By Elizabeth Murray If someone had told me earlier in that I would be rising daily at 6 a. A non-morning person who knows next to nothing about South Asia?
China's growth engine 1a. Introduction to China's Growth Engine China's phenomenal average annual growth rate of 9. This unprecedented growth has improved the living standards of millions of Chinese people whilst maintaining inflation at an average of 2 percent and achieving per capita GDP of 8.
The Chinese economy has transformed from a centrally planned system whereby it was largely closed to international trade, to a more market-oriented economy with a rapidly growing private sector and progressive moves to becoming the world's leading economic powerhouse.
The country has shown incredible resilience towards the global financial crisis, churning out an economic growth rate of 9. However, in due course, the global financial crisis engulfed emerging markets through trade channels as the recession tremendously lowered demand for emerging market exports.
The crisis manifested China through a These are alarming statistics for a country who claims its continued double-digit growth to have come from private sector expansion and huge state investment in infrastructure and heavy industry.
Since the 's China has adopted an export-led growth strategy such that today its export dependency is the highest amongst major world economies. Fixed asset investment FAI and exports are the predominate engines of China's growth which have attributed to staggering overcapacity and inefficiency.
During the period the average annual growth rate of exports was 29 percent and 24 percent for FAI whereby their combined contributions to GDP growth was above 60 percent, thus emphasising their importance to China's growth Yongding, The persistently rising investment rate has meant that the growth of the Chinese economy is not in steady state as the investment rate cannot increase forever and exports cannot remain constantly higher than that of the global economy.
The collapse of external demand threatens China's economy as the overheating that has resulted from strong investment and export demand could turn into overcapacity followed by sudden chances in inflation to deflation, as already witnessed in China during September to October Stratfor, This unbalanced growth has been achieved through China's exchange rate regime and monetary policy management which have been geared towards maintaining international competiveness' in the areas of manufactured goods and attracting foreign direct investment.
These policy measures to foster exogenous economic growth have led to financial repression through their conflicting relationship with other macroeconomic objectives. The resulting government control in the banking sector has meant that non-performing loans are mushrooming, market forces are unable to prevail and corruption fills the air.
Sustainable growth will only be achieved if essential reform strategies are implemented to enforce endogenous growth whereby economic policy is orientated towards the domestic market. Furthermore, the most fundamental dynamic suffocating domestic consumption is the principle structure of the Chinese financial system that threatens future growth and stability.
China is treading on thin ice whereby investment-driven and export-led growth is not sustainable; it is a shame that it has taken the global financial crisis to expose the vulnerability of China's growth strategy as well as highlight the fatal and detrimental effects it has had on the development of China's financial systems Yongding, The remainder of this essay is organised as follows.
Section 1 introduces China's domestic financial system, which, upon analysis is found to be financially repressed due to export-led growth and political control.
Section 2 suggests an alternative growth strategy by analysing endogenous growth theories, whereby, we find financial development and financial liberalization to have a positive correlation with economic growth.Midea Group’s planned takeover of Kuka AG marks the largest-ever Chinese takeover in Germany, where buyers have been targeting companies with technological and manufacturing know-how.
Relations between the U. S. and Asian countries were not stable after the World War II, because of the so-called “American dominance” in the world. America was suspicious of Communist government of China making an assumption that China could invade all East Asia and so threaten America.
The Promising Future of China's Economy Essay Words | 4 Pages. The Promising Future of China's Economy If China's economy grows as fast for the next 20 years as it has for the past 14, it will be the biggest economy on earth: I feel that China's drastic improvements over the last 14 years are overwhelming, with their Real GNP growing at a.
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