Economics – China Case Study
With the use of statistics explain the current strategies being used by China to promote economic growth and development. China is one of the fastest growing economies in the 21st centuryћ it has sustained a high rate of average annual GAP growth of around 9% since 1995. Many strategies and policies have been implemented to ensure these periods of positive GAP growth for maximum periods of time. The major strategies undertaken by the Chinese government currently are all apart of the 5-year plan that are a series of social and economic development initiatives and has been established in the economy since 953.
The five-year plans of the Chinese economy have been implemented since 1953 and are currently underway with their twelfth guideline that lasts from 2011 till 201 5; the themes and targets in the plan are the basis for China’s strategies in sustaining not only economic growth but economic development, sustainable energy sources and raising the living standards of its population. An important goal of this plan is to develop China’s western regions.
This goal is particularly important, as across China in past years there has been a division of income across the geographical range of China. From the eastern provinces
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The Chinese government aims to develop this western region by developing infrastructure such as transport, hydroelectric plants, energy and telecommunications. Of which the Chinese government have already started 92 key construction projects in western regions, with a total investment of more than 1. 3 trillion Yuan (An, 2013). They aim for this investment to increase Job opportunities and thus increasing standard of living over this western region.
Another goal for China is to continue the transition of their economy from being dependent on exports to being driven by domestic consumption, as it would be less risky and more sustainable over time. The main reason for this transition was the Global Financial Crisis (SGF) in 2009. In 2007 China’s growth rate peaked at 14. 2%, which significantly dropped to 9. 2% in 2009 due to the impact of the SGF on China’s exports and foreign investment (Riley, 2014). The Chinese government responded to the SGF by implementing a IIS$Bibb fiscal stimulus package to maintain domestic spending.
This is important as it reflects the effect any sudden fall in export can have on the economy, essentially if exports of China were to fall what happened in the SGF then the economy will be to dependent on it to not be affected. This fall in GAP Economics – China Case Study By Corey notational goal then government expenditure would need to shift to other areas of the economy and partially away from the trade sector as if they are constantly depending on trade to raise GAP levels primarily, they will be constantly set back during each recession the International Business Cycle (BBC) experiences.
This goal is to essentially reduce the Chinese economy’s susceptibility of being affected by economic crisis’ as significantly as it was in the SGF. China aims to increase domestic consumption in order to balance out the ratio contribution of imports to exports to China’s annual GAP. To spark this domestic demand one strategy the Chinese government have conducted is the implementation of temporary tax cuts and promises of fresh credit for small businesses.
These tax cuts will allow small businesses to be able to employ more staff, in doing so raising employment levels which will improve the lives of Chinese citizens, which is a goal in itself as apart of China’s Five Year Plan, and allow small businesses to increase wages across the Chinese economy This chain reaction will lead to positive economic growth and development as Chinese citizens’ living tankards will rise due to the increase in employment opportunities and increase in wage rates.
This marks an increase in economic development in China as living standards and wage rates would have increased which leads to an increase in consumer spending and consumption and therefore domestic firms are able to take on more staff and in doing so reallocate labor back into domestic firms. The outlining of economic goals in China’s Five Year Plan summarizes the strategies and goals set by the Chinese government that will ensure an increase in the living tankards of those in Western Regions of China who suffer from a division of labor and to improve the lives of Chinese citizens across all of China.