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    Lotus - A trusted name in family travel

    Last November, there was a new president in the US, and many adoptive families may also recall there was a change in China’s president.
    In November 2012, China’s Communist Party completed its most sweeping transfer of power in a generation, only its second orderly hand-over in more than six decades of rule. The 18th National Congress unveiled a new leadership slate headed by Xu Jinping, the son of a revered revolutionary leader and economic reformer.  He is tasked with keeping a sustainable model of growth and managing the country’s rise as a global power.
    After a confirmation vote by the party’s new Central Committee, Mr. Xi, 59, strode onto a red-carpeted stage at the Great Hall of the People accompanied by six other party officials who form the Politburo Standing Committee, the elite group that makes crucial decisions on the economy, foreign policy and other major issues.

    Differences in a Decade

    Adoptions have been taking place in China since approximately 1994, with the heaviest period of adoptive families traveling to China to meet their sons or daughters, occurring around 2005.   Families who have not yet taken a return heritage trip have many fond memories of the way things were during their adoption trip(s).   However, so much has changed in China since many families took their adoption trip(s), that it seemed like a good time to highlight some changes that have been occurred in the last decade. Lea Xu and Louie Yi, co-owners of Lotus Travel, have lived in Guangzhou with their three girls for the last 5 years and also echo the sentiment that China has undergone significant shifts.     

    The world's second biggest economy has undergone a massive transformation within the last 10 years. From rapid urbanization and economic growth to social and political development, China has marked many milestones and firsts in the past decade, which highlights its significance on the global stage.


    Rapid Economic Growth

    Riding the wave of rapid economic expansion, China's growth engine has remained strong over the past decade. China's economy grew from being the 5th largest in the world in 2002 to 2nd only to the U.S.
    Dr. Zhu Haibin worked as a senior economist for the Bank for International Settlements for 10 years and came back to China last year to head the China Economic Research team at JP Morgan.   He says, "It’s probably the biggest event in the global economy in the past few years, that China has surpassed Japan to become the second biggest economy. The market widely expected that in 10 or 15 years, that China will also surpass US to become the biggest economy in the world."

    China has already overtaken the United States to become the world's biggest market for grocery shopping. The Chinese grocery sector will continue its fast growth over the next few years according to grocery industry researchers IGD. That trend brings opportunities for both Chinese and international retailers, but economists warn it will also put upward pressure on already high food prices. Driven by a growing population, a move to more expensive foods and robust economic growth, the Chinese grocery sector was worth 920 billion at the end of 2011, while the US market slipped to second place at 867 billion.  "China's grocery growth story is phenomenal," said IGD's chief executive, Joanne Denney-Finch. "Despite its various logistical and bureaucratic challenges, China is a crucial growth market for many of the world's largest grocery retailers.

    Rising Middle Class & Expectations
    In a 10 year period, the per capita income of urban residents rose from $827 in 2001 to $3,711 in 2011, according to the National Bureau of Statistics of China. That's a nearly 350 percent increase. China's average minimum wage has been rising an average 12.5 percent annually from 2006 to 2010, and the government announced earlier this year that minimum wages should grow by an average of at least 13 percent during the next few years.

    Technology
    By sheer numbers, China is experiencing a technology boom unlike anywhere else in the world. Its internet population surpassed half a billion users in 2011 — making it by far the world's biggest online market. That's a more than 362 percent increase since 2005. Even then, the internet usage was at 38 percent in 2011, which presents significant further growth potential.
    About four out of 10 Chinese use the internet, accounting for a total of 538 million users, according to state-run agency China Internet Network Information Center (CNNIC). That population is set to jump to 700 million users by 2015, according to the Boston Consulting Group (BCG), which is more than double the entire population of the U.S.

    Exports and Growth
    From 2002 to 2011, China’s GDP grew at an average annual rate of 10.7%, and moved up from the sixth biggest economy to the second place in the world. In the same period, per capita GDP jumped from 1,000-plus U.S. dollars to 5,432 U.S. dollars. That made the Chinese market a target for the world’s corporations, won its leaders an expanded role in global governance, and encouraged critics in the West to soften their tone on human rights.

    China’s entry into the World Trade Organization in 2001 ushered in an export boom, with exports averaging nearly 30% annual growth from 2002-07. But as China has grown to be the world’s largest exporter, with more than 10% of the global market, the room for further expansion is limited. Rising wages, and a stronger yuan, have also taken a toll on export competitiveness.
    A survey of by Wang Xiaolu in 2008 found that the top 10% of China’s urban dwellers had average disposable income of 139,000 yuan a year, 7 times more than average wage earners, and 25 times more than the bottom 10%. With rich households saving more of their income than poor, that income inequality helps explain China’s high savings rate and low consumption.

    Exchange Rate
    China’s exchange rate has been liberalized. The yuan has risen 31% against the dollar since the peg was broken in 2005. In 2012, the band in which the yuan trades was widened – giving the markets a great say in how it moves.
    A diminished supply of workers is driving up wages at a rapid clip. Liu Xingshun, a 40-year-old migrant worker from Jiangxi province, currently working in a furniture factory in Shenzhen, recently explained he made about 1,000 yuan ($160) a month in the year 2000. Now he makes 4,000 to 5,000 yuan monthly.
    Higher wages are essential to fuel an increase in China’s household consumption. But key elements of the reform agenda, from opening state-dominated sectors of the economy to competition, to strengthening farmers’ land rights, and reforming the inequitable system of urban and rural residence rights,  are not yet in place.

    Cities & Population
    Amy Eldridge, Executive Director of Love Without Boundaries recently took a look at changes in international adoptions; specifically focused on China during the last several years.   Read her article here: Changes to China AdoptionIt’s a” must read” on this topic. 
    The new Chinese cities face big challenges. Forecasts indicate there will be over 200 Chinese cities with a population of over a million by 2025. The issue is becoming ever more pressing – rural unrest over continuing poverty as well as land seizures due to voracious development is widely reported, even in China's heavily censored media.   The speed of urbanization is a significant concern. Chengdu has become a test case for how China resolves these varied challenges. It has been named as one of China's "pilot reform regions", giving local authorities extraordinary powers to experiment.
    Chengdu's mayor, Ge Honglin, claims that the city has avoided some of the problems associated with migration into the cities by encouraging families to stay in the countryside. "The first thing I did was to improve the conditions – schools, shops, garbage collection, the sewage system. We had to cut the gap between rural and urban areas. If people could have a brighter future in the countryside, they'd stay there. So we're not seeing people swarm into the city. Instead there are people in the city considering moving to the country."
    Chengdu modified the household registration system in use across the country, known as hukou, which previously prevented rural migrants from registering as city dwellers and benefiting from the city's welfare services. But at the same time it has extended such services into the surrounding countryside. Farmers as well as urban workers can now receive pension insurance, allowing women over 55 and men over 60 to claim a rudimentary pension once they have paid premiums for at least 15 years. Hundreds of new schools have been built in the villages surrounding Chengdu; successful head teachers from city schools are being recruited to move into the countryside, while partnerships between struggling rural schools and the best urban schools are being set up.

    Sources:

    ITV's Angus Walker;  Eric Baculina of  NBC News; Andy Wong/Associated Press; China Real Time / Tom Orlik, MinJung Kim, Lilian Lin and Olivia Geng; CCTV reporter Guan Xin; Paul Webster /The Observer

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