The Chinese economy is the second largest in the world; second to the United States of America. China has taken on an important role in manufacturing, producing many of the goods sold in the United States and Europe. In an article written by Damian Grammaticas, China correspondent for BBC, the decline and rebound of the Chinese economy is discussed. Grammaticas highlights that China suffered its slowest period of economic growth in 13 years, witness in the third quarter of 2012, an increase in Gross Domestic Product (GDP) of 7.4%. GDP increased by 7.8% in the fourth quarter of 2012. This shows signs that the economy is back on track. Grammaticas also highlighted that while China did see a decline in growth, their growth rate is still very high compared to other countries, about 2% in the United States. China is a "transition economy", the population is shifting from low-income earners to middle-income earners. This points to future growth showing similar patterns as the economy works out its "growing pains". All in all, the future is bright for the Chinese economy, which is closely tied to the health and stability of the economies of the rest of the world.
http://www.bbc.co.uk/news/business-21071546
As you said, China is in a period of economic transition as their 10 percent growth has slowed down significantly. And even though it has slowed down it is still doing quite well at 7.8 percent. The government had an effective strategy of investing money into the Chinese infrastructure to boost growth through this time of economic transition. Also, the increase in willingness of companies and consumers to invest and spend will play a key role in stabilizing the economy.
ReplyDeleteFurthermore, not only is China going through a key "transition" economically, it is also settling into a new regime. Only a few months ago, the new leader of China's Communist Party, Xi Jingpin was selected to lead this growing power house. There is always economic uncertainty with a change in leadership, thus, it will be interesting to see what kinds of issues, (monetary) and fiscal policies this new government will put in place.
ReplyDeleteChina's economy is certainly still doing very well, and it'll be interesting to see how they respond to the challenges they will be facing in the near future.
ReplyDeleteAmong these, is how China will deal with its demographic trends, which could potentially present a stalling point for economic growth. China will soon experience a large growth in the number of their senior citizens as the population grows and their policies limit births. In addition, China's sex ratio has become more skewed over the year, rising to 117 male children to female in the most recent census, and being as high as 130:100 in some provinces.
China is undoubtedly a center of interest for macro-economists to look at, as they try to overcome various challenges and maintain their growth rate.