Analyze the business environment of China - Essay Example

However, even if only economic considerations are used, we can see that economic trends justify investment in China. As indicated by Figure 1, which is a graph of year-on-year growth on every quarter of the year from 2006 to 2010 latest figures, the real economy of China has been growing within the neighborhood of 10% per annum during the last 4 years. It can be deduced from Figure 1 that the source of Chinese economic growth is mainly internal rather than external. The contribution of net exports in the last four years was from about negative to about half of real growth.

However, even in periods where net exports have been decreasing at a high 10%, Chinese economic growth has continued to be in the neighborhood of 10%, confirming that growth is largely internally driven rather than driven by exports. Looking at figure 2, we also see that despite the uncertainties and threat of a global crisis in 2009 arising from the crisis in the United States originating from its sub-prime housing market, real economic growth in China has remained respectable at around 5 or 6%.

External conditions, especially US economic conditions, can affect China but based on the US crisis years of 2008, 2009, and 2010, the effect will not be of a magnitude that will drive Chinese economic growth into the negative territory. The real economic growth from 2001 to 2010 is likely over and above the Chinese annual population growth, implying that with the economic growth; the quality of life in China is more likely improving. Or, at least, the growth figures are of the type that has the potential to significantly improve the quality of life for many of the people of China.

Figure 2 is also showing that China has ceased to be an agricultural country. First, growth figures are higher in industry and services sectors rather than agriculture. Second, growth in the agricultural sector