【正文】 ............................................ 30 Less Exposure In China ....................................................................................... 30 Not Allowed For Operating Lease........................................................................ 31 Limited Customer Base And Business Areas....................................................... 31 Funding Bottlenecks ............................................................................................ 31 Opportunities............................................................................................................... 31 Captive Business ................................................................................................. 31 WTO .................................................................................................................... 31 Threats........................................................................................................................ 31 More Powerful Competitors ................................................................................. 31 Easy Bank Lines as Substitutes .......................................................................... 32 Legal Enforcement and local protectionism ......................................................... 32 9 Suggested Strategies...................................................................................................... 32 Closely Monitor The Market ........................................................................................ 32 Assist MED To Set up Vendor Finance Program ........................................................ 32 Jointly Manage MED‘s Lease Portfolio ....................................................................... 32 Extend the Program .................................................................................................... 33 10 Conclusion........................................................................................................................ 33 11 READING LIST .................................................................................................................. 34 5 S. Wei Gang / M. Schlaffer Leasing Business in China 1 Political Environment On the 16th Chinese Communist Party (CCP) Congress (scheduled for 09/20xx) it has to be decided about seven top positions in the CCP, as the current leaders are due for Recently, officially unconfirmed messages announced that China has already decided about the next generation of Due to this statements the current Vice President Hu Jintao will bee successor of Jiang Zemin as President in March 20xx. Moreover Hu will follow him as chairman of CCP. However Jiang will stay as chairman of the important Central Military Commission. This position has the most influence in China because all political power derives from there. Further decisions are: Wen Jiabao bees successor of Prime Minister Zhu Rongji and the tempered Li Ruihuan follows hardliner Li Peng as Chairman of the National Congress. It is anticipated however that China‘s political landscape will remain unchanged under the new leadership and the moderate process of reforms will be continued. 2 Macroeconomic Environment The currently high growth rate of GDP will remain on a stable high level between a corridor of 7% and 8% for the following 5 years. But still China‘s economy is not driven by on an own dynamic yet. The strong growth is mainly based on high domestic fiscal expenditures for infrastructure projects throughout the country. Here huge projects in telemunications, power production and transmission as well as public transportation especially in the poor western parts of the country count for the most important drivers. Roughly 60% of the annual GDP (in 20xx: USD 1,) are based on government‘s Source: Todd, Lee (20xx): China Third Quarter 20xx. DRIWEFA (Hrsg.). October 20xx., p. 3. Despite the enormous population size, private consumption does not remarkably promote the GDP yet. Deflation during the last two years and fears about future unemployment support the countrywide highest savings rate up to roughly 40% (RMB ). The per capita ine amounts USD758 in urban areas and USD 272 in rural areas. Due to a relatively low export rate, China is not heavily affected by the worldwide economic slow down. Only some experts have estimated that the Chinese decrease of exports by 10% 1 Ng, Amin (20xx). Deutsche Bank China Newsletter 27th Edition. Deutsche Bank AG, 09/30/01. P. 1. 2 G228。enhandelsinformationen 4 N. N. (20xx). China bereitet sich auf Konjunktureinbruch vor. Handelsblatt, 12/15/01. P. 35. 5 Reisach, Ulrike (20xx). Ver228。r Au223。 Poor‘s has estimated that ?at least‘ 50% of all loans in the Chinese financial markets are nonperforming. This would equal 60% of China‘s In the meantime even PBOC confirmed estimates of at least 25% as nonperforming. And there is little evidence that the banks are acting now according to mercial criteria. Only Bank of China is in a slightly better condition because they did a lot of restructuring. But even they are far away from fulfilling the minimum capitaladequacy ratio of 8% set by Bank of International Settlement (BIS). Based on the government‘s estimate, it would take China up to 10 years to clean up the banking Reforms of State Owned Banks The outlined situation of the state owned banks forces the officials to e up with appropriate reform plans. Concerning to them the nonperforming loan ratio is to be reduced by 1% per year and the BIS ratio is to be increased above 8%. Moreover the government appears to have recognized that the ultimate solution to Ch