1、China and the world Inside the dynamics of a changing relationship July 2019 McKinsey Global Institute Since its founding in 1990, the McKinsey Global Institute (MGI) has sought to develop a deeper understanding of the evolving global economy. As the business and economics research arm of McKinsey i

2、t is not commissioned by any business, government, or other institution. For further information about MGI and to download reports, please visit China and the world: Inside the dynamics of a changing relationship Authors Jonathan Woetzel, Shanghai Jeongmin Seong, Shanghai Nick Leung, Hong Kong Joe N

3、gai, Hong Kong James Manyika, San Francisco Anu Madgavkar, Mumbai Susan Lund, Washington, DC Andrey Mironenko, Sydney July 2019 The relationship between China and the rest of the world appears to be entering a new phase. Chinas economic miracle was fueled by industry and investment, but today domest

4、ic consumption is the main driving force of growth. The country is becoming less exposed in economic terms to the rest of the world. However, reflecting Chinas rise to being the worlds second-largest economy and its leading trading nation, the rest of the world is becoming more exposed to China. The

5、se shifts have been accompanied by trade tensions and rising protectionism in many countries, raising the question whether we have reached a point of peak integration between China and the world. In this report, we look at the extent of Chinas global scale and integration, and highlight the findings

6、 of the new McKinsey Global Institute China-World Exposure Index. We examine the exposure of sectors and countries to the China-world relationship, with particular emphasis on the technology and consumer sectors. Finally, we simulate what value might be at stake for China and the rest of the world f

7、rom less engagement and from more engagement, and briefly explore how businesses might navigate what may be a highly uncertain environment. This report is part of a series of MGI publications on global trade that includes Digital globalization: The new era of global flows in March 2016 and Globaliza

8、tion in transition: The future of trade and value chains in January 2019. This research was led by Jonathan Woetzel, a director of MGI based in Shanghai, and Jeongmin Seong, an MGI senior fellow in Shanghai; Nick Leung, McKinsey senior partner and chairman of McKinsey Greater China; and Joe Ngai, Mc

9、Kinsey senior partner and managing partner of McKinsey Greater China; James Manyika, chairman and director of MGI in San Francisco; Anu Madgavkar, MGI partner in Mumbai; and Susan Lund, MGI partner in Washington, DC. Andrey Mironeko and James Bien led the research team, which comprised Mo Chen, Carm

10、en Liu, Meng Meng, Raye Qin, Erik Rong, Ben Wang, and Minyu Xiao. We are also grateful for the input and guidance of Rik Kirkland, McKinsey partner for global publishing in London; Glenn Leibowitz, McKinseys group head of external relations in Greater China; and Ziad Haider, head of risk for McKinse

11、y, Asia. Our academic and external advisers challenged our thinking and added new insights. We extend sincere thanks to Martin Baily, Bernard L. Schwartz Chair in Economic Policy Development and senior fellow and director of the Business and Public Policy Initiative at the Brookings Institution; Gor

12、don Orr, director emeritus and senior adviser to McKinsey; Dr. Andrew Sheng, distinguished fellow of the Asia Global Institute; and NicholasR.Lardy, Anthony M. Solomon Senior Fellow at the Peterson Institute for International Economics. We thank the many business leaders, policy makers, and research

13、ers at public and private institutions who shared their insights confidentially. This project benefited immensely from the industry expertise of manyMcKinsey colleagues. We thank Stefan Burghardt, Albert Chang, Wonsik Choi, Michael Chui, Karel Eloot, Paul Gao, Mingyu Guan, Patrick Hertzke, Sheng Hon

14、g, Forest Hou, Richard Huang, Daniel Hui, Mekala Krishnan, Gang Liang, Lan Luan, Katrina Lv, Felix Poh, John Qu, Dennis Schwedhelm, Sha Sha, Yezhou Shi, Antonio Sun, Florian Then, Christopher Thomas, Jin Wang, Ting Wu, Alex You, Cherie Zhang, Derek Zhang, Haimeng Zhang, Susan Zhang, Gaobo Zhou, Tian

15、kai Zhu, and Daniel Zipser. Preface This report was produced by MGI senior editor Janet Bush, editorial production manager JuliePhilpot, and senior graphic designers MarisaCarder and PatrickWhite, with support from Cathy Gui, MGIs head of external relations in Asia Pacific; Lauren Meling, MGI digita

16、l editor; and Timothy Beacom, MGI content specialist. This report contributes to MGIs mission to help business and policy leaders understand the forces transforming the global economy and prepare for the next wave of growth. As with all MGI research, this work is independent, reflects our own views,

17、 and has not been commissioned by any business, government, or other institution. We welcome your comments on the research at MGI. Jacques Bughin Director, McKinsey Global Institute Senior partner, McKinsey (2) liberalization of services; (3) globalization of financial markets; (4) collaboration on

18、global public goods; and (5) flows of technology and innovation. Less engagement between China and the world could mean higher tariffs, more limited trade and technology flows, and continuing gaps in addressing key global challenges. More engagement could see China importing more from the rest of th

19、e world, greater two-way flows of technology, and a more competitive Chinese services sector; reaching solutions to global issues would be more likely. In both scenarios, different stakeholders could experience upsides and downsides as well as conflicting priorities. Businesses may need to adjust th

20、eir approach to uncertain, and potentially higher, risk conditions. We suggest four areas for consideration: (1) assess their short- and long-term exposure to the China-world relationship; (2) determine their investment and value chain posture; (3) develop the operational excellence needed to manage

21、 risks and uncertainty; and (4) adopt a “survivors mind-set,” both optimistic and realistic, improving their balance sheet and maintaining robust access to capital, and looking for opportunities to acquire and restructure amid the uncertainty. In brief China and the world: Inside the dynamics of a c

22、hanging relationship Simulated impact, 2040 China has been reducing its exposure to the world, while the worlds exposure to China has risen 1. Growth as an import destination 2. Liberalization of services 3. Globalization of fnancial markets 4. Collaboration on global public goods 5. Flows of techno

23、logy and innovation Between $22 trillion and $37 trillion of economic value (equivalent to about 15 to 26 percent of global GDP by 2040) could be at stake from less or more engagement between China and the world Signifcant value is at stake from less or more engagement between China and the world Ch

24、ina-World Exposure Index (trade, technology, and capital) Weighted average exposure of 7 large economies1 = 1.0 20002017 World exposure to China China exposure to the world 0.6 0.4 1.2 0.8 Source: McKinsey Global Institute analysis 812 35 58 36 36 1 2 China, Japan, Germany, France, India, United Kin

25、gdom, and United States. Estimated value at stake based on specifc conditions and assumptions, and should not be taken as a forecast. China and the world: A changing relationship Areas of engagement Potential value at stake $ trillion, 20402 Efects of climate change could be signifcant beyond 2040 C

26、hina has achieved global scale, but more can be done to integrate of global goods trade 11% in the world on R has 110 Global Fortune 500 companies, comparable with the US tally; and is in the worlds top two for receiving and being the source of foreign direct investment (FDI). However, not all dimen

27、sions of Chinas scale have translated into global integration. A huge majority of Chinese firms revenue still comes from the home economy. Operational and regulatory complexities in Chinas financial markets remain a barrier to international players. Cross-border data flows tend to be limited despite

28、 the massive amount of data Chinas digital ecosystem generates. Chinas opening and reform have offered economies in the rest of the world large benefits. Consumers have benefited from lower prices due to Chinese imports, and multinational corporations have tapped into new sources of growth in Chinas

29、 quickly expanding, dynamic market. However, the evolution has entailed costs, too, notably in the form of lost middle- income jobs, particularly in advanced economies. The relationship between China and the world now is changing. The new McKinsey Global Institute (MGI) China-World Exposure Index sh

30、ows that the worlds exposure to China has increased, while Chinas exposure to the world has fallen in relative terms. Accompanying this shift are the beginnings of a reevaluation of the relationship. Trade disputes are making daily headlines, new rules are emerging to scrutinize technology flows, pr

31、otectionism is on the rise, and geopolitical tensions are becoming more heated. Could we be seeing the beginning of a trend of less engagement between China and the world after the years of deepening ties? Could we be witnessing peak integration? Conversely, what opportunities could more engagement

32、offer? What value could be at stake for all players? How should businesses navigate what is likely to be an increasingly uncertain environment? In this report, we examine the state of Chinas globalization on eight dimensions (chapter 1) and discuss shifts in the mutual exposure of China and the rest

33、 of the world, looking in detail at sectors and countries (chapter 2). We then look in particular detail at technology (chapter 3)which is central to the economic development of all economies, including Chinasand consumer markets, which are now the main engine of Chinas growth, and arguably one of t

34、he main sources of global growth (chapter 4). In chapter 5, we discuss the value at stake from less and more engagement between China and the world. Finally, in chapter 6, we explore how business executives may consider adjusting their approach in the face of the shifting relationship between China

35、and the world. We note that this analysis builds on MGIs earlier research on shifting global value chain that discusses “the new China effect” driving global demand growth and reaching a new level of industry maturity.1 China is a global power in scale, but scale has not always translated into globa

36、l integration China became the worlds largest economy in purchasing-power-parity terms in 2014. In nominal terms, Chinas GDP was 66 percent that of the United States in 2018, making it the second-largest economy in the world. On the MGI Connectedness Index that ranks participation by flows of goods,

37、 services, finance, people, and data, China was the ninth- most-connected country in the world in 2017.2 In 2018, China accounted for about 16 percent of world GDP. 1 Globalization in transition: The future of trade and value chains, McKinsey Global Institute, January 2019. 2 Digital globalization:

38、The new era of global flows, McKinsey Global Institute, March 2016. 1China and the world: Inside the dynamics of a changing relationship However, Chinas journey to global prominence has been uneven. To gauge the extent of its integration with the world, we look at eight dimensions of Chinas global s

39、cale and integration (Exhibit E1). Trade. China has become a major global player in trade as a supplier and as a market. The country became the worlds largest exporter of goods in 2009, and the largest trading nation in goods in 2013. Its share of global goods trade increased from 1.9 percent in 200

40、0 to 11.4 percent in 2017. In an analysis of 186 countries, China is the largest export destination for 33 countries and the largest source of imports for 65. However, trade exposure to China varies substantially by region and sector. China has a disproportionately high impact on specific regions (p

41、articularly those close by) and sectors, notably those with globally integrated technology chains, and resource-exporting sectors for which China is a big market. China became the worlds fifth-largest exporter of services with $227 billion of exports in 2017, triple the value in 2005. China also imp

42、orted $468 billion in services in 2017, making it the second-largest services importer in the world. However, Chinas global scale in services trade is not as significant as in goods. China accounts for 6.4 percent of global services trade, about half that of goods trade. Globally, services trade is

43、growing 60 percent faster than goods trade.3 3 Globalization in transition: The future of trade and value chains, McKinsey Global Institute, January 2019. Exhibit E1 China has achieved global scale, but more can be done. Chinas scaleMore room to globalize further TradeChina has been the worlds large

44、st goods trading nation since 2013, accounting for 11.4% of global goods trade in 2017 but China accounted for only about 6.4% of global services sector trade in 2017 FirmsChina has 110 Global Fortune 500 companies, comparable with the United States but they are still anchored in the domestic market

45、 (18% of revenue earned overseas vs 44% for S and Best global brands 2018 rankings, Interbrand, 7 The China effect on global innovation, McKinsey Global Institute, October 2015; and Digital China: Powering the economy to global competitiveness, McKinsey Global Institute, December 2017; 03/03/c_13786

46、5068.htm 8 “Imported” IP charges are payments China makes to other countries for their IP. “Exported” IP charges are payments China receives from other countries for domestic IP. 9 Digital globalization: The new era of global flows, McKinsey Global Institute, March 2016. 14x more Chinese traveled ov

47、erseas in 2018 vs 2000 3China and the world: Inside the dynamics of a changing relationship Environmental impact. China has been the worlds largest source of carbon emissions since 2006, and today accounts for 28 percent of annual global emissions (although a much lower share of the accumulated stoc

48、k of greenhouse-gas emissions). The country has been investing heavily in renewable energy. In 2017, it invested about $127 billion, 45 percent of the global total and three times larger than US and European investment, each $41 billion. In addition to being motivated by its commitment as a signator

49、y to the Paris Agreement to reduce its carbon intensity by 40 to 45 percent from 2005 to 2020 a milestone achieved by the end of 2017China is seeking to reduce its carbon intensity because of domestic issues including pollution.10 The median exposure of Chinas PM 2.5, an indicator of air pollution, was 3.7 times larger than the Organisation for Economic Co-operation and Development (OECD) average in 2016, according to the World Bank. Culture. China has invested heavily in building a global cultural presence. Consider that the number of Confucius