0 China Challenges and Opportunities Murilo Ferreira, Vale CEO Rio de Janeiro, June 10, 2015
1 Main messages The Chinese economy has been slowing down albeit from a much larger GDP base The Chinese Government is taking support measures to achieve its economic growth targets and expand the countrys global influence…
2 Chinas GDP growth has been slowing down to what is now considered a new normal GDP growth, % 14.2 12.7 11.3 10.4 10.1 10.0 9.6 9.2 9.3 9.1 8.4 8.3 7.7 7.7 7.4 7.0 2000 2001 2002 2003 2004 2005 2006 2007 2008…
3 Fixed asset investments are growing at a lower pace Fixed Assets Investments (FAI) Growth rate (% y/y 3mma) Investments in real estate, infra- structure and manufacturing shrank significantly from 2013 to 2014 with Total FAI…
4 Credit has tightened as shadow bank practically ceased Monthly overall credit Share in GDP (%, sa, 3mma) Overall credit as a percentage of Corporate bond GDP increased strongly after 2009, 50 Off-balance sheet credit when…
5 Real interest rates remain at higher levels despite recent rate cuts Real interest rate % per annum, CPI & PPI average deflated Rate cut The PBoC cut interest rates Real rate (1yr benchmark lending rate) 8 three times in the…
6 Main messages The Chinese economy has been slowing down albeit from a much larger GDP base The Chinese Government is taking support measures to achieve its economic growth targets and expand the countrys global influence…
7 The Chinese government is taking several initiatives to support GDP growth Goals Support investment in the real estate market Stimulate and direct local Several governments investments towards initiatives were key…
8 The new silk road economic belt will help the export of Chinese products and services The new silk road China assembling new trade routes, binding other regions closer to it
9 Meanwhile reforms which are more supportive of growth and help rebalance China's economic structure were prioritized Current priorities Internationalization of the RMB through less capital control and Financial interest rate…
10 With the reforms the RMB is expected to maintain its relative value against the USD Even after the depreciation of major currencies, the RMB has remained practically stable against the USD The Chinese government is expected…
11 Main messages The Chinese economy has been slowing down albeit from a much larger GDP base The Chinese Government is taking support measures to achieve its economic growth targets and expand the countrys global influence…
12 China is very important for the mineral commodities market Share of global demand in 2014 - % Share of seaborne trade, % 69 21 43 40 65 58 33 28 Iron ore Metallurgical coal Nickel Copper Based on the…
13 Iron ore alone represents about 10% of the revenues from Brazilian exports Brazilian exports in US billions Vales share in iron ore exports, % Iron ore exports in US billions 82 83 83 83 82 80 256 243 242 225 202…
14 Chinas iron ore imports are expected to grow only moderatly in the next years under the new normal CAGR 2000-2014, % Chinese iron ore imports, Mt CAGR 2015-2020, % 1.2% 1,052 1,061 1,028 1,047 987 946 840 760 705…
15 But the opportunities go beyond the export of commodities During Premier Li Keqiangs visit to Brazil a few cooperation agreements were emphasized: The construction of the railway line to connect the Atlantic to the…
16 Final remarks Chinese GDP growth has been slowing down to a new normal However, the Chinese government is acting promptly to support the domestic market and to create demand for Chinese products and services outside China…
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