China's Economy - Economic Reforms, Decline in Employable Workforce, Independence of State-Owned Business Enterprises - Essay Example

The paper “China's Economy - Economic Reforms, Decline in Employable Workforce, Independence of State-Owned Business Enterprises" is a  potent example of an essay on macro & microeconomics. China is the world’s second-largest economy in the world, after the United States. Furthermore, it is the fastest-growing economy in the world with an average growth rate of ten percent for the past three decades. With regards to exports and imports, China is the world’s largest exporter as well as the second-largest importer in the globe. According to the International Monetary Fund, China’s per capita GDP in 2011 was $8,394(Fleisher, 2012). Basing on a variety of news about China’s economy in recent years, it is palpable that China is still recording excellent performances in its economy since the economic reforms were undertaken over three decades ago.

In 2010, China recorded a GDP growth of 10.456 percent which was totaling to $5,754.13 billion (EconomyWatch, 2010). There was an increase to 11.79 percent GDP growth which totaled to 6,422.28 billion in 2011. With a GDP growth rate of between 10 to 12 percent, it is anticipated that by the year 2015, China’s GDP will reach a total of US $ 9,982.08 billion (Fleisher, 2012). There is a greater probability of this occurring as the economy of China is huge and it expands drastically. For instance, in the last three decades, the economy of China has experienced growth of more than ten times. China strives to become the largest economy in the world in this twenty-first century.

With a population of 1.341 by 2010, the unemployment rate in china stood at 4.1 percent in 2010(EconomyWatch, 2010). This is depicted as a 4.65 decline from the preceding year and a further decrease to 4 percent was experienced in 2011. According to Fleisher (2012), forecasts predict that China’s unemployment will remain at 4 percent for the next five years. Even so, the inequalities in income are still great among the Chinese people. In this regard, the Chinese per capita income is pegged at the US $ 2,000. This is slightly below the global standards.

The excellent economic performance in China is greatly attributable to the economic reforms which began in China in the 1970s (Star, 2010). Initially, the primary focus of these reforms was on collective agricultural activities. This began by changing the center of agricultural activities from farming to household activities. With time, the reforms incorporated the liberation of prices and fiscal decentralization.

The reforms also facilitated the independence of state-owned business enterprises. Thus, there was an escalated creation of private-owned enterprises within the service sectors as well. For instance, the banking system was greatly diversified and the Chinese Stock market grew and developed to large extents. As a result of these reforms, the Chinese economy grew and became open to the world.

In 2001 China became a member of the World Trade Organization (Star, 2010). Consequently, there was free movement of goods and services which in turn resulted in the escalated flow of foreign investment to China. Ever since that time, Foreign Direct Investment to China has been on a tremendous rise.

However, China’s economy is recently facing a problem of decline in its employable workforce. In this regard, with the success of the government's move to keep its population growth at 0.6 percent through the one-child plan policy, the old-age pensions and other benefits pose a major challenge on the Country’s national output (Fleisher, 2012). Another eminent problem facing the Chinese economy is the continued reliance on a fixed exchange system. This has adverse effects on making counter-inflationary monetary policies inflexible.

Thus, on the basis of the foregoing analysis of the Chinese economy, it can be concluded that, with the increase in the Chinese Stocks, coupled with relative socio-economic stability, the Chinese economy is bound to become the world’s leading economy in this century.