China’s National Economy from 2005-2014
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China’s National Economy from 2005-2014• Module Name:• Class Code:• Student’s Full Name:• I/C number:• Name of Lecturer:• Submission date:Table of Contents1. Introduction 2. Production Output Performance Analysis 2.1. Real GDP, Real GDP Growth Rate, Real GDP per capita Analysis 2.2. Definition of Each Indicator 2.3. Economy Performance Trend 2.4. Government’s Measures 3. Labour Market Analysis 3.1. Unemployment Rates Analysis 3.2. Definition of Unemployment Rates 3.3. Types of Unemployment Analysis 3.4. Government’s Measures 4. Price Level Analysis 4.1. Inflation Rate Analysis 4.2. Definition of Inflation Rate 4.3. The Causes of Inflation 4.4. Government’s Measures 5. Conclusion References 1. IntroductionDuring the decade between 2005 and 2014, China’s national economy put the public through a lot, which are labeled as fierce market competition, excessive-priced housing, high price of commodities, high taxes, high cost of financing, stock market crash, the gap between rich and poor, etc. On the whole, China’s economy is now faced with very complicated domestic and foreign environment. Lots of reasons, such as history, economic system, political system, and the transition phase all contribute to this complicated environment (Buckley, 2016). The review of the ten years of development of Chinas macro economy intends to find the economic operation rules and logic in the process of Chinas economic development and thus provides analysis basis and support to better grasp the future development trend.2. Production Output Performance Analysis 2.1. Real GDP, Real GDP Growth Rate, Real GDP per capita Analysis Figure 1 shows China’s real GDP from 2005 to 2014. Figure 2 shows China’s real GDP per capita from 2005 to 2014. Figure 3 shows China’s real GDP growth rate from 2005 to 2014. Among them, the real GDP increased from the 185,896 billion Yuan in 2005 to the 636,139 billion Yuan in 2014; the real GDP per capita increased from 1,4259 Yuan in 2005 t0 4,6629 Yuan in 2014. Among these two years, the growth rate of real GPD in 2007 was highest, which was 14.2%, while the lowest growth rate was 7.3% in 2014 (State Statistics Bureau, 2015).
[pic 1]Figure 1. China’s real GDP from 2005 to 2014. Data source: (State Statistics Bureau, 2015)[pic 2]Figure 2. China’s real GDP per captia from 2005 to 2014. Data source: (State Statistics Bureau, 2015)[pic 3]Figure 3. China’s real GDP growth rate from 2005 to 2014. (State Statistics Bureau, 2015)2.2. Definition of Each Indicator GDP refers to the total market value of all final products and services in a certain production period of all residents units in a country (within the scope of national border). GDP is the core criterion for national economic evaluation, which is also a crucial index to evaluate a country or regions overall economic status. Real GDP refers to the market price of the final product by using the market prices of certain specific base period (Rajewski, 1994).Real GDP per capita, often been used to evaluate the economic development, and is one of the most crucial macroeconomic criterions. It is the resultful tool for public to grasp the macroeconomic status of a country or a region. When GDP within a national accounting periods divided by the permanent residents of the country (or census register population), the result is GDP per capita, which is a measurement of peoples’ living standard (Smyth & Inder, 2004). The GDP growth rate is the GNP in the end period divided by the GNP in the base period. When the GNP in the end period is calculated with the current price of the end period, then the result is the nominal economic growth rate. When the GNP in the end period is calculated with the same price (the base price), the result will be real economic growth rate. In measuring economic growth, the real economic growth is used. Economic growth rate is also called economic growth speed, which is the dynamic index reflecting the change of economic development level in a given period and is also a basic indicator of whether the national economy is dynamic or not (Canning et al., 2004).2.3. Economy Performance Trend Chinas GDP in 2005 and 2014 were 185,856 billion Yuan and 636,139 billion Yuan respectively. The latter was increased by 3.43 times compared with the former. Seen from the growth rate, the high-speed platform of 11.3% in 2014 declined to 7.3% in 2005. Seen from the industrial structure, the contribution rate of the secondary industry in 2005 and 2014 were 50.3% and 44.4% respectively, while the contribution rate of the tertiary industry to GDP were 47.1% and 48.1% respectively (State Statistics Bureau, 2015). This shows that Chinas economic growth fell mainly due to the slowing of the manufacturing growth.2.4. Government’s Measures Table 1 summarizes the main economic policies and measures implemented by China’s government between 2005 and 2014.Table 1. The main economic policies and measures implemented by China’s government between 2005 and 2014. YearThe main economic policies and measures2005The financial system reform; The exchange rate reform of RMB for the first time; The reform of the shareholder structure; 10-year Treasury yield declined from 4.9% to 3%; House prices increased too fast, causing the central Bank start to crackdown on real estate.2006In order to prevent the overheating of investment, the central bank raised the deposit reserve rate and interest rates to turn to tight monetary policy.2007China implemented the new accounting standards in line with international standards and introduced the fair value concept; the central bank raised the interest rate 6 times and the deposit reserve rate 10 times to prevent the overheat of economy.2008The state council launched 4ooo billion investment plan; The central bank cut interest rates sharply. 2009Government subsidies on consumer prices. 2010The central bank raised the deposit reserve rate four times and the benchmark interest rates on lending and deposits twice and began to implement the tight monetary policy.2011cut the deposit reserve rate once2012In order to sustain development, the government put forward another small scale fiscal stimulus; the central bank lowered the deposit reserve rate three times and the deposit and loan interest twice.2013In order to promote the marketization of interest rates, the central bank cancelled the limit on loan interest rate, but did not completely let go of the deposit interest rate.2014In order to save the economy downturn, the limit on real estate purchase in many provinces was cancelled in China. The central bank also changed the purchasing standards of the first suite. The government began to take advantage of the infrastructure construction areas, shanty towns’ reconstruction, and high-speed rail military industry, small and micro enterprises and agriculture to hedge the decreasing investments in real estate and manufacturing.Source: (Babones, 2015; Nolan, 2015; Cai, 2015; Koivu, 2012)