Question

Analyze the time-series data of Balance of Payment of China (Since 2010). Discuss the trend of changes in current, capital and financial accounts. Based on your observation, with other external economic information, what shall the policymakers do in responding to these changes?

You required to do.

1. Find the current account, financial account, and capital account of china.

2. Describe thier trends of changes from 2010 to 2019 with evidence

3. Explain why their were such changes.with evidence.

4. Advice policymakers about what shall be done based on the observation.

5. Discuss the balance of Payment detaily.

6 discuss the implications on setting external economic policies and concepts

(Use 1500 words)

Answer 1

Introduction: From a very poor state of the economy to the fastest growing economy in the world, China had an unprecedented growth rate in the GDP in the past four decades

The balance of payment of China had recorded a surplus of $110.2 Billion in June 2020. It was 143.9 Billion in the last year and the deficit recorded this year was 24%. In 2010 the GDP of China was a record high of $12.14 Billion which had suffered a steep low performance in 2015 with $ -5.05 Billion.

The deficit of 24% low GDP in 2020 had its trend starting even before the Covid-19 situations.

The current capital and financial accounts of china have recorded a deficit of $ 34.5 Billion in 2020. China had a very poor and state-controlled ineffective economy prior to the Liberalization and Globalization they had initiated 40 years ago, in 1979. China has been in the forerun in capturing the developing and developed countries market with its stringent international trade policies and reforms and become the fastest- growing economy in the world soon. China has become the major business partner of the US. The GDP was doubled every 8 years.

The sharp decline in the present economic growth rate has its root in the ever-increasing internal problems and it’s the external relationship and partnership suffered a huge set back than ever before. Though economists had predicted the Chinese economy to be the superpower by 2030, with the present challenges and declining trend, such a dream remain unattainable. An increase in bad loans due to the pandemic situation is the main threat to the economy.

In order to stabilize the economy, China has to change its game plan from an expansionist approach to a sustainable approach. The huge spending on defense even during the trouble covid pandemic situations derails the struggling economy. Through participating in the international peace treaty measures, China has to bring peace and harmony into South and South-East Asia and reallocate the extra defense fund for debt clearance.

By setting win-win international trade policies China could stabilize not only the struggling economy but also the much-needed confidence among world nations. Increasing internal issues such as environmental pollutions, rich and poor gap, lack of sufficient medical infrastructure in the non-urban areas, etc are to be the top priority in the planning.

In the international relationship management area, Issues with Hong Kong, Mongolia, India, Tibetan monks, Vietnam, Indonesia are to be amicably and bilaterally settled.

The country had already come forward with a ‘Stimulus 2.0’ program but the main focus should be the control of inflation and increase government spending to support the Covid situation and re-establish international trade relationships. The cut in the rate of interest, which was increased to boost the economy three years ago, is also very important. The main thing that lacks in China is the positive interaction and peaceful coexistence between the state-owned public sectors and private firms. This could contributorily supplement the growth to a larget extend.