Furthermore, before the financial crisis, the Chinese economy had a record from 2006 to 2008 with the fastest-rising Gross Domestic Product (GDP) in 11 years. The effect of this enormous growth has captured world attention, due to the fact that the large trade surplus China is with U.S has been leading to several issues in both countries. Some analysts such as ARTICLE 8 PP 5 see the huge China trade surplus with U.S as a clear indicator that China’s economical trade policies are manipulated or unfair. On the other hand, some other experts in the economic field claim that China´s surplus is a synonym of high savings rate. This paper aims to argue why China’s surplus is neither good for China nor the U.S. in terms of “exchange rate manipulation” and “high savings rate”.
The year is 2001. China joins the World Trade Organization (WTO) and Americans give way to the new “Asian powerhouse.” China has grown 9 percent a year for more than 25 years and is recorded as the fastest growth rate for an economy in history according to and abstract by Peter Katel in the CQ Researcher. With exports rising from 38.8 billion to 196.7 billion (a 400% increase) from 1994 to 2004 to the US alone, no wonder why China has gained new popularity with the business world. In the same article Peter Katel goes on to state that two-thirds of the world’s copiers, microwave ovens, DVD players and shoes are manufactured in China. With this powerful advantage that China has, its promising future does not seem that far away.
This is leading to tremendous changes in the global economy. China has become the second largest foreign direct investment recipient country in the world and the largest recipient among developing countries. Since 1978 the foreign direct investment has flooded into the country. In 2002 china became the first country for a very long time to attract more foreign direct investment in one year then the United States (bringing in US$53.2 billion while US$52.7 billion flowed into the United States). Foreign direct investment has played a vital role in the transformation of the Chinese economy in China, with value contracted increasing from US$ 52.1 billion (1998) to US$ 115.1 billion (2003).
Controls on private businesses continued to decrease and the number of state owned enterprises decreased by 48%. As a result of this deregulation it improved economic efficiency of state owned enterprises and it was also able increase competition between newly deregulated and private sector industries(Seaze et al.2001). Over the past 20-odd years since reform and opening-up, China 's economy has maintained sustained and rapid development, export and import since it began to open its doors to foreigners. As seen in (Appendix 2) China has experienced a continuous annual growth rate in foreign trade. For example as seen in (Appendix 4) Chinas trade with EU has continued to increase from 2004 right through to 2013.
Although China makes great economic achievements and improvements every year, the economic achievements is not that glorious when divided by the large denominator of population. B... ... middle of paper ... ... rate is 8.77‰( SFPCC) in China, it brings a population increase of 19,090,000(SFPCC statics), which equals a medium-sized country in Europe. As a result, overpopulation may not be that serious in some other countries, it does be the most serous social problem in China. In order to solve the overpopulation issue, the government should pay great attention to it. Some policies, such as “ One China policy”, have already been made in China.
Exports and imports of goods and services have grown rapidly. The tremendous growth of international trade over the past several decades has been both a primary cause and effect of globalization.The volume of world trade increased twenty-seven fold from $296 billion in 1950 to $8 trillion in 2005 (WTO, 2007). In recent years China has experienced an economic slowdown along with the rest of the world, but many worry that because of its position in the world market, any downturn will have a global impact. In the years leading up to the global recession China was growing at an unprecedented pace. However, the Beijing government recently predicted a rate of seven percent growth, for the next year, a slowdown for the previously hot Chinese economy (Kurlantzick, 2013).
From the 1970s, there has been a wave of liberalization in China, which was introduced by Deng Xiaoping. This is one of the key reasons to the rise of China to be one of the economic giants in the world. In the last 25 years of the century, the Chinese economy has had massive economic growth, which has been 9.5 percent on a yearly basis. This has been of great significance of the country since it quadrupled the gross domestic product (GDP) of the country thus leading to saving of 400 million of their citizens from the threats of poverty. In the late 1970s, China was ranked twentieth in terms of trade volumes in the whole world as well as being predicted to be the world’s top nation concerning trading activities (Kaplan, 53).
“Effects of a widening trade deficit and the necessary government policy” “Trade Gap Widens, Fuels Calls for Tougher Stance on China” WSJ, 4/13/05, A2. The U.S. current account (trade deficit) hit a monthly high rising 4.3% in February to $61.04 billion. The increased deficit reflects the rising costs of imported oil and increased consumer demand for foreign goods. Imports rose by $2.58 billion from January to February as Exports remained constant. The widening trade deficit over the past two years has economists concerned about the longevity of attracting foreign capital.
During pre-modern times, China’s economy was in constant growth and stable due to its high influence in commerce along trade routes that moved across the Old World. Since China was deficient in technology and innovation that would push its economy and it commercial relationships with other countries, America became an economical power and its global influence expanded which resulted in its surmount above other economies including China’s . China lost against America in the economy and America took first place. After the September 11, however, America’s economy began to fall; it was not until 2013, when the economy began to rise. Although America’s economy is growing as time goes on, China’s economy is also growing.
Of course, if we were to examine the statistics of late, we would most likely see a continual increase in the percentage of exports that China commands, and if we were to go one step further and predict t... ... middle of paper ... ...e costs can probably double and still maintain their competitiveness, except the consumer surplus level will be reduced. Wage rates are on average in China now approx. 40¢ an hour, dramatically less than the likes of Mexico, and even India. So China can afford to let its prices rise slightly higher before people will start buying abroad, although due to the phenomenal size of the Chinese workforce, plus the recent 110,000 lay offs taken place in the last few years, there needs to be significant numbers of new businesses to absorb the superfluous labour in the market. * Chinese labour is unskilled as a rule, so there will rarely be a skills mismatch in the labour-intensive sector of the market.