Conference Presentation, Panel
Chinas Future: The Sky Is Not Falling
- The Chinese film market is projected to reach approximately $7 billion by year-end 2015, matching the U.S. 2010 total within just 56 days, with expectations to equal the $10 billion U.S. market by early 2016 driven by screen expansion from 31,600 to near 43,600 and sustained growth for at least two years due to low screen density per capita; mobile ticket sales are expected to constitute 80% of transactions with 30% to 60% discounts, contrasting with 12% to 15% online sales in the U.S.
- Consumer sentiment and economic contributions are anticipated to shift positively, with the "new economy" sectors growing at 20% and the "Jing Index" expanding 15% to 20%, while China's GDP contribution could reach $700 billion annually if growth hits 6% or 7%; investor sentiment is forecast to stabilize after negative trends in late 2015, though asset quality may face pressure for a couple of years as the government reduces leverage in overcapacity sectors like steel.
- China's technology and e-commerce landscape expects continued dominance by domestic firms like DJI, BGI, Baidu, Tencent, and Alibaba, who are predicted to expand into offline payments and fill consumer credit gaps, while foreign competitors face reduced market share unless they localize products and services; investment focus is expected to gradually shift from consumer internet to enterprise applications, big data, SaaS, and AI.
- Demographic challenges include a shrinking workforce expected within five years and a stagnant birth rate despite the removal of the one-child policy, leading to labor shortages that will drive the fastest investment growth in robotics; in contrast, the government aims to double per capita income between 2010 and 2020, though current global ranking remains at number 90, indicating a long path remains before reaching middle-income levels.
- The Chinese yuan is anticipated to undergo managed convertibility over the next five years, transitioning slowly and steadily against a basket of 13 currencies, with a reference rate trading between 99 and 101; the currency's value relies on domestic confidence regarding a $21 trillion savings pool and is supported by $3.25 trillion in stable foreign exchange reserves and PBOC willingness to use "ample firepower" if necessary.
- Regulatory and structural shifts include a transition from a producer to a consumer economy requiring a stronger social safety net to encourage spending, a "painful" anti-corruption campaign intended to strengthen institutional confidence, and improved bond market health through controlled defaults; inbound cross-border trade via "Hightower" models faces regulatory hurdles as customs and banking infrastructure catch up, while content value in China remains significantly lower than in the U.S. due to lower licensing costs and an OTT market consolidated among seven license holders.