China's Economic Restructuring to Boost Consumerism

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Good evening to our viewers across China.

I'm Saijal Patel and you're watching “Asia Market Daily”.

China's booming consumerism is about to grow even faster, thanks to economic restructuring.

At the same time, the market is becoming more varied and rapid changing, even leading global trends in some ways.

Cheng Lei brings us this special report.

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3000 pairs of shoes sold online every minute, 500 cars sold on TV in 45 minutes, 20,000 loan applications received on taxi touchscreens in 5 months. China is a long way from the days of state owned department stores selling goods in one size. Spending on advertising - a good indicator of consumption growth - is set to continue at double digit pace.

(SOT) Annie Hsiao, President, Maxus China:

"2011's ad spend growth is expected to be around the same as 2010, 12% or so. The no.1 media is still TV, over 60% of the market, followed by newspapers, then internet, then outdoor media. But the bright spot is the growth of the internet advertising."

While total retail sales is growing at high teens per year, online retail sales have doubled every year over the past 5 years - reaching almost $80 billion in 2010. According to iresearch data - 80% of the market share going to online retailer - Taobao.

(SOT) Annie Hsiao, President, Maxus China:

"Taobao's daily turnover in 2010 is 1.2 billion yuan, double HK's daily retail sales. It's driven by a group of people we call the "new rich", mainly in first tier cities and the developed 2nd tier cities."

The buzz about China's e-commerce market is one reason stock rose 87% on its debut on the NYSE.

Also planning a listing is taxi touchscreen operator TouchMedia - whose sales have shot up 15 times over the past 3 years - benefiting from China's increase in mobile and affluent urban consumers.

(SOT) Neil Ducray, Managing Director, TouchMedia:

"Consumerism in China is going crazy, and in many ways they're bypassing the stages of conventional media that the western markets went through. In China 41% of young adults would now rather use mobile internet rather than computer internet. That's double the levels of most advanced western countries."

While high end spending is powering ahead, the other end of the spectrum is also enjoying robust growth. Beijing's rural incentives have seen appliance sales more than double in 2010 in the countryside — thanks to a 13% cash rebate and better service networks. Farmers are also discovering the joys of online shopping.

(SOT) Annie Hsiao, President, Maxus China:

"Now in Taobao, 30% of its contribution comes is from the rural market. In the China market, there's polarized spending. The high end and low end both want quality, but in relation to their prices. The low end spending is mostly in household goods, and clothing."

As China's villages become towns, and towns become cities, the next 20 years may unleash the spending power of 300 million new urbanites.

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From one economic superpower to another.

The World Bank is lending India $2 billion, to fund mostly projects to improve rural areas.

The latest move underscores the growing relationship between the two, which saw world bank loans to India surge to $11 billion last year.

World bank President Robert Zoellick hopes the funds will aid India's agriculture production, blamed for escalating inflationary pressure in the country.

CNBC-TV18's Siddharth Zarabi asks Zoellick for an update on his global economic view.

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Robert Zoellick, President, World Bank: I hope that we will have now a sustainable recovery, but I think we need to recognize that there are danger points that we are going to need to face this year just as we faced last year and its going to require the key economies in the international system to try to work together and manage the differences, because if they spin out of control that increases anxiety in markets and that will hurt everybody.

Siddharth Zarabi, CNBC-TV18, New Delhi: Is the G-20 proving to be this sort of forum that will manage this new recovery, the new normal order like you have called it in the past?

Robert Zoellick, President, World Bank: I think its in an early stage. I think the good news was that when the crisis hit, the G-20 rose to the occasion by and large in terms of the type of efforts to keep the economy on track and not let it slip into a problem like the 1930's. We're now at a stage with this multi-speed recovery where economies were facing different challenges and so their policy mix will have to be an integrated one but reflecting differences depending on where they are in the economic cycle. The G-20 has the benefit of including more economies, like particularly some of the larger emerging market economies. So that makes it more representative of the global economy than the G-7. It has a disadvantage of being larger and any time you have a larger group, its sometimes hard to get beyond bureaucracies and just the talking action.

Siddharth Zarabi, CNBC-TV18, New Delhi: You mentioned resolving differences and one of the key takeaways from the last G-20 was, if I may put it that way the failure of the United States and China to resolve their differences over the currency issue. What would you advocate at this point of time in terms of the U.S. and China settling their differences over the currency issues because its clearly something that impacts the entire economic order across the world?

Robert Zoellick, President, World Bank: Well the U.S. and China are highlighted because they are both major economies. But it really is an issue that affects others too as you mentioned. So one of the things that I am trying to caution is, for all the talk about exchange rates and monetary policies and others, one has to look at some of the structural aspects of growth. Just as we are talking about in India and these are clearly going to be part of the Chinese discussion for their next five year plan, how can they shift the more domestic demand led growth which won't be easy, but I think they are trying to move in the right direction. Similarly there is debate in the United States about some of the structural aspects of growth. Those will have to be done at the national level, but I think they can be interconnected at a global level and then I think for the monetary system as a whole, the dollar is going to remain the dominant reserve currency, but you're going to start to have choices among different currencies and so one of the issues will be how within a flexible exchange rate system, can you move the Chinese RMB to be a greater flexibility and how do you try to manage countries that are in a situation where you have interdependence but flexibility of currencies.

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Thanks for watching “Asia Market Daily”.

I'm Saijal Patel from CNBC Asia.

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