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An Inside Look at the Economic Performance of China in April 2012 - Essay Example

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An Inside Look At the Economic Performance of China in April 2012 In order to know the total value of a countries production, it is important to learn and understand the measurement tools used. One of them is the value of GDP, known as the gross national product…
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An Inside Look at the Economic Performance of China in April 2012
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Download file to see previous pages Recently, the china daily newspaper, reported that the economy is dwindling, a factor that has taken the country by storm, considering that the country has had a booming economic pattern in the last few years. This article looks at the factors that have affected the country’s gross domestic product, and the resultant consequences. According to the china daily, the recently released economic informants have indicated that the country’s economy have continued to slow down throughout the month of April, which has raised concerns that the country’s government will opt to adopt greater policies so that it can ease and help to stimulate the growth of the country’s gross domestic product. 2 The policy makers of the country have resulted to quickly annihilating the industrial production and fixed investment sector, in addition to the disappointing trade figures, factors that have overtaken inflation as the main issues of concern for Chinese policymakers.3 Various factors and measurement tools are used to determine the value of the gross domestic product. These factors are subdivided into four major groups of expenditures. These are consumption, investments, government purchases, and the net exports. However, other means of calculating the gross domestic product include adding up the value of every firm that is involved in the production of final goods and services. In addition, other measures can also be employed such as the total production and the total income.4 According to the China Daily, various risks are associated with this downtrend, which has driven the policy makers to act quickly. According to the analysts, the gross domestic product for the country is expected to reduce in the month of April compared to other months in the year. The reasons for these downward trends are the weak exports and dwindling real estate markets. However, there are other factors that I will analyze, which have caused the economic downtown in the country. These factors are related to consumption, investments, government purchases, and net exports.5 The basic equation for calculating the gross domestic product is GDP=C+I+G+ (X-M), where C represents the private consumption, I represents the gross investments, G represents government spending and (X-M) represents the exports minus imports.6 Production approach In order for China to experience declining economic growth in the in the production sector, a number of reasons can be attributed. One of the major factors is that the country has been experiencing a decline in the number of exports to other countries. As a result, the manufacturers have been hard hit and the ports remain piled due to the low demands of these goods. A major contributor to the low demand of the products is the availability of quality substitutes, which are produced in another country.7 Products such as the mobile phones and the electronic equipment such as the televisions have remained in low demand though the cost of production in the country is low. In addition, the value of the Chinese Yuan has constantly been on the rise due to the recent demand for its products and services. This has made the Yuan appreciate over other currencies such as the Japanese yen, the Australian dollar and the Hong Kong dollar. Consequently, importers from other countries are required to spend more to import this product. The result is that other importers cease buying from China.8 Another reason for ...Download file to see next pages Read More
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