Question

can you please explain the differential disgnosis about the chinese economy?

Answer 1

Since the market reform initiated in 1978, it has shifted from a centrally-planned to a more market-based economy and has experienced rapid economic and social development. GDP growth is about to 10% in a year, the fastest sustainable growth by any economy in the history, about 800-850 million people have lifted them self from poverty line. Although China’s GDP growth has gradually slowed since 2012. Still the country is on track to eliminate absolute poverty by 2020 according to China’s current poverty standard.

13th five year plan of China addresses the issue for development of services and environmental and social imbalances, reducing pollution and increase energy efficiency.

Elements that brought transformation of Chinese economy:-

1- Gradual work-

There has been much debate centers on the issue whether the country reform process should be gradual or rapid. There is no doubt from the studies of the Chinese economy, however, that gradualism was the right policy and has worked for China’s economic reform.

2- Co-exist and Compete-

To speed up economic growth, which is required to give reform momentum and support, the policy was to allow the non-state sectors to serve as an engine for growth.

3- Dual price technique-

when higher priced housing was available in the market, and to the supply of foreign exchange when a foreign exchange swap center enabled the importers and exporters to trade foreign exchange at a market price.

4- Economic liberation through the open-door policy-

Foreign trade and foreign investment, as well as travel abroad, were allowed, enabling the free flows of goods, capital, technology and people. This increased efficiency in the allocation of resources and helped speeding economic growth.

In terms of its total output measured in purchasing power parity terms China is already a great economic power, second only to the US.

All three microeconomics, macro economics and financial economics apply to Chinese economy. it has changed many phases form time to time with the gradual growth process. Currently it has become largest, fastest and improving economy in the world.