Hardly a day goes by now without some Chinese firm striking a deal to buy assets overseas, but the country’s best prospects for growth may be right in its own backyard. Vivi Lin in Beijing reports on how the world’s workshop is fast becoming one of the world’s top consumers.

China Investment Summit, August 31-September 2, 2009

China holds the undisputed position as workshop to the world, but it’s also fast becoming one of the world’s top consumers in its own right. As the global financial crisis approaches its second anniversary, China’s role in pulling the world out of recession is gaining growing attention as cash-rich Chinese consumers spend billions of dollars under their government’s $585 billion economic stimulus plan.

The huge spending spree has helped the Shanghai and Hong Kong stock markets rise more than 70% and 40% this year, respectively, as investors from both home and abroad look to get a piece of an economy set to overtake the United States to become the world’s largest by 2030. Even as the rest of the world suffers in recession, China’s GDP is expected to grow 9.4% this year and 11.9% in 2010, according to Goldman Sachs, which recently upgraded its forecasts for the country. Underscoring the growing clout of its domestic market, China’s retail sales surged 15% in the year to July and urban investment rose 33%, even as July exports tumbled 23% year-on-year.

Reuters China Investment Summit, held in Beijing, Hong Kong, Shanghai and Taipei from August 31 to September 2, will shine the spotlight on a wide range of foreign and domestic Chinese players as they jockey for position in one of the world’s fastest growing markets with 1.3 billion consumers. The interviews will generate exclusive stories and investable insights, as well as other multimedia offerings which will be immediately available only to Thomson Reuters clients during the summit.

China’s real estate sector has a chilly winter ahead, said Pan Shiyi, chairman of Beijing property developer SOHO China Ltd. And he had interesting, alphabetical way of describing it.

“I look at the shape of the real estate market and I imagine it bottoming out as a letter “L”. If after the snows earlier this year, China had loosed up its monetary policy, we would have seen a “V”-shaped market. If they had loosened up before the Olympics, we would have seen a “U”. But for them to release new policies now, like reducing the interest rate, it’s already an “L”. I don’t know when the market will come back up.”

More pressure will come to bear on Beijing’s property market, especially the market for lower-end, residential units, as projects built on land released for development in 2007 are completed, Pan said, speaking at the Reuters China Summit in Beijing on Thursday.

“Most developers are building common, residential units. As these units come onto the market, they will deal it a huge hammer blow,” Pan said, adding that China’s policy since late-2006 of promoting the construction of residential units of less than 90 square meters would soon be felt.

“This year in the fourth quarter, the effect of this policy will hit the market and reshape it…. The price pressure will be biggest first on real estate outside the fifth ring road, second on units 90 square meters and below, and lastly on those priced at 8,000 a square meter or more.”

By Lucy Hornby

Personal wealth is soaring in China, and Standard Chartered is hoping to bring out credit cards and boost its private banking operations to tap that growth, Christine Ip, head of consumer banking, said at the Reuters China Century Summit.

Less than 1 percent of China’s population has credit cards, and more than half of those accounts are inactive, according to McKinsey & Co. Credit card profits in China could hit $1.6 billion by 2013, McKinsey said.

The late Chinese leader Deng Xiaoping once proclaimed that “To get rich is glorious”. So many Chinese have taken his words to heart that there‘s now a growing need for expert help in managing the cash mountain. More and more people are sitting on assets worth more than $1 million but need advice on how to venture beyond the savings account at their local bank. Johnson Chng, a partner at Bain & Company, has sliced and diced the Chinese wealth management sector and has some advice for foreign banks on how to approach China’s thriving super-rich. Click here to listen to him.