China Falters in Effort to Boost Consumption - Essay Example

Download file to see previous pages In the article namely “China Falters in Effort to Boost Consumption” by Tom Orlik and Bob Davis, published in’ The Wall Street Journal’, various macroeconomic issues relating to China have been discussed. These macroeconomic issues include:

INCOME OF HOUSEHOLD
According to the article, growth relating to the disposable income of urban households has declined to 6.5 % in the first half of 2013 as compared to the first half of 2012 growth rate i.e. 9.7 %. The declined level of disposable income would result in a slowing down of the consumption rate as well. Higher disposable incomes are a prerequisite to boost the economy of a country. This is because a higher level of disposable income facilitates augmenting consumption and a greater rate of consumption in turn leads to enhanced spending which is necessary for economic development (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

RETAIL SALES
Chinese retail sales have been lowered to 12.7% in the first half of 2013 against the impressive rate of 14.4 % oa n a YoY (Year-on-Year basis) in 2012 (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

ECONOMIC GROWTH
Chinese economic growth also decelerated to 7.5% in the second quarter of 2013 against the previous year’s rate. Apart from the Chinese economic growth rate, this article revealed the growth rate related to the United States. The QoQ (Quarter on Quarter) annualized basis growth rate related to the United States came out as 6.9% in 2013 which is slightly up from the previous year’s (2012’s) growth rate i.e. 6.6%. However, this rate was far below than the government's target growth rate i.e. 7.5% (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

INFRASTRUCTURE
The article has revealed that the new residential properties under construction in China have grown to 2.9 % YoY basis in the first half of the year 2013. It also revealed the fact that the real estate prices in China especially in the cities such as Beijing as well as Shenzhen have grown by double-digit (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

2. GOVERNMENT ROLE IN THE ECONOMY
Government plays a vital round the economic development of a country. Government roles involve developing various economic policies for the country, defending the nation’s borders, and operating courts and legal systems. Government plays an important role to regulate the tax system of the country along with investing capital for developing various infrastructures within the country. Government has three major roles in the economy. Firstly, it establishes and upholds various property rights. Secondly, it offers a nonmarket mechanism for allotting limited resources and thirdly it implements provisions that redistribute wealth and income (Parkin 371-372). In the case of the Chinese economy as well, the government has strived to take certain measures in terms of preparing an economic restructuring plan through laying its focus on investment related to ensuring energy efficiency along with information technology. It has also encouraged different institutions to provide lending to the country’s smaller-sized organizations (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

3. IMPRESSIONS DERIVED FROM THE ARTICLE
The article i.e. “China Falters in Effort to Boost Consumption” published in The Wall Street Journal explains the latest economic developments in China. It has revealed vital facts relating to the growth rate of China with regard to various fields, especially urban households. Beijing’s plan to cut focus on undependable exports also creates a hindrance to growth as urban households' level of disposable incomes reduces. The initial part of the article discloses various formations relating to construction and real estate prices, the government's economic restructuring plan, inflation, household incomes, consumptions, retail sales, economic growth,h, and investment spending.

The article has pertinently revealed that in the coming month of October 2013, the government is going to prepare an economic restructuring plan. The greatest threat to this restricting plan could be the global rise in unemployment. Nevertheless, the Chinese labor market is going to remain robust. This owing to the reason that Chinese cities such as Beijing have generated greater than seven million new jobs in the first half of 2013 (Orlik and Davis, “China Falters in Effort to Boost Consumption”).

4. PERSONAL IMPRESSION ABOUT THE CHINESE ECONOMY
There is no doubt that Chinese economy is the world’s 2nd biggest economy. According to the article, Chinese consumption contributed to 45.2% of countries GDP in the first half of 2013 which is down from the previous year’s figure of consumption in terms of GDP contribution. In the first half of 2012, Chinese domestic consumption contributed to 60.4% of GDP. As a consequence, the Chinese GDP growth rate also declined. These are different impacts of this issue. ...Download file to see next pages Read More