key macroeconomics issues of china

8/3/2019 Key Macroeconomics Issues of China

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ISSUES & PROSPECTS

B Y : S A N T O S H V E R M A ,

R O H I T V A I S H ,

D I L J O T S I N G H .

KEY MACROECONOMICS

ISSUES OF CHINA


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INTRODUCTION

Macroeconomics (from Greek prefix "macr(o)-"meaning "large" + "economics") is a branch ofeconomics dealing with the performance, structure,

behavior, and decision-making of the entire

economy. This includes a national, regional, orglobal economy. With microeconomics,macroeconomics is one of the two most general fieldsin economics. '''Uses of Macroeconomics''' 1

National Income: -:- Macroeconomics helps us tojudge the national income and modification therein.It enables us to judge the absolute and relativeprogress of our economy.


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INTRODUCTION

Snapshot of Chinas Growth and Inflation Since 1990


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INTRODUCTION

Snapshot of Chinas Fixed Asset Investment AndGDP Growth 1990-2005


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CHINAS MONETARY POLICY

Chinas Monetary Policy Objectives :-

Maintain the Growth

Price Stability

Exchange Rate Stability


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CHINAS TRADE POLICY

Chinas Trade Policy.

Growth Rate of Net Export for better GDP.

Price Index


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CHINAS FOREIGN RESRERVES

Chinas FDI Policy.

Chinas Interest Rate for the Reserves.

Roles of PBOC in the foreign reserves.


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CHINAS FOREIGN RESRERVES(contd.)

Chinas Interest Rate Snapshot Since 1995


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CHINAS FISCAL POLICY

Chinas fiscal policy results in accumulation of largedebts since 2005.

Higher ratio of Debt Balance/GDP.


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RECENT ANAMOLY ON CHINASMACROECONOMIC ISSUES

GDP growth rate10.2%higher than in the same period of 2010.

Growth rate of fixed assets investment27.7%4.9 percentage points higherthan in the same period of 2010.

Growth rate of Social 12.8%the real growth is 12.2%0.3 percentage

points higher than in the same period of 2010.

Trade surplus:23.3 billion US dollar growth rate of 41.4 percent; the growthrate of exports is 197.3 billion US dollar growth rate of 26.6 percent thecorresponding figures for imports are 174 billion US dollar and 24.8 percent.

Increase in the number of projects of construction (for the first two months in2010) In- process construction projects: 39.8 percent New start of construction projects: 33.4 percent Growth rate of profits of

large-scale industrial enterprises: 21.3%, higher than in 2010.


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CONCLUSION

In 2006-09, Chinas economic situation will be good. There shouldbe not doubt that the growth rate of Chinese economy can maintaina growth rate higher than 9 percent without causing seriousproblem in price stability. However, China needs to slowdownthe growth rate of fixed assets investment initiated by localgovernment and supported by loose monetary policy. On the other

hand, China should also be on guard against the possibility ofsignificant slowdown of the growth rate. The right combinationshould be a relatively tight monetary policy and arelatively expansionary fiscal policy. However, the multi-objectivesofChinas monetary policy have deprived the ability of the PBOC toimplement a relatively tight monetary policy. To raise the

effectiveness of macroeconomic control so as to provide conduciveenvironment for Chinas structural adjustment while maintain themacroeconomic stability, reform must be carried out withChinas macroeconomic management regime.


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BIBLOGRAPHY

Allsopp, C.J. and Vines, D: The Assessment:Macroeconomic Policy, Oxford Review of Economic

Policy,VOL.16.NO.4, Winter 2000.

Pierce and Tysome: Monetary Economics, 1985.

Dai Genyou: Chinas Monetary Policy: Retrospect and

Prospect, World Economy and China, No.3, 2001, p15.

Wikipedia & Google,Inc


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key macroeconomics issues of china

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