china’s economic has grown very fast since its reform and opening-up policy began 1978. But this year the domestic growth is expected to slow as exports to foreigner countries are hit by the USA economic crises and it affect on global economies. Although the United States government passed a $700 billion “rescue” package to stabilize the crises, the rippling effect is expected to have a slowing effect on China’s brisk economic growth making it the slowest since 2002..
According to the National Bureau of Statistics, China’s share of the world’s combined gross output rose to 6% in 2007 compared with just 1.8% in when its reform and opening-up began 1978. The growth over the last 30 years has moved China’s GDP ranking in the world from 10th in 1978 to 4th exceeded only by the United States, Japan and Germany. World Bank ratings show China’s developing economy in the category of lower middle class income with per capita between $936 and $3,705. Per capita income rose from $190 in 1978 to $2,360 in 2007 and China’s GDP grew at an annual average rate of 9.8%, much higher than the world average during the same period.
The majority of China’s growth is from exports to the USA. This years USA economic downturn is having a negative influence on China thus the chinese face a complicated economic situation. China’s economic growth is estimated to be 10.5% in 2008, 4.5 % lower than 2007 and inflation pressures still exist. Exports will be slow from American economic decline.
China’s tightening monetary policy in 2008 is expected to keep its accelerated economy from overheating and to contain inflation that threatens its social stability. The Chinese Yuan is expected to rise faster against US dollar in the first half of year compares with latter half. This will have more negative impacts on the profits of export-oriented companies, and the government should be careful with exchange rate policies to avoid a cooling effect on the domestic economy as the result of declines in exports.
Even though China’s economy is expected to continue to grow it still faced some major problems. China’s rural areas and agriculture still need much more development. The economic grow has been very fast in recent years, but this fast growth has created many side problems. Industrial pollution from China’s many factories contaminates the air and water and cause respiratory sickness and cancer. Eventually China must spend money to resolve these dangerous problems.
China’s major export costumer is the United States. Since the economic downturn of the United States housing, financial and other investment sectors, Americans are frightened and don’t spend money on as many Chinese products. This will have a big impact on the acceleration of the booming Chinese economy in the near future. With the rise in per capita income, the Chinese do have the option to develop their 1 billion plus domestic market of consumers to offset their export decline due to the current global economic crisis.
Work cited:
www.chinadaily.com.cn/china/2008-01/10/content_6385505.htm www.chinadaily.com.cn/china/2008-01/10/content_6383747.htm
www.chinadaily.com.cn/bizchina/2008-10/27/content_7145579.htm
en.ce.cn/Business/Macro-economic/200810/28/t20081028_17202510.shtml
www.atimes.com/atimes/China_Business/HE19Cb06.html
www.atimes.com/atimes/China_Business.html
www.npr.org/templates/story/story.php?storyId=95727213&ft=1&f=1004
www.boston.com/business/articles/2007/12/05/china_to_tighten_monetary_policy_in_2008/