Economy

Chinese economy is growing at a phenomenal rate. Ever since the Reform and Opening-up policy was implemented, China’s Gross Domestic Product is increasing at a compounded rate of nearly 10 percent for thirty years. Today, merchandise made in China are on the shelves around the world, and China has become an influential participant in the global trade. At the same time, however, China is experiencing the “growing pains” of rapid-developing economy. Inequality in wealth distribution and expensive housing problem has to be addressed by the policy makers.

There are six sub-topics:

1. Made in China, Not Just a Cliché.

Merchandise produced by China are now on store shelves around the world. The rise up of “Made in China” has contributed a lot to China’s fast growing GDP, and is an important factor in understanding China’s competitive advantage in world stage.

2. Wealth Polarization, the Price for Being a GDP race winner.

While China’s GDP (Gross Domestic Product) grows at a phenomenal rate, incremental wealth is distributed unevenly and the polarization of “haves” and “have nots” has to be addressed. Balancing between development and equality is never an easy issue to deal with.
Hint: What about regional differences and urban-rural differences? How is it related to Reform & Opening-up Policy? (In 1978, Deng Xiaoping, a prominent Chinese reformer, developed Socialism with Chinese characteristics and Chinese economic reform, and partially opened China to the global market. The reform affected a shift of not only the economic, but also the justice and political systems.) How is China handling this situation?

3. China in World Trade Organization (WTO) and the As a newcomer in WTO, China is greatly changed by the rules of world trade. Meanwhile the world trade will never be the same with China’s presence. The RMB, China’s currency, is under pressure of appreciation and as the world monetary system continues to shift, the RMB may take a more important role.

4. China’s booming real estate market

Housing price is rapidly rising in China, and the burden of high mortgage payment is stressing out the young generation as they start to consider purchasing housing. This boom in real estate reflects an unmatched demand and supply, and has many causes. Some economists believe it will lead to asset bubble that may destroy the Chinese economy in the long run.

5. Saving rate in China

After the financial crisis crippled demand from American and Western European market, Chinese companies found it hard to sustain the sales figures and the profit. Over the years, the domestic consumption demand is rather weak, and the personal saving rate is relatively high. These
contrasts with the negative saving rate in the U.S. before the bubble burst. The driving forces of this difference may be found in the Chinese mindset, in the imbalance development or in the inadequate social welfare system. The saving rate in China, as in many Asian countries, has been relatively high in comparison with those in the US and Euro-zone. Some critics believe that this is one contributor to the global economic imbalance and the subsequent financial crisis. Taking a closer look at the saving pattern, there are reasons that may explain this: inadequate social security system, limited investment channels and some other factors.

6. Case study: Small and Medium enterprises in Zhejiang Province