The impact of the Chinese economic stimulus plan
think: act CONTENT
2009
Different industries are being impacted in various ways by the financial crisis and the RMB 20 trillion + economic stimulus plan in China. Roland Berger believes that there will be more challenges ahead when the financial crisis is over.
As the biggest U.S. debt holder and the second-largest economy in the world, China is facing a daunting reality. The World Bank forecasts that the nominal GDP growth of China in 2009 will hit a historical low of 7.5%, which also touches the bottom line of China's forecast for its GDP growth during the Eleventh "Five Year Plan". Considering the effects of inflation, the real GDP growth could be around just 5%.
Against this background, China’s national government launched China's Economic Stimulus Plan in 2008. The tone of the RMB 4 trillion investment plan is consistent with the Eleventh "Five Year Plan", with focuses on the construction, energy and manufacturing industries. Investment plans on the provincial level were launched shortly after the national plan, which sums up to a total economic stimulus package that exceeds RMB 20 trillion. Compared with the plans of the central government, the provincial level plans cover different industries based on the development status of each province.
Investments in the energy industry and agriculture are mainly financed by the national plan, while investments in the manufacturing, high-tech, environmental protection, education, health care and cultural industries are mainly covered by the provincial plans. Investments in the construction industry, the largest beneficiary among all industries, are contributed by both the national and provincial plans.
Roland Berger has studied the 13 industries that are in the spotlight of the national and provincial stimulus plans. We analyzed the impact of the economic crisis and the impact of the economic stimulus plan on these industries and identified three clusters of industries. We believe that companies in each
cluster should consider adopting different competitive strategies.
