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Macro economics - Research Paper Example

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This paper talks about the states of national economies of China and India, which are considered as two of the most prominent emerging countries in the world today. Emerging markets are currently restructuring their economies along market-oriented lines and offer opportunities in different fields…
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Macro economics
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Download file to see previous pages China’s main industries consist of mining iron, coal, aluminum and other metals, armament manufacturing, machine building, petroleum, textiles, automobiles, aircraft, communications and telecommunications, food processing and all sorts of consumer product manufacturing to name just a few. 1.2. Exchange rate. The official currency of the PRC is called Renmimbi which means “people’s money. It has an ISO 4217 code and symbol of ?. The Renmimbi has been traditionally pegged to the U.S. Dollar. The devaluation of the currency in 1980s to stimulate Chinese exports caused the currency decline from 1.50 in 1980 to 8.62 Yuan to a dollar in 1994. CIA reported following status of YUAN: In July 2005, China revalued its currency by 2.1% against the US dollar and moved to an exchange system that references a basket of currencies From 2005 to late 2008, cumulative appreciation of the renmimbi against US dollar was more than 20% China’s exchange rate remained pegged to the dollar from onset of global crisis In June 2010, Beijing allowed resumption of a gradual appreciation of renmimbi Source: CIA World Factbook Fig. 2. USDCNY Exchange rate Fig. 2 shows the Chinese Yuan Exchange Rate Chart (USDCNY) presenting the depreciation by 4.33 percent during the last 12 months. Source: Trading Renminbi yuan (RMB) per US dollar - 6.7852 (2010) 6.8314 (2009) 6.9385 (2008) 7.61 (2007) 7.97 (2006) 1.3 Inflation rate. Report of Inflation in China as of March 2011 is 5.4 percent, a rise from previous 4.90. Record shows that from 1994 to 2010, the average inflation rate in China was 4.25 percent that went up to its highest rate of 27.70 percent in October of 1994 and a...
This paper is one of the best examples of comparison of the recent performances of economies of China and India. The World Bank considers China and India as emerging markets ,whose economic growth has been accompanied by even more rapid growth in their trade that will affect their relations with other trading partners.
Based on the GDP performances of China and India, it is clear that these countries have taken their lead in the economy and could rightly belong to be called an emerging economy. Its big population has been an asset instead of a destabilizing factor in the economy. China still has to resolve issues concerning its devaluation policy that many countries are against.
China has experienced rapid expansion of economy after it changed from a centrally planned system to the open market structure. In 2010 China became the world’s biggest exporter, and on the basis stood as the second-largest economy in the world after the US.
In China, a country in transition from a closed system to an open market system, government policies stabilizes its economy through monetary reforms. In India, a lot of infrastructure support for technological development is observed to become the leader in IT services. Services and industry have improved in India, but agriculture has been left behind in terms of share in GDP.
While the economies of both countries are improving, its internal effect to domestic consumption has problems. Unemployment rate is still high and poverty level must be addressed by the government.

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