The purpose of this paper is to take an in depth look at the macroeconomic aspects of China. This includes a general background of the country, and the China’s Gross Domestic Product.
Background
China houses the largest number of people of any country, and is the biggest nation on the continent of Asia. It comprises: thirty-three units for administration which are under the under the main government; of these, twenty-two are provinces, five are regions that are autonomous, and four municipalities (Tianjin, Shanghai, Beijing, and Chongqing), and two special administrative regions (Hong Kong and Macau) (Encyclopedia Britannica, n.d.). The nation’s capital, Beijing, is also its economic center. Its main commerce hub is Hong Kong, and its foremost industrial region is Shanghai. China’s massive population makes it home to one fifth of the world’s inhabitants (Encyclopedia Britannica, n.d.).
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China has a registered history which dates back over 4,000 years. It is one of just several existing nations which did well economically during the early stages of civilization. In fact, regardless of its many social and political disturbances, it stands out among other countries due to its resilience and longevity as a unique cultural and political unit. A great deal of its cultural development was achieved without influence from outside the country, with the exception of India’s introduction to Buddhism: a spiritual way of life which is still very strong today (Encyclopedia Britannica, n.d.).
When the mid-19th century arrived, China’s isolation from other countries rendered it technologically inferior. From then, 110 years of decrepitude and decline followed, as the nation saw itself as being comparatively incapacitated in the shadow of the foreign onslaught. This dire situation spurred on the revolution that went up against the old regime at the start of the 20th century, and ended in the communist party coming to power in 1949. It remolded the earth’s political geography, and lead to China taking the title of one of the world’s most powerful countries (Encyclopedia Britannica, n.d.).
Economy
The emergence of China as one of the world’s leading economies was predicted by a number of economists, and remarkably, it was the private sector which helped it attain such a high growth rate. Ever since the beginning of its economic reformation more than 25 years ago, the country has transitioned through a very rapid pace of economic change. In fact: “According to official statistics, economic growth has averaged 9.5% over the past two decades and seems likely to continue at that pace for some time. National income has been doubling every eight years” (Herd & Dougherty, 2016). To that end, looking at it from an economic global standpoint:this massive surge in output is representative of: “one of the most sustained and rapid economic transformations… in the past 50 years” (Herd & Dougherty, 2016).
Comparatively speaking, at the present time, China’s economy is bigger than most OECD economies. Moreover, a large number of its industries are fully integrated into the global supply chain, and based on today’s trends, this nation which now enjoys 6% in global trade, may well end up the world’s biggest exporter by the start of the 2020s boasting a whopping 10% global trade (Herd & Dougherty, 2016).
The reasons for China’s outstanding economic success is due to the government’s economic policy reforms which have systematically allowed stronger leeway towards market forces. This began over 20 years ago in the sector for agriculture, and was slowly extended to the service sector and industry, thereby virtually dismantling price regulation by the start of the 21st century outside the sector for energy. Furthermore, the government enabled private citizens to form
corporations with limited liability. And it also unified China’s internal market by strongly
enforcing laws relating to competition. Moreover, it stepped up its environment for business by stopping multiple rates of exchange, lowering tariffs, permitting direct foreign investment, and doing away with its monopoly on state export trading (Herd & Dougherty, 2016).
During the 21st century, the drive toward an economy that is freer has been boosted by China becoming a member of the WTO, thereby resulting in the reformation of many of the country’s regulations and laws, as well as the prospect of more reductions on tariffs. For example, regulations which did not allow companies which were privately-owned from entering various economic sectors, including financial services, public utilities and infrastructure, were abolished in 2005. Furthermore, enterprises which were owned by the state have been changed into corporations, and a large number of these can be found on the stock exchange. The Chinese policy of restructuring big companies, and enabling the privatization of small companies, have generated wealth for the nation (Herd & Dougherty, 2016).
GDP
GDP represents one of the main indicators that is utilized to ascertain the health of a nation’s economy. It is representative of the complete $ value of all the services and goods that have been generated over a specific period of time. Normally, it is expressed to compare it to the previous year or quarter (Investopedia, n.d.). For example: in the second quarter of 2017, China’s GDP rose by 2%. This was 1.7% greater than in the first quarter of 2017. There was a 6.9% GDP year-on-year change, and since the last quarter, there is not any change since the previous quarter which is lower than the 2017’s first quarter’s 6.9% (Country Economy, n.d.). It is extremely important to know the GDP of a country in order to understand its economic health.
In summary, my expectations for China’s future growth are very optimistic. This is based on the current GDP, the huge workforce, and the successful changes that the Chinese government have implemented in order to drive enterprise, business, and the economy.
- Country Economy (n.d.). “GDP China.” http://countryeconomy.com/gdp/china
- Encyclopedia Britannica (n.d.). “China.” Retrieved from
https://www.britannica.com/place/China - Herd, Richard and Dougherty, Sean (2016). “China’s economy: A remarkable transformation.”
Retrieved from: http://oecdobserver.org/news/archivestory.php/aid/1685/China_92s_
economy:_A_remarkable_transformation.html - Investopedia (n.d.). “What is GDP and why is it so important?” Retrieved from http://www.investopedia.com/ask/answers/199.asp#ixzz4pwFnColg
