1、 This report is based on information available to the public. No representation is made that it is accurate or complete. This report is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. China International Capital Corporation Limited and others associ
2、ated with it (CICC) may have positions in, and may effect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for those companies. This report may also be made available (1) in Hong Kong by China International Capital Corporati
3、on Hong Kong Securities Limited, and (2) in Singapore only to accredited investors and/or institutional investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act and Regulations in Singapore, by China International Capital Corporation (Singapore) Pte. Limited (“C
4、ICCSG”). By virtue of distribution by CICCSG to these categories of investors in Singapore, disclosure under Section 36 of the Financial Advisers Act (which relates to disclosure of a financial advisers interest and/or its representatives interest in securities) is not required. Recipients of this r
5、eport in Singapore should contact CICCSG in respect of any matter arising from or in connection with this report. Copyright of this report belongs to CICC. Any form of unauthorized distribution, reproduction, publication, release or quotation by any institution or individual is prohibited without CI
6、CCs written permission. Macroeconomy ReportHighlights: Our analysis found that the labor shortage is currently still a regional phenomenon, mainly concentrated in the export processing industry in the Pearl River Delta (PRD) and southeast Fujian, while a much greater proportion of migrant workers ar
7、e now going to central/western China. In the short term this supports our call for more balanced regional growth in China: Inland provinces are absorbing more migrant workers as more jobs are created there and the wage gap between inland and coastal regions narrows. But the more deeply rooted reason
8、 is that Chinas demographic dividend is moving toward the 2015 turning point, with migrant workers of the baby boom generation already in their middle age and the new generation of migrant workers (born in the 1980s) having higher requirements for wages and working conditions. The rural labor surplu
9、s is now merely 50mn people, and China will face its Lewis Turning Point in several years. It still needs another few years for the labor shortage to develop into a nationwide problem. Implications for investors: Labor compensation will likely increase as a percentage of national income, promoting h
10、ousehold consumption and industrial structure upgrading. Currently Chinas demographic structure resembles Japans in the 1980s, when Japans household consumption to GDP ratio hit an upward inflection point after a tight labor supply spurred accelerated wage growth. Likewise, Chinas ongoing labor shor
11、tage will force companies to raise wages, addressing the imbalance between investment and consumption stemming from the corporate sectors years of overly high proportion in the distribution of economic success. The share of labor compensation is likely to hit an inflection point and drive up consump
12、tion. Judging from Japans and Koreas experiences, we are particularly positive about urban consumption of such goods as autos, travel services, health care, culture and entertainment, as well as the fast growth of rural appliance sales in China over the next few years. In addition, it is difficult f
13、or low-end industries in the PRD to find workers, but easier for higher-end companies in the Yangtze River Delta (YRD); the YRDs exports have also recently recovered more strongly than that of the PRD. This suggests rising labor costs will force companies to move up the value chain and change their
14、growth patterns. The shares of machinery and equipment in Chinas exports will expand further. March 18, 2010 China RESEARCH The Causes, Consequences, on the other, the new-generation of migrant workers have higher requirements on job types, working conditions and labor protection, and are no longer
15、willing to work at companies paying low wages and requiring long hours of overtime. Not so much surplus labor in rural area. The Ministry of Agriculture estimates that agricultural production in China needs a labor force of less than 200mn, so there is still nearly 100mn surplus rural labor to be tr
16、ansferred in the future (according to Minister of Agriculture Han Changfu at the annual legislative sessions). However, about half of that surplus labor force is over 40 years old and is not suitable for being transferred, as shown by Cai Fangs study in 2007. Therefore, the rural labor surplus is no
17、w only about 50mn, and will run out in 78 years based on the past transfer pace of 67mn migrant workers each year (this is in line with our call for a demographic structure inflection point in 2015). The migrant worker market is moving toward a supply/demand balance from the past unlimited supply. C
18、ompanies have to offer higher wages and better working conditions in order to attract the remaining surplus rural labor. Figure 7: Chinas demographic dividend will come to an end in five years Source: UN, CICC Research 505560657075195019551960196519701975198019851990199520002005201020152020202520302
19、035204020452050%Share of working age population (aged 15-64)Japan:Turning point: 1990ChinaTurning point: 2015IndiaTurning point: 2040ChinaJapanCICC Research This report is based on information available to the public. No representation is made that it is accurate or complete. This report is not an o
20、ffer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. China International Capital Corporation Limited and others associated with it (CICC) may have positions in, and may effect transactions in securities of companies mentioned herein and may also perform or seek
21、to perform investment banking services for those companies. This report may also be made available (1) in Hong Kong by China International Capital Corporation Hong Kong Securities Limited, and (2) in Singapore only to accredited investors and/or institutional investors, as defined in the Financial A
22、dvisers Regulations and the Securities and Futures Act and Regulations in Singapore, by China International Capital Corporation (Singapore) Pte. Limited (“CICCSG”). By virtue of distribution by CICCSG to these categories of investors in Singapore, disclosure under Section 36 of the Financial Adviser
23、s Act (which relates to disclosure of a financial advisers interest and/or its representatives interest in securities) is not required. Recipients of this report in Singapore should contact CICCSG in respect of any matter arising from or in connection with this report. Copyright of this report belon
24、gs to CICC. Any form of unauthorized distribution, reproduction, publication, release or quotation by any institution or individual is prohibited without CICCs written permission. 7Figure 8: Migrant workers moving into middle age: The 1534 age group declined Source: UN, CICC Research Implications: H
25、igher labor costs are positive to household consumption growth and industrial structure upgrading Currently Chinas demographic structure and labor supply resemble Japans in the 1980s, when Japans household consumption to GDP ratio reached an inflection point (Figures 9 open up industries to private
26、capital and break monopolies to improve corporate efficiency; and increase fiscal spending on R&D and education, encourage innovation and technological progress through tax incentives to improve labor productivity, thus tackling cost pressures. Figure 14: Chinas agricultural labor productivity is fa
27、r below that of neighboring countries, leaving room for releasing additional surplus labor Source: CEIC, UN, CICC Research Grain Output per capita0.00.10.20.30.40.50.60.70.80.91.0Japan Korea Chinath ton / personBeijing China International Capital Corporation Limited 28thFloor, China World Office 2 1
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34、: (8620) 8396-3968 Fax: (8620) 8516-8198 This report is based on information available to the public. No representation is made that it is accurate or complete. This report is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. China International Capit
35、al Corporation Limited and others associated with it (CICC) may have positions in, and may effect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for those companies. This report may also be made available (1) in Hong Kong
36、by China International Capital Corporation Hong Kong Securities Limited, and (2) in Singapore only to accredited investors and/or institutional investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act and Regulations in Singapore, by China International Capital
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