China remains a robust and viable market for U.S. companies. U.S. exports to China totaled more
than $30 billion for the first six months of 2009. Despite the global slowdown which led to a 15%
drop in U.S. exports to China during this period, 75% of U.S. companies operating in China remain
profitable and positive about the country¡¯s economic outlook.
The recent $585 billion Chinese stimulus plan has created new opportunities for U.S. businesses in
China. As the Chinese government and industry attempt to drive long-term sustainable growth
through the injection of funds into infrastructure, healthcare, clean energy and other fields, they look
to foreign corporations to provide technology and value-added services. With over 95% of the
stimulus directed towards regions outside Beijing, Shanghai, and Guangzhou, Chinas dynamic
emerging markets offer strong and growing opportunities.
Economic Outlook
Optimism Abounds in Chinas Market:
Chinas ongoing economic transformation has revealed a dynamic and resilient economy which has
maintained double-digit GDP growth for most of the past decade. Despite the global slowdown,
China grew by 9.8% in 2008 and officials expect it will top 9% again this year. China-U.S. trade has
grown to $409.2 billion, making China our largest overseas market and second-largest trading
partner (following Canada).
Growing Middle Class Ready to Consume:
China is no longer just the ¡°factory of the world.¡± With the opening of 150,000 new stores and with tax
rebates to stimulate spending on appliances for 200 million rural households, the size and
spending power of Chinas consumer base will continue to grow. Chinas rising disposable income
also means that millions of Chinese are consuming in ways they never have before: traveling, driving
cars, or shopping for high-end goods. Chinas middle class is expanding beyond major cities such
as Beijing and Shanghai. Current spending accounts for an estimated 20 percent of GDP, according
to at least one source familiar with Chinas retail markets. Estimates vary, but the middle class could
total about 340 million people by the year 2016.
Emerging Market Cities - Chinas New Business Frontier:
Chinas emerging markets outside Beijing, Shanghai, and Guangzhou have become hot
destinations for U.S. products and services. In 2008, pharmaceuticals exports to Dalian grew by
134%, railway equipment sales to Tianjin increased by 151%, and Hangzhou imports of cosmetics
rose by 174%. The demand for goods and services is surging in these cities as companies take
advantage of cheaper land, labor, and energy. The population in these cities is also projected to
account for three-quarters of Chinas growth in wealthy households in the next seven to eight years.
