The Effects on China’s Economy Due to Fluctuation of Exchange Rate.

Topics: United States dollar, Exchange rate, Economics Pages: 4 (1345 words) Published: December 21, 2012
Topic: The effects on China’s economy due to fluctuation of exchange rate.

1. Introduction
China's economy is huge and expanding rapidly. In the last 30 years, the rate of Chinese economic growth has been almost miraculous, averaging 8 percent growth in Gross Domestic Product (GDP) per annum. The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars in 2007. China already has the biggest economy after the United States and most analysts predict China will become the largest economy in the world this century. In 2010, China’s GDP growth was 10.456 percent, totaling US$ 5,745.13 billion, and is expected to increase 11.79 percent in 2011 to US$ 6,422.28 Billion. Forecasts for 2015 predict China’s GDP to reach US$ 9,982.08 billion, growing 10-12 percent per year between 2010 and 2015. China’s population in 2010 was 1.341 billion, and its expected to grow to 1.375 billion in 2015. In 2010, China’s unemployment rate stood at only 4.1 percent, decreasing 4.65 percent from the previous year and expected to decrease further to 4 percent in 2011. Forecasts for 2015 predict China’s unemployment rate to remain at 4 percent from 2011 to 2015. The Chinese economy, in a state of autarky since the days of Mao Zedong experienced some radical transformations after Deng Xiaoping took over in 1978. From being an excessively centrally planned economy it matured to a more open economy from his time and is now the growth engine for the world economy for the past ten years. Driven by rapid economic growth and rising incomes, the standard of living has risen and consumer goods such as cars and television sets which were once reserved for the elite are now within the grasp of the common man. Between 1978 and 2002, the amount of goods passing through Chinese ports had increased ten fold and the number of foreign visitors to the country had crossed over a million. Therefore exchange rate fluctuation plays an important role in...
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