Economics BRICS
ECONOMICS ASSIGNMENT
Glossary
SA – South Africa
GDP – Gross Domestic Product
FDI – Foreign Direct Investment
MBA 2013 January Intake
1
ECONOMICS ASSIGNMENT
Question 1
Using appropriate diagram, illustrate and explain what has happened in the Chinese economy since 2005? What have been the year-on-year GDP growth rates and what, in your opinion, has led to this performance? What are some of the other economic problems China seems to be experiencing?
Over the past three decades, China’s policies did not allow its economy to grow, however, from 1979 China shifted from a centrally planned economy to a market based economy and according to Morrison (2013):
China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging nearly 10% through 2012. In recent years, China has emerged as a major global economic and trade power. It is currently the
world’s
second-largest
economy,
largest
merchandise exporter, second-largest merchandise importer, second-largest destination of foreign direct investment (FDI), largest manufacturer, and largest holder of foreign exchange reserves. China economy 2005 - 2012
After the introduction of the various economic reforms, their economy has been moving faster than before. From 2005 onwards, as is seen from Table 1 and Figure 2, China’s GDP has been increasing until the global economic downturn which started in 2008 and affected the global economy thus having a direct impact on the Chinese economy. Due to various obvious factors, the critical one being China’s dependence on exports. The GDP fell from
14.2% in 2007 to 9.6% in 2008 and down to 9.2% in 2009. The effect on aggregate demand
(AD) can be determined by first understand what makes up the aggregate demand. It is the sum of the general consumption, the investment, government spending and the net export.
After the year 2008, some components in the equation, such as
Glossary
SA – South Africa
GDP – Gross Domestic Product
FDI – Foreign Direct Investment
MBA 2013 January Intake
1
ECONOMICS ASSIGNMENT
Question 1
Using appropriate diagram, illustrate and explain what has happened in the Chinese economy since 2005? What have been the year-on-year GDP growth rates and what, in your opinion, has led to this performance? What are some of the other economic problems China seems to be experiencing?
Over the past three decades, China’s policies did not allow its economy to grow, however, from 1979 China shifted from a centrally planned economy to a market based economy and according to Morrison (2013):
China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging nearly 10% through 2012. In recent years, China has emerged as a major global economic and trade power. It is currently the
world’s
second-largest
economy,
largest
merchandise exporter, second-largest merchandise importer, second-largest destination of foreign direct investment (FDI), largest manufacturer, and largest holder of foreign exchange reserves. China economy 2005 - 2012
After the introduction of the various economic reforms, their economy has been moving faster than before. From 2005 onwards, as is seen from Table 1 and Figure 2, China’s GDP has been increasing until the global economic downturn which started in 2008 and affected the global economy thus having a direct impact on the Chinese economy. Due to various obvious factors, the critical one being China’s dependence on exports. The GDP fell from
14.2% in 2007 to 9.6% in 2008 and down to 9.2% in 2009. The effect on aggregate demand
(AD) can be determined by first understand what makes up the aggregate demand. It is the sum of the general consumption, the investment, government spending and the net export.
After the year 2008, some components in the equation, such as
References: Yongding Y., 2010 The Impact of the Global Financial Crisis on the Chinese Economy and China’s http://twnside.org.sg/title2/ge/ge25.pdf Last accessed 03-10-13 National Development and Reform Commission (NRDC) People’s Republic of China, 2013, [online] Available at en.nrdc.gov.cn Last access on 02-10-13 Federal Reserves, 2013 How does monetary policy influence inflation and employment? Morrison, W. M., 2013 China’s Economic Rise: History, Trends, Challenges, and Implications for the United States, Congressional Research Service [online] Available from APCO worldwide, 2010, China’s 12th Five-Year Plan: How it actually works and what’s in store