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China and Economic growth, Case Study

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Case Study - China Characteristics Of China The Chinese Economy, the world's fourth largest economy (in nominal US dollar terms), is classed to be an emerging economy. It is the fastest growing economy in the world over the past two decades by achieving a sustained average rate of growth in real GDP by approximately 10% per annum. China is currently reforming its economy to become more market driven and becoming more integrated into the global economy through international trade and foreign investment. This results in greater increases in per capita income and living standards alongside a reduction in poverty. Statistics of the Chinese Economy: Nominal GDP (US$b) - 5,878 (2010) HDI - 0.663 (2010) Unemployment - 5.4% (2010) Section One: Overview Of The Impact Of Globalisation 1. Quality Of Life Indicators Improvements in human and economic development over the past 20 years have caused China's HDI value to rise, from 0.368 in 1980, to 0.663 in 2010 as illustrated in figure 1.1 below. This ranked China 89th out of 169 countries on the UNDP's HDI list. 1980 1990 1995 2000 2005 2009 2010 0.368 0.460 0.518 0.567 0.616 0.655 0.663 Figure 1.1: Trends in China's HDI from 1980 to 2010 Despite these improvements, China had an estimated proportion of 28.4% of its population being classed as being below the international poverty line (less than US$1.25 per day) ...read more.


Globalisation has caused increased growth and production in China as well as increased trade. This resulted in increased resource usage, resource depletion problems and resource allocation issues. This has also increased negative externalities, for example: air pollution. This threatens human health and biodiversity by reducing air quality. A report by the OECD also found that as many as 300 million people in China are drinking contaminated water every day. 4. Economic Growth The Chinese Economy has achieved an average rate of annual growth of 10% between 2005 and 2008. This growth slowed to 9.2% in 2009 due to the GFC. The Chinese Government implemented a US$568b fiscal stimulus package in November 2008 to ensure the growth rate did not fall below 8%. China has begun to industrialise by driving growth through foreign investment and international trade. This has transformed the Chinese Economy in two main ways: 1. China has moved from being a planned economy to a market economy. 2. China has moved from being an agricultural economy to an industrialised economy; and a peasant based society to an urban based society. This has driven China to become the fourth largest economy in the world as measured by nominal GDP ($US). ...read more.


However, due to the Chinese economy being a net lender to the rest of the world, it lessened the effects of the GFC and this was mainly due to globalisation. Due to a fall in growth, there was a rise in unemployment levels. As previously mentioned, there was an estimated 10 million workers who were made redundant as a secondary effect of the GFC; the primary effect being a lack of growth and a lack of finance. Conclusion The Chinese economy's shift from a planned economy to a market economy has strengthened its annual growth rate and this is largely dependent on the advantages of globalisation. The US$568b fiscal package developed by the Chinese government was largely effective on the economy with growth only declining 0.8%; however, there was an approximated 10 million workers who were made redundant throughout this period and this raised unemployment levels. The Chinese economy is quickly becoming one of the largest producing economies in the world and has become a net lender to the entire world. This will be an advantage in years to come and with China having influence on the European economies; it would be interesting to see if China were to lend money to Italian economy as it did to the Australian economy during the GFC. ...read more.

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