Macroeconomics Paper and presentation
timmy turner
Microeconmics.pptxChina’s Economy
Macroeconomics presentation
Professor : Insaf Lahouel
Abdullah AlHasoon Khaled Ahmad Abdullah Hoori Abdulelah Marghalani Nabeel AlMutahar
China’s Real GDP
China’s real gross domestic product has declined from 14.2 percent in 2007 to 6.9 percent in 2017
International Monetary Fund anticipates the growth to fall to 5.7 percent by 2022
Between 1979 and 2016, the country’s real gross domestic product averaged 9.6 percent.
Nonetheless, the global economic slowdown significantly affected Chinese economy
China’s real gross domestic product has declined significantly, from 14.2 percent in 2007 to 6.9 percent in 2017, and the International Monetary Fund anticipates the growth to fall to 5.7 percent by 2022. Since the introduction of economic reform, the country’s economy has increased or grown faster compared to the pre-reform era and avoided major economic disruptions for the major part. Between 1979 and 2016, the country’s real gross domestic product averaged 9.6 percent. This implies that on average the country has managed to increase the size of its real gross domestic product by more than 100 percent in 8 years. Nonetheless, the global economic slowdown, which started in 2008, significantly affected Chinese economy (Morrison, 2018).
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China’s Real GDP Growth
Real GDP Growth 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 14.2 9.6 9.2000000000000011 10.6 9.5 7.9 7.8 7.3 6.9 6.7 6.8 6.6 6.4 6.2 6 5.8
China’s Real GDP
In 2009 at least 20 million migrant workers returned to the country after losing their jobs
China’s real GDP for the fourth quarter of the year 2008 declined to 6.8 percent year on year
Between 2008 and 2010 the country’s real gross domestic product growth averaged 9.7 percent
China’s gross domestic product slowed from 10.6 percent in 2010 to 6.7 percent in 2016
In 2017, China’s real GDP was 6.8 percent
The country’s media reported in 2009 that at least 20 million migrant workers returned to the country after losing their jobs due financial crisis and that the country’s real gross domestic product for the fourth quarter of the year 2008 had declined to 6.8 percent year on year. The government responded by implementing a 586 billion United States dollars economic stimulus package for infrastructural develop and loosening of monetary policies to stimulate bank lending. These policies enabled the country to effectively weather the impacts of the global recession in demand for the country’s products. Between 2008 and 2010 the country’s real gross domestic product growth averaged 9.7 percent. However, the rate of the China’s gross domestic product slowed from 10.6 percent in 2010 to 6.7 percent in 2016 before rising to 6.8 percent in 2017 (Morrison, 2018).
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China’s Real GDP
Real GDP 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 7.6 7.9 5.8 9 10.9 15.2 13.5 8.9 11.6 11.3 4.0999999999999996 3.8 9.2000000000000011 14.2 13.9 13.1 10.9 10 9.3000000000000007 7.8 7.6 8.4 8.3000000000000007 9.1 10 10.1 11.3 12.7 14.2 9.6 9.2000000000000011 10.6 9.5 7.7 7.7 7.3 6.9 6.7 6.8
China’s Inflation
The food component has caused significant variations in the consumer price index
Food prices are highly volatile due to their susceptibility to the supply side shocks
Since 2012, China’s consumer price index has been in a relatively narrow range
A reduction in food prices in early 2017 exerted a downward pressure on inflation
China has seen variations in its consumer price index because of the high weight of food component in the consumer price index component as well as the inherent volatility of food prices due to their susceptibility to the supply side shocks. Chinas’ National Bureau of Statistics publishes a monthly consumer price index headline and indices for 8 major expenditure categories in the consumer price index basket. These include: food, residence, alcohol and tobacco, transport and communication, household durables and services, clothing, education and recreation, health as well as miscellaneous category. Since 2012, China’s consumer price index has been in a relatively narrow range, partly because of stable food price inflation. The reduction in food price cyclicality has reflected the structural food production changes in the country. In early 2017, a reduction in food prices due to abundant supply of vegetables exerted a downward pressure on inflation (RBA, 2017).
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China’s Recession and it Impact
An economic recession in China will hurt everyone
International Monetary Fund indicate that the pain will be concentrated and confined regionally
Nonetheless, the impact of Chinese recession on the international market would be great
A recession in China’s economy would lead to:
Shrinking of consumption and investment; and
Reduction in market valuation of firms
China’s real gross domestic product peaked at 14.2 percent in 2007 and has been decline since then. By 2017, the real gross domestic point dropped to 6.8 percent. Typical estimates, for instance the International Monetary Fund’s estimations of a country risk, indicate an economic recession in China will hurt everyone. According to the International Monetary Fund, the acute pain will be concentrated and confined regionally unlike the United States deep recession. Nonetheless this might not be the case. First, the impact on the international market would be greater than the Chinese market linkages would forecast or suggest. Secondly investors today are more concerned about the rising interest rates, which would lead to the shrinking of consumption and investment as well as reduction of market values of firms whose valuation are heavily anchored on the future profit growth par. A recession in China’s economy would worsen the situation (Rogoff, 2018).
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China’s Recession and it Impact
An economic slowdown in one region would lower the aggregate demand
This should exert downward pressure on the global interest rates.
High Asian saving rates have been a major factor in the decline of the overall level of real interest rates in the United States and Europe
A recession in China could paradoxically result in higher interest elsewhere
According to Keynesian an economic slowdown in one region would lower the aggregate demand, hence exerting downward pressure on the global interest rates. However, the modern thinking is more advanced. High Asian saving rates in the past 20 years have been a major factor in the decline of the overall level of real interest rates in the United States and Europe, courtesy of the fact that the underdeveloped Asian capital markets are unable to absorb the surplus savings. Therefore, rather than resulting in a lower global inflation adjusted interest rates, a slowdown in China’s economy that spreads across the Asian continent could paradoxically result in higher interest elsewhere, particularly if another Asian financial crisis leads to depletion of central bank reserves. Hence, a Chinese recession would greatly affect the global markets (Rogoff, 2018).
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China’s Recession Data
References
Morrison, W. M. (2018). China’s economic rise: History, trends, challenges, and implications for the United States. Congressional Research Service, 1-53
Reserve Bank of Australia. (2017). Underlying consumer price index in China. Bulletin | December Quarter. Retrieved from. https://www.rba.gov.au/publications/bulletin/2017/dec/pdf/bu-1217-4-underlying-consumer-price-inflation-in-china.pdf
Rogoff, K. (2018, November 7). A Chinese recession is inevitable - don't think it won't affect you. The Guardian. Retrieved from. https://www.theguardian.com/business/2018/nov/07/a-chinese-recession-is-inevitable-dont-think-it-wont-affect-you
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