China's Economic Analysis - Research Paper Example

China’s Economic Analysis This research paper is to analyze China’s economic analysis based on its different facets. These facets are as illustrated and explained below; I) Population China’s population has been on a decline in the present past. It has a population growth rate of 0.47% ranking it 159th in the world statistics. Although China has registered the largest population in the world, its growth rate has been on a downward movement recording rates lower than countries such as the United States. The total fertility rate of the Chinese women, which account for the average number of children a woman in her child-bearing age can expect to have during her lifetime has also gone down to a figure of 1.4, lower than that which has been recorded for the past years Since the introduction of the one child policy, which was designed to reduce the birth rate in China, the statistics on the birth rates has gone tremendously to lower heights. This slower growth rate in China has been matched by the ageing of the population. People above the age of 60 have been on the rise and represent a significant proportion of the population. The effect of this economically is that if the trend goes on, then an increasing dependency on the young working population by the elderly will be experienced Cai, Fang and Yang Du 21) The government too would be affected in the sense that it would have to increase its pension funding and the health care systems for the elderly. Gender disparity though poses a future huge challenge for China. According to its 2010 census, the male population was recorded at 51.27% of its 1.34 billion population. The females on the other hand accounted for a 48.73% of the total population. At present the number of boys in China is more than that of girls by a figure recorded at 9 million. As much China remains the most populated country in the world, there exist major variations in the population densities in its different regions. The northern and the western regions only have a few million people while the eastern area has close to 1.3 billion people. The majority of the citizens live in the eastern areas in the major cities and it is concentrated towards the eastern parts of the mountains and south of the northern steppe (Banister and Judith 32). II) Economic statistics and activity China has had a rise in its economic growth in the reform period and this too has led to the rise in the per capita income. Over the past decades, China as a country has exhibited dramatic economic growth which has also been accompanied by a sharp increase in income inequality. Its GDP per capita increased from 311 yuan, in 1974 within the pre reform period to 1644 yuan in 1990 and later to 12,336 yuan in 2004 as reported by the National Bureau of Statistics. During the years 2001 to 2003, Chinese economy was reported by the World Bank to have increased by 10% in every year though the real income of the 10% poorest people decreased, by the same report, by 2.4%. This statistical inference of China’s growth in its GDP values, of the latest release is represented graphically as follows; This growth in the economy though has come with it a greater income disparity among its citizens. In the same reports, income inequality was also reported to have increased from 0.273 in 1974 to 0.357 in 1990, and then to 0.469 in 2004. In the year 2006, those who were on a salary contributed as much as 60% of the whole government tax income, while in the same light the rich contributed only 10%. The inequality among the Chinese populace has brought with it a lot of social dissatisfaction, which has been exhibited through acts such as demonstrations, civil disorders, strikes in various companies and an increase in criminal offenses (Li, Yong, L Yao, and Yeung 40). In the modern era, it has become a policy responsibility of the governments to try to maintain a stable and attractive currency with regard to foreign trades. Several nations, China included have adopted measures that have been aimed at preserving the trade surplus and maintaining a positive balance of payments. These nations have thus tended to provide protection for their domestic products foreign competition. This protection includes a set of policies normally aimed at protecting a nation’s industry products from foreign competition. These policies have included among imposing of quotas, tariffs and embargos. A tariff is a tax usually imposed on goods imported from a foreign country; this tax helps in raising the prices of such goods hence making them less attractive in the local markets. A quota on the other hand represents a limit placed usually on the amount of a specific good that is allowed into the local market; this helps in protecting the indigenous products from being phased out from the markets by the foreign products. An embargo is a policy statement completely prohibiting the importation of a particular good into a country. Such measures although to do not sufficiently promote free trade are necessary tools in helping guard and protect the local productions and a country’s economy (Li, Yong, L Yao, and Yeung 67). It further helps in protecting the employment creation structures within a country’s boundaries. Such measures have been placed by the Chinese government in helping in also to maintain a positive balance of trade. China for instance has continued to restrict United States production of autos, steel and beef from infringing its markets. Other sectors including that of the healthcare sector, the energy and financial sectors have had restrictions especially when it is to be provided by the foreign industries. In the recent developments however, The Chinese Sate council has been able to approve less trade restrictions and adjust particular administrative measures regarding foreign investments in some industries like that of Shipping, Civil Aviation, Automobiles and infrastructural development in the Shanghai Pilot Free Trade Zone. Import licensing, where licenses have to be provided for particular import products is also being practiced by the Chinese government in order to be able to regulate on the amount and quality of the products being brought into the country. Most of these trade restrictions practices always have an objective of making imports less attractive to the locals in order to promote local productions (Li, Yong, L Yao, and Yeung 66). Regarding the exchange rates, the renminbi has been regarded as the legal tender in the mainland China though not in other areas including Hong Kong and Macau. The currency is often issued by the people’s Bank of China. Until the year 2005, its value had been pegged to the dollar. China, in its quest to transition to a market economy from a central planning system and to involve itself actively in the foreign trade, had the value of the renminbi reduced so as to increase its competitiveness in the world market. Contrary to what was happening before to this currency, the Chinese government and its banking system has put in place mechanisms to enable the appreciation of the renminbi. After the year 2006, the currency in the exchange market has been allowed to float and be concurrent with the world economy and has become at the moment the 8th currency traded most in the world. The government too has promised through its major policies to make the Chinese exchange rate more flexible. The exchange rate of the Chinese government and the convertibility of its currencies have undergone a lot of revolutions since the pre reform era. During the command economy era, the value of the renminbi currency had been set to unrealistic values and with stricter policies. A dual currency was instigated in 1978 and where renminbi’s used was only allowed domestically. Later in the 80’s and 90’s, the Chinese RMB was made more convertible and currently it has been made to be fully convertible. The inflation rate in the Chinese context often refers to rate of inflation usually based on the consumer price index. This index normally shows the changes in the prices of a standard package of consumable goods bought by the Chinese households. In order for the inflation rate to be determined, the Rise of the Consumer Price index is noted and its percentage calculated over a given period compared with the consumer price index of the past period. The CPI of the recent months has been reducing (Li, Yong, L Yao, and Yeung 79). In the Chinese customs duties department, there is the General Administration of Customs who are usually responsible for customs processes and for ensuring that customs laws and regulations are adhered to throughout the nation. These personnel are under a statutory duty to enforce the law diligently and their duties involve Monitoring and controlling merchandise which passes through the customs territory of China Collecting of any applicable duties, taxes and fees on imported goods Investigation and prevention of smuggling activities into the country Compilation of trade statistics Enforcement and carrying out customs laws and regulations After China joined the World Trade Organization in 2001, its tariffs reduced tremendously leading to a lot of revenue loss to the government. The After effect of this was the subsequent increase in the revenue collection through General Administration of Customs. Custom malpractices investigations were also enhanced in major ports of entry of products and in the common trade zones. III) Channel of distribution (Macro analysis) The channel of distribution in the Chinese market has undergone a lot of transformation over the past decades. In consideration of the consumer market, a lot of manufactures and retailers have gone the extra mile to improve the supply chain efficiency and expand the distribution networks of their products. There are a lot of challenges that have been experienced especially with regard to the government policies in this sector thus the process of product distribution has remained a complicated task. Before the reform period, the wholesale sector had been widely controlled and regulated by the Chinese government and this was done to help in rationing the wide range of products that existed in short supply (Tang, Christopher, Chung-Piaw and Kwok K 27). The consumer goods were majorly delivered through the Supply and Marketing Co-operatives or through some government controlled supply systems. In the economic reform period the degree of central planning was reduced tremendously and after the entry of China into the World trade organizations, market liberalization was introduced. After this period, foreign distribution companies were offered wholesale licenses and have thence been allowed into the wholesale and retail business. A lot of wholesale joint ventures have seen been set up by these foreign companies which have dealt with goods produced both locally and those that have been imported. To date, the distribution modes and channels have become modified and diversified with an increasing number of players and due to the increasing competitiveness and the complexity of the market, the distribution systems have become effective and more customer driven. The role of wholesale middlemen has been integrated into the supply chain with some of them obliged to the buyout of the manufactured products while some paid on a commission basis. Most of these though are government owned enterprises with the local distributors and agents leaning more on the selling and logistics aspects in the channel distribution of products. These they have managed to do in specialty shops and department stores that have taken the center stage in retail business (Tang, Christopher, Chung-Piaw and Kwok K 27). IV) Media The media in China comprises of radio and television, the print media and the use of the internet. Although most of these have been used to successfully drive the economic agenda of the country, they have come under a lot of scrutiny and by the national government and have received a lot of restrictions and jurisdictions placed on them by the same government. Internet censorship and control in China has been labeled as the most advanced in the world and has been conducted under numerous varieties of laws and regulations. More than sixty regulations have been laid down by the government regarding the internet use and these have been meant to be implemented by the provincial branches of ISPs state-owned companies and organizations. The government is reported not only to block the contents of the website but also control the internet access by the citizens. These restrictions have also been extended to the radio, film and television media outlets usually regulated by the State Administration of Radio, Film and Television. The government for instance put limitations on the 34 major television stations restricting them only 2 90-minute entertainment shows per week. Restrictions on the same stations were also put on the number of hours dedicated for news stories, which had to be approved by the state. The government also banned the audience ratings to these stations. With such a control in their operations, the media hasn’t been as effective in the economic improvement in the country (Zhou, Yuanzhi 44). Under such circumstances, vices such as corruption are carried unabated. With regard to the cost of the population percentage reached by these media outlets, the use of the internet has taken a centre stage. The internet use involves just the creation of websites which can be viewed by people both locally and internationally and is less costly. A case in point is the Huitongda Networks Co. that reported to have increased retail sales through the use of the new wholesale e-commerce site, this they did by cutting off the several players existing in the supply chain of their good and product (Zhou, Yuanzhi 72). V) Transportation systems Transportation sector is of great importance in China mainly because it stretches through a vast territory and provides homage to a huge population. The first railway line in China was built in 1876, and the first highway construction in 1906. The Government later began venturing into the civil aviation transport sector in 1929. A lot of developments and improvements in the transportation systems have spurred since then to date. The total length of the constructed highway in the country clocked 4,237,500 kilometers by the end of 2012 and by the year 2013 those that used the rail transport reached 2billion in number. With this expansion both in scale and quality, the transportation sector has continued to significantly contribute to society advancement and more importantly to the improvement of the Chinese national economy (Zhang and Fengbo 44) The Chinese transportation system currently constitutes a comprehensive and integrated system of modern transportation including railway transportation, civil aviation, road traffic and water transportation. This transportation system has also improved over time and been advanced technologically. It’s been fast, convenient and improved in safety and accessibility. In larger cities, certain modern modes of transport including electrified railroads, express highways, metros and light railways, have increasingly become common too. This massive improvement of the of the transportation systems especially in the city areas has helped in spurring the Chinese economy. Better transport systems mean increased accessibility and the movements of goods and people become enhanced. The diversity too is been good for the economy as the transportation of goods too prefer different modes (Bai, Yong 22) Work Cited Bai, Yong. Sustainable Transportation Systems: Planning, Design, Build, Manage, and Maintenance : Proceedings of the Ninth Asia Pacific Transportation Development Conference June 29-July 1, 2012, Chongqing, China. Reston, VA: American Society of Civil Engineers, 2012. Internet resource. Banister, Judith. China's Changing Population. Stanford: Stanford University Press, 1987. Print. Cai, Fang, and Yang Du. The Approaching Lewis Turning Point and Its Policy Implications. Leiden: Brill, 2009. Print. Li, Yong, L Yao, and K W. Yeung. The China and Hong Kong Denim Industry. Cambridge: Woodhead, 2003. Internet resource. Tang, Christopher S, Chung-Piaw Teo, and Kwok K. Wei. Supply Chain Analysis: A Handbook on the Interaction of Information, Zhang, Fengbo. Economic Analysis of Chinese Transportation. England: Lulu.com, 2009. Print. Zhou, Yuanzhi. Capitalizing China's Media Industry: The Installation of Capitalist Production in the Chinese Tv and Film Sectors. , 2007. Print. Read More