A leading China commentator for 15 years, Jing Ulrich is convinced China's developmental path is now entering a key transitional phase. Rapid economic growth has been led by investment, particularly in the extensive export-oriented manufacturing sector.
Consumption will be a larger driver of growth, and this will be reflected in an expansion of China's markets for goods and services. It will also be reflected in a new influence China will have in global economics: rather than exporting disinflation through its cheap manufactured goods, China will increasingly be known for exporting capital and, thus, inflation in categories such as commodities and natural resources, and a range of global asset classes.
As managing director and chairman of China Equities at JPMorgan, Ms Ulrich has identified six 'mega trends' that will play an important role in the evolution of China's economy and financial markets in the years ahead. She is well qualified to comment on China's great transition to becoming a world superpower as she is leading the expansion of JPMorgan's China equity business both within China and worldwide. Educated at Harvard and Stanford, Ms Ulrich has received numerous industry accolades for her work as a China watcher, and is known for bridging cultural divides between western and Chinese societies.
Global institutional investors have frequently voted her the best China strategist in independent research polls, and she won the title of Young Achiever of the Year in the South China Morning Post/AmCham Women of Influence Awards last year. China is a fast-moving phenomenon, and such trends will determine how well China handles its economy, industries and the environment, how it implements its laws and policies, and how China is perceived internationally.
1 The end of cheap labour
The mainland's labour market is changing. According to Ms Ulrich, in the first half of 2007, average wages rose by 17 per cent, almost double the rate in 2000. 'As wages in China steadily rise, labour shortages have become more common. The new generation of workers are more educated and skilled. They have abandoned the fields for the cities, low-paid manual labour for more value-added sectors, and back-breaking toil for lighter, hi-tech, and highly-mechanised vocations.' Compounding this is the fact that the overall size of the workforce is declining. Ms Ulrich cites research by Dr Clint Laurent, from Global Demographics, who forecasts that China's labour force will peak in 2008, and then decrease. He forecasts that in the decade from 2005-15, the number of young people aged 15 to 24 will fall by 31 per cent. In addition, women are declining in numbers, with Dr Laurent forecasting that China's population will actually stabilise by 2017, and that total births will fall by 50 per cent in the next 20 years. So what does all this mean? Ms Ulrich believes that with a smaller workforce, an ageing population and rising average wages, China must invest heavily in cutting-edge technology, research and high-end production. Brawn must be replaced with brain; the focus must shift from quantity to quality.
2 Record productivity growth will drive corporate profits