The Growth of China's Economy Essay

In 2008, the Global Financial Crisis broke out; both the American economy and the economy in the West suffered a hard blow. However, a big economy system in the East emerged unexpectedly. China is now able to challenge the America’s decades-long dominant position in economic area. Started during the middle of 1990s, China’s manufacturing industry developed rapidly that billions of exports were floating out, and China was given the title of “the world’s factory”(BBC). By the end of 2010, China with a GDP of $5.8 trillion, surpassed Japan’s GDP of $5.48 trillion, became the world’s second largest economy system (BBC). China also exceeded Japan became America’s largest foreign securities holder. Since then, China has been seen as the US’s

With a gross domestic product (GDP) calculated at the equivalent of $11.06 trillion and an average growth rate of 1.84 percent, China has the potential to surpass the United States' economy by the year 2030 (citation 1). China's rapid GDP growth is caused mainly by state investment, high exportation, and successes with e-commerce (citation 2). However, China was not always a country eager to open its doors to economic opportunity. Instead, the government strove to maintain self-dependency and to limit influence from other countries. Through the decades of isolation, many countries attempted to gain trade relations with China. These attempts usually were unsuccessful. It wasn't until the late twentieth century until China began forming the economic

China as an economy has change rapidly over the past few decades. It has gone from a war struck country prior 1978, in which the economy was greatly effect, to one of the largest

China, the most populous country in the world, has experienced an abnormal growth rate in Gross Domestic Product over the past decades. However, facts and statistics indicate an economic growth slowdown of the Asian giant.

In the past years, the economy in China has grown at a considerably high rate averaged at nearly 10% annually. Due to this enormous growth, China now influences the economy of virtually every country all over the world. This is more apparent and frightening, considering the United States economic relationship with China. Until 2005, China pegged its currency to the U.S. dollar, but as from July 2005, it linked its currency to other currencies rather than dollars and let its currency appreciate by 2.1%. The central bank of China did this by buying and selling the dollar dominated assets in exchange of printed Yuan in order to eliminate excess supply or demand for the Yuan. Due to this, the exchange rate between the dollar and the Yuan, basically, remained constant irrespective of changes in economic factors which could have otherwise destabilized the Yuan relative to the dollar.

China is a country that affects the world and the way people live. China has the second largest economy and it grows through time. They have a large wealth of many minerals and natural resources, which include coal, iron, copper, limestone and much more. These reserves of mineral and natural resources help provide China with a steady foundation for rapid industrial growth. China is quickly growing and it’s population is increasing enormously. It’s booming economy and industry are a huge catalyst for the economic status of many other countries, of those including the U.S.

On the year of 1978, China was one of the poorest states at the global stage. During that time, China’s true per capita GDP was just one-tenth of the Brazilian grade and one-fourtieth tha United State of America grade. The following time, the true per capita GDP in China has grown to more than eight percent (8%) as an everage level in every year. The result from that increasing, has made China today holding the true per capita GDP at the same grade as Brazil and merely one-fifth of the United State of America grade. Nowadays, China become the second-largest economy at the global stage because of the fastest and perpetuated development in standard of living has made in a state with exceeding twenty percent (20%) of the globe’s population. However, China’s economic transformation is said has no historical law in the angle of steps and scale (Xiaodong, 2012, p. 103).

During the crisis, the greatest issues that China faced were a decrease in income level, many of its companies went under, and there was tremendous pressure on the yuan to devalue (Yongding, 164). The Chinese government at this time had concluded that being pegged to the US dollar at a market exchange rate that equaled about 1 USD= 8.28RMB was the best chance they had to keep the yuan stable (Frankel and Shang Jin, 595). The stability that the US dollar was able to provide the Chinese yuan helped the issues it was facing not become even bigger ones. If the Chinese yuan had devalued more than it

risen to seventh in the world, and its economy is growing at over nine percent

China’s growth rate is plummeting in recent years and is showing signs of falling further in coming years. Governments effort such as monetary stimulus, stock market bubble and bond market bubble has failed to stabilize economy, making only small and temporary effects. Authorities are trying to boost investment demand through monetary policy but industries already are in state of overcapacity; a result of force saving policies; and therefore real effect is showing as weakness in currency exchange. Commodity market is collapsing in greater rate each year and situation seems like Chinese economy might be moving toward depression.

The International Monetary Fund (IMF) recently highlighted that global recession risks in 2016 had risen, but attached a zero percent chance that China would experience this fate. A scenario of an economically contracting China would send deflationary scares spiralling: government bond yields in advanced markets, particularly safe-haven countries, would collapse and perhaps go negative as investors switched their focus to real returns. Although China is unlikely to experience negative growth in the near term, the economy is clearly growing below trend, thereby imparting a deflationary bias on activity. One possible way to eradicate such forces is to export them by weakening the yuan. The decision by the Peoples’ Bank of China (PBoC) to allow the currency to weaken in August sent shock waves around global financial markets, because it highlighted the risks of further escalation in the Great Currency War. Furthermore, the decision to at least contemplate devaluation to solve deflationary issues was viewed as mimicking the policies of the European Central Bank (ECB) and the Bank of Japan (BoJ). The latter is an old hand at fighting the persistence of falling prices, but the fact is that it is still paying a heavy price for failing to contain the forces that were producing a bubble economy, notably a major expansion of bank lending and corporate debt issuance. Japan consequently experienced a so-called balance sheet recession that

China has sustained a high rate of average annual growth in real GDP 10.1% between 1998 and 2008. The growth rate peaked at 14.2% in 2007 but slowed to 9.2% due to the impact of the Global Financial Crisis (GFC) on China’s exports and inflows of foreign investments. Hence, in 2015, China’s growth was 6.9%, falling to 6.7% in 2016 and forecast at 6.7% in 2017. Despite these recent slowdowns, the Chinese economy has seen a rapid rise in overall economic performance over the past years due to the introduction of globalisation. The Chinese government has capitalised on growth opportunities through policies promoting trade and foreign investment. Through the “Great Leap

So it is easy to conclude that china’s economic markets are sluggish and weak, for these reasons, China should adopt this monetary strategy to deal with these series of problems, and keeping the healthy and steady growth in economic markets. On the other hand, China wanted to increase the monetary (Yuan) liquidity, further, wanted Yuan to become international reserve-currency. Broadly speaking, China hoped to consolidate its central position in the global economic markets. In conclusion, pulling the healthy and steady growth internally and pushing Chinese monetary (Yuan) circulate in the international economic market, externally are the two key factors drove China to devalue Yuan.

There has always been a persistent hustle between reality and its abstractions. Seldom do we find that a model aimed at capturing a portion of reality has provided both accurate and consistent results. Such a friction between reality and a proposed model of it can also be found in the case of China’s credit policy. The People’s Bank of China (PBoC) fixed the exchange rate of the yuan to the US dollar in the middle of the 1990s. In spite of the currency turmoil and depreciation during the Asian crisis, the Yuan Renminbi (RMB) was held at 8.28 to a dollar although there was a 50% depreciation. After 2005 the RMB exchange rate was only allowed to appreciate on tiptoes at 5% a year to the dollar before the Great Financial Crisis

In 1997, Asia financial crisis broke out. It brought a huge and negative influence on economy of Asia, even the world economy. Financial crisis which is the value of financial assets decline, lots of financial institution out of business or stock market crash. Currency plays an important role in the market. It is a base that keep economic stability in the country. When currency change significantly, the country’s economy in turmoil. The financial crisis started from Thailand, and then Philippines, Malaysia, Indonesia and other Southeast Asian countries, domestic currency depreciate and stock market downfall. Neal Maroney wrote that “six Asian countries (Indonesia, South Korean, Malaysia, the Philippines, Taiwan and Thailand) from October