China. Economic Analysis

Population

With nearly 1.5 billion people, China has the biggest percentage of the world population based on country terms. The vast majority of the country’s citizens is largely rural as around eight hundred million people reside in rural areas while the rest, roughly 35 percent reside in urban areas.

Since the introduction of new family planning laws took effect, the population growth rate considerably slowed down (Murphey 10). The Chinese population continues to grow disproportionately as the number of girls born is less than the number of boys, for example, in 2000, for every 100 girls born; one hundred nineteen boys were born. The total imbalance stood at 128: 100 (Murphey 10).

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China falls in the eastern part of Asia. The country stretches around three thousand four hundred miles from the North to the South while stretching approximately three thousand two hundred miles from the East to West. A bigger percentage of the population resides in the rural areas while few reside in the urban coastal towns of the country (Yu 28).

Economic Statistics and Activity

In the recent past, China has been registering between eight and ten percent GDP growth. The country has managed to maintain GNI and per capita GDP at around one thousand seven hundred from the year 2005. The trade volumes between China and the rest of the world continue to increase.

However, it is notable that trade outflow has increased at a higher rate than the trade inflow. Another notable occurrence in China rests on the notion that inflation is under control. In the recent times, it is only in 2004 that inflation was high, as it stood at seven percent. In 2007 and 2008, China recorded around seven percent inflation. In the latter part of 2008, inflation rose to 8.7 percent (Guo 200-9).

The accession of the Chinese economy into the world stage took an interestingly turn in 2001 when China got admission into the WTO. After this admission, China became more open in terms of trade. As a direct result of the opening up, the trade volumes between countries such as the ASEAN countries and Japan on the one hand and China on the other hand, grew rapidly. At the same time, China lowered its tariffs (Guo 200-9).

According to Ilan and McIntyre (45), the opening up of the Chinese market also allowed for an increase in the levels of Direct Foreign Investments in the country. A year after the accession of the country to WTO, Foreign Direct Investment rose from forty-four to fifty three billion dollars. The Chinese trade volumes in 2010 was roughly 3 trillion Us dollars, making it the second largest trading country after the United States.

Despite the recent successes being witnessed in the Chinese economy, one problem has emerged. The country’s employable work force has declined over the years. This is likely to force the country into further problems based on the notion that pension and associated benefits would put the economy under pressure (Guo 200).

Another problem that affects the country is based on the idea that China solely relies on a fixed exchange rate. The effect of using a fixed exchange rate rests on the belief that the system adversely affects inflation since counter-inflationary policies are comparatively less flexible. This system may benefit if some reforms are carried out.The other aspect that characterizes the Chinese economy is inequality.

The coastal cities of the country keep on registering unprecedented growth levels while the rural areas continue facing various hardships. China is thus among the most unequal societies. In the period between 1980’s and 1996, China registered the highest income inequality. At the same time, per-capita incomes were 2.3 times higher in urban areas in 1990. This rate increased to 2.7 in 1999 before rising to around 2.9 in 2000.

Thus, it is rightly alleged that China is split into two countries, the rich coastal megalopolis and the rest made up of poor interior regions. In the coastal megalopolis, per capita incomes are as high as $1,000 while in the interior regions, per capita incomes are as low as less than $200 per year (Guo 2009).

Table 1 proves that average disposable income and the consumption levels in the Chinese republic are relatively low when compared to other developed nations. Another aspect that springs up centers on the expenditure patterns of the Chinese people. Unlike other people from different parts of the world, the Chinese people prefer saving their money than spending. This is based on the Chinese tradition, which lays emphasis on saving for the future generations.

Urban families

(Yuan/person)

Rural families (Yuan/person)
Disposable income3934.941280.5
Consumption expenditure2619.551072.2

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