Analysis of China's Economy - Essay Example

Economy of China By + Background There has been a rapid rise in the economy of China with a span ofless than three decades. The period that the country has experienced much growth is from 1979 to 2013. The gross domestic product of the country has much grown at a rate of 10% making many people that lived in poverty to find activities to involve in. the country has emerged to be a major global power with it being considered to be the country with the second largest country after the country united states. The country is considered to be the greatest merchandise exporter, largest manufacture and a country that holds foreign exchange reserves (Dodsley & Chesterfield, 2007). Predictions have been made by economists that the country can become the largest economy in the next five or so years due to the rapid growth. The country is however still not much developed as compared to United States. The growth in the country has increased in commercial ties within the country and United States. From the data that was given out by the United States, the trade between the countries increased from estimate of 5 billion dollars to 562 billion between the year 1980 and 2013. China is presently the United States’ second-largest exchange partner, its third-largest export market, and its major basis of imports. Many U.S organizations have wide operations in China in order to market their products in the thriving Chinese market and to take advantage of lower-cost labor for export-based manufacturing. The operations that are involved between the operations of the two countries have made United States firms to be much competitive in international basis and the consumers in the country are always satisfied from the low cost products from china. The emergence that the china economy has however raised many questions to the United States policy makers. The claim is that the country uses unfair practices in carrying out their trade. The tactics that the country is thought to use include use of currency that is undervalued and more subsidies that are given to the local companies for more production. This has made the united states market to be flooded with goods that are of low cost and the practices have also threatened the jobs that are available in U.S. this has led to decrease in the living standards in the country. Other policy makers also claim that China’s growing use of industrial policies to promote and protect certain domestic Chinese businesses or firms preferred by the government, and its failure to take actual act against widespread breach of United States intellectual property rights in China, threaten to undermine the competitiveness of United States. China on the other hand has viewed the growth that occurs in its economy to be crucial for maintaining a social stability. The economy faces many challenges that could in the end interfere with the economy of the country with the inclusion of distortion of economic policies that are used in the economy. The risk that the economy will be exposed to include those to do with weak banking system, widening in income gap and more pollution being brought out by the many industries. Research objectives The main aim of the research is to bring out what could have led to the problems that the country faces in its economy. In the determination, there will be the focus on the economy before there was reform and the problems that were brought about due to the reform. There will also be focus on the factors that led to the introduction of the economic reforms and how they were carried out. The research also will aim in determining the changes that occurred in the economy with their importance to the economy (Dodsley & Chesterfield, 2007). All these will be determined with the look at the Gross domestic Product of the country from 1979 to 2013. The research is to be carried out in the economy of China with little consideration of the trade that occurs between the country and United States. Method of research The method that is to be used in determination of the economy of the country is to be together with consideration of the nominal exchange rates in the country. The GDP also is considered in the study for measurement and compare it with that of the United States. The choosing of the method is due to the claim by economists that the data that is obtained from nominal exchange rates to convert Chinese data into U.S. dollars fails to reflect the true size of China’s economy and living standards relative to the United States. The use of PPP exchange rates is also considered able to increase the estimated measurement of the economy. The research is expected to be carried out in a period of one month. The collection of data on the research topic will be through the use of questionnaires and administering of interviews on different sectors of the economy. The sectors of the economy that will be much considered in the research are the production sectors, both private enterprises and public sectors. The government will also be a focus since the data will important in determining how the intervention of the government has contributed or burred growth in the society. Semi-structured interview is a method that will be used in the interview as the interview was to be carried out in social science. The interview, through the method will be open allowing new ideas to be brought out during the interview. The interviewers will gain more information than just that that is in the objective of the research. Those that the interviewees bring out will be included in the study. Ethnography is a method that will be used in observation during collection of data. The method aims in systematic study of cultural phenomenon through observation with observation of the society considering the subject of the study. The method will enable coming up with history on the economy without the implementation of current structures by the government of China. This will enhance data collection as more observations are made. Literature review Before the reforms that occurred in the economy of china in 1979, there was maintenance of a centrally planned and commanded economy. This was done through leadership in the area at the time. The shares that were obtained from the output of the economy was directly obtained and controlled by the central government. The governance with the control was able to dictate the prices of goods, setting production goals in the society and controlling the resources that are used in production. The government with the aim of making industrialization in the country to be rapid undertook large investments in the human and physical capital in the years (Fei, Chang, Cooper & Redfield, 2013). Private enterprises and firms that were foreign were barred from entering into production in the economy. Industrial production in the country was mainly through enterprises that were owned by the state. There are different factors that led to the growth of the economy of China. The concerns that enabled china to have an increase in its economy was due to the increase in the demand for more energy and raw materials and also China being the largest emitter of greenhouse gases in the world. The factors that are The government policies that were used in the time kept the economy of the country to be of stagnant growth. The main reason behind this is that the companies and organization in the country were mainly run by the government. Struggle in marketing was nearly not existing, international trade and flows of investment were mainly restricted to countries that belonged to Soviet bloc, and price and production controls resulted to increment in alterations in the economy of the country at the time. Living standards of those that lived in the country were considerably lower as compared to those of many other developing countries. The Chinese government in 1978 decided to disruption with its economic policies with considered soviet style by slowly reforming the economy with consideration to free market measures and principles. After 1979, the government of China launched economic reforms so that they could enable the economy of the country to grow. The practices that were carried out were to involve the price and ownership incentives to the farmers in the country. With these reforms, the farmers were able to sell parts of their crops on the market which was considered to be free. The government of China also then established economic zones mostly art the coast of the country so that they could attract more investment and boost their exports. Other reforms were carried out in forms and forms which followed in phases, sought to devolve policy making in economics in several sectors, with the main focus being trade. Economic control of several enterprises was given to state and local governments, which were generally allowed to function and compete on free market values, rather than under the direction and guidance of state planning. In addition, citizens were encouraged to start their own businesses. Additional coastal regions and cities were designated as open cities and development zones, which allowed them to experiment with free market reforms and to offer tax and trade incentives to attract foreign investment. In addition, state price controls on a wide range of products were gradually eliminated (Fei, Chang, Cooper & Redfield, 2013). Trade berries that were removed in the market encouraged greater competition and this encouraged more investors in the country. After the economic reforms, the economy of the country has grown substantially mostly during the pre-reform period. The annual GDP was found to be high but there was claim that there was exaggeration of the GDP by the government on the production level due to the political reasons that occurred in the country (Bernstein & Munro, 2007). The economy of China suffered economic downturns, which led to famine in the country and the death of many deaths. There was also political chaos in the country, which disrupted the economy of the country. From the statistics obtained it can be said that the country has been able to double the size of their economy after the time of eight years. China’s economic growth Two major factors are thought to have contributed to the rapid growth of China’s economy. Large capital investment of the country is one of the factors that have contributed to the rapid growth. This is through the financing by the large domestic savings and foreign investment (Wiens, 2008). Rapid productivity growth has also contributed to the rapid growth. The two factors have been seen to depend on each other in enabling the growth of the economy. The reforms that occurred in the country boosted output and increased resources which were used for additional investment in the economy (Fei, Chang, Cooper & Redfield, 2013). The growth that occurred in the economy in the period led china to becoming the largest world manufacturer. This was according to the data that was given out by United Nations. Expected research outcomes In conducting the research of the economy of china, several factors are able to come about such that more improvements are made. The research will also identify the problems. The identification of the problems will make the governance to look for possible resolutions for the problems. The research will also come up with possible solutions to the problems that are experienced in the economy. Economy through these identifications will enable the gearing of the country to enhance the largest economy in the world which was their view. The economy of China has grown at a high rate. In the growth, the research will enable determination of the factors that led to the faster growth. The research aims in identifying the factors to enable the country strengthen on the factors to enable continuity in the growth. Participation in carrying out the research will not have qualifications. Those that are expected to take place in carrying out the research are economic students from the universities as they will be well conversant with the economic terms and indications that are used to determine economic growth. The collection of data on the research topic will be through the use of questionnaires and administering of interviews on different sectors of the economy. The sectors of the economy that will be much considered in the research are the production sectors, both private enterprises and public sectors. The government will also be a focus since the data will important in determining how the intervention of the government has contributed or burred growth in the society. The research is to maintain ethical issues during its conduction. Those that are to carry out the research are those that are responsible and respectful. This is what will make them to obtain the right information. Communication skills are also a consideration in the research. The research will mainly aim in the economy of china before reforms, the reforms that occurred, factors that influenced the reforms and the results of the reforms. All these will be determined with the look at the Gross domestic Product of the country from 1979 to 2013. The research is to be carried out in the economy of China with little consideration of the trade that occurs between the country and United States. Timetable and plans Activity Estimated period Description Development and adapting to research objectives 1 day The formulation of objectives will be made with the focus on the factors that contribute to economic growth of China. Design research protocol 2 days The research protocol will plan on the activities to take and the sequence on which they will be carried out. Design or adapt instrument 1 week The adaptive instruments will be there to correct mistakes that can be in the research Recruit interviewers 2 weeks The interviewers to be used in the study are selected with consideration of their qualification. Translation of instrument into the language understandable 1 week The research will be conducted even to the local sectors. This will require translation to a language that can be understood by those in the local. Interviewer training 1 week The training will include pretesting of those that are to conduct the data collection. Revising of instruments in training will also be done at this stage. Preliminary analysis in the field 3 days Preliminary analysis in the field will include the testing of selected techniques to be used in the field. Preparation for presentation 1 day Preparation will include putting in place the tools needed for the research. Carrying out the research 1 month The interviewers will be in the field to collect the information needed in the study. Complete analysis 1 week Complete analysis will involve going through the data that is obtained from the field. Prepare report 1 week Analysis is prepared as a report and is published for future reference. Expected outcomes of the study There are two major factors that are thought to have contributed to the rapid growth of China’s economy. The causes are focused in the research and are expected to come clear after the study. Large capital investment of the country is one of the factors that have contributed to the rapid growth. This is through the financing by the large domestic savings and foreign investment (Yueh, 2010). Rapid productivity growth has also contributed to the rapid growth. The two factors have been seen to depend on each other in enabling the growth of the economy. The reforms that occurred in the country boosted output and increased resources which were used for additional investment in the economy. The risk that the economy of China can be exposed to include those to do with weak banking system, widening in income gap and more pollution being brought out by the many industries. The government policies that were used in the time kept the economy of the country to be of stagnant growth. The main reason behind this is that the companies and organization in the country were mainly run by the government. Struggle in marketing was nearly not existing, international trade and flows of investment were mainly restricted to countries that belonged to Soviet bloc, and price and production controls resulted to increment in alterations in the economy of the country at the time. References Dodsley, R., & Chesterfield, P. (2007). The economy of human life. Printed at Leominster, (Massachusetts): By Charles Prentiss. Fei, X., Chang, T., Cooper, P., & Redfield, M. (2013). Earthbound China. Chicago: University of Chicago Press. LaFleur, R. (2010). China. Santa Barbara, Calif.: ABC-CLIO. Luh, S. (2006). The economy of China. Broomall, PA: Mason Crest Publishers. Wiens, T. (2008). The microeconomics of peasant economy. New York: Garland. Wu, Y. (2005). The economy of Communist China. New York: F.A. Praeger. Yueh, L. (2010). The economy of China. Cheltenham: Edward Elgar. Bernstein, R., & Munro, R. (2007). The coming conflict with China. New York: A.A. Knopf. Read More