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a case presentation on current Chinese economy

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there is a small presentation on the Economy of China and a strategical comparison with Indian Economy.guys,have a look

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a case presentation on current Chinese economy

  1. 1. United hands Contemporary issues
  2. 2. GROUP MEMBERS United Hands
  3. 3. CHINESE ECONOMY: AN INDIAN POINT OF VIEW INDEX
  4. 4. World’s 2nd largest economy after United States World’s fastest growing economy over 30 years,growth rate averaging 10% Tight economy according to the plans and policies high menufecturing power,maximum exports,technical advancements and high tourism support an economy fighting with the internal unstablities GDP growth rate 7.8 annual change AN OUTLOOK
  5. 5. Wikipedia report says According to IMF,China’s GDP is totallig to US$ 8.227 Trn and nominal GDP per capita US$6,085 Initially had Soviet Style planned economy,followed by Mao’s communism policy economic growth equal to all G7 countries combined. powerpoints- high productivity,low labour costs,relatively good menufecturing Foreign Exchange Reserves reached $2.85 Trn in 2010 and expecting growth Towards the end of 2012,China producing 2nd highest number of billionairs domestic retail market worth over 20 Trn Yuan(US$3.2 trn) and growing over 12% annually
  6. 6. Chinese Economy: a past glance In the Maoist Era (50 years ago). Before 1949,the economy of China was fragile and broken “Building a new China” in the Communist Party’s Rule. “A GREAT FORWARD” attempt. LI and Deng approach in the early 80’s. they emphasise in the folollowing points- a. rising personal income and consumption with introduction of new managarial system. b. Foreign trade as a major vehicle for econompc growth c.minimum redtape in the economic zones controlling the power of the SOE(state owned enterprizes) FDI was introduced Culture Revolution started. First GDP reports
  7. 7. chinese economy : the current scenario widespread corruption,cronysm is instutionalised and pervasive Undermined productivity growth tight controll of communism “ONE CHILD POLICY” to a social unrest A critical and unfree economy
  8. 8. China’s weak judicial system is highly vulnerable to political influence and corruption. All land is state-owned. Individuals and firms may own and transfer long-term leases that are subject to many restrictions. The top income tax rate is 45 percent, and the top corporate tax rate is 25 percent.The overall tax burden is equal to 18.2 percent of total domestic income. Government spending amounts to 23.6 percent of GDP. Public debt has decreased, but large amounts of debt are held in off-budget obligations. Slower growth may undermine fiscal policy. regulatory framework remains complex, arbitrary, and uneven. Completing licensing requirements costs over three times the level of average annual income. The labor regime remains repressive. The state imposes price controls on a wide range of energy, raw materials, and other basic goods. The trade-weighted average tariff rate is 4 percent, and layers of non-tariff barriers add to the cost of trade. The investment regime is non-transparent and inefficient. The state continues its tight control of the financial system as its primary means for managing the rest of the economy. Rule of law Limited Govt. Regulatory efficiency Open markets www.Heritage.org
  9. 9. protection of private property rights A freezed up credit market financial probe with Peoples’ Bank of China the “GO WEST” policy U.K. calling,to be the “centre for the global innovation” Trade falls a new sign in economic fading
  10. 10. China’s trade declined abruptly in june forecasting a rapid fall in the further days. Exports fell by 3.1% & imports contracted by 0.7% Due to central bank’s cooling credit system,exports have also gone down Retail sales have fallen short according to HSBC survey Exports growth to united states,china’s biggest foreign market fell to 15.5% www.Washington post.com
  11. 11. oil price fall affecting GDP slowdown Menufecturing weakness in credit crunch LI Xinping’s china dream Affects of the global economic slowdown in 2008 the global economic slowdown in 2008 effected mostly on the exports of the country.GDP growth fell from 14.2% in 2007 to 9.2% in 2009 IMF projection a GDP fall Will China have a safe landing Global financial markets were roiled after the world’s 2nd largest economy notched only at 7.7% boost in gdp in the 1st quarter,a disappointment for a country that jumped 10% or more over three decades.
  12. 12. China- U.S. economic relations Resumed trade relations in 1972-73 U.S has more than 20,000 equity Joint ventures and SOEs U.S. trade defcit with mainland china exceeded $350 bn in 2006 and it was United states’s largest bilateral trade deficit Undervaluation of renimbi relative to U.S.$ China United states
  13. 13. In september 2009,trade dispute emerged between China and U.S.,resulting n U.S. import tariffs on 35% on China’s tire imports,and China accusing U.S. to be in a “grave act of trade protectionism” U.s. demand for labor intensive goods exceeds domestic outputs: PRC has restrictive trade practices which includes a wide array of barriers to foreign goods and services,aimed to protect SOEs.these practices includes High tariffs,lack of transparency,requiring firms to obtain special permission to obtain goods,and leveraging technology from foreign firms in return for market access.
  14. 14. Chinese leaders are betting that if they can roll out a smarter electricity grid before the United States, China can not only address their domestic energy challenges but also get a head start on technology standardization China Aims to Dominate U.S. in Smart Grid Investments China aims to modernize its energy infrastructure and dominate clean energy technology markets abroad. At the Smart Grid World Forum in Beijing late last month, China’s State Grid Corporation announced plans to invest $250 billion in electric power infrastructure upgrades over the next five years, of which $45 billion is earmarked for smart grid technologies. According to its three-stage plan, China will invest another $240 billion between 2016 and 2020 (including another $45 billion toward smart grid technologies) to complete the build-out of a “stronger, smarter”.
  15. 15. FDI effect in China A lower base,a higher gain 2nd leader in APEC nations consists largely of greenfeild Fdi,Hongkong being the largest source of fdi in PRC. Cut throat competition from local investors Labour uncooperation current inflow- $124.0 billion
  16. 16. June july august september 20.12 24.13 23.09 24.8 FDI flows in last four months
  17. 17. STIMULUS PACKAGE IMPACT A policy initiated in 2008 to achieve GDP target rate to take he leap in the economy RMB 1.5 trn in public infrastructure RMB 1trn for post quake reconstruction RMB 370bn for technology advancement RMB 370bn for rural development RMB 210bn for sustainable development RMB 150 for cultural growth IMPACT ACHIEVEMENT WITH CLASH BETWEEN FOREIGN AND DOMESTIC INVESTORS
  18. 18. Causes of China’s economic growth China’s economic growth: Pros & cons Large scale capital investment Rapid Production Growth High rate of savings High TFP (total factor productivity) Quick policy formulation and implementation some other potential factors - well equipped infrastructure - technological advancements - balance between trade and agriculture
  19. 19. Threats to China’s economic growth Pollution power shortage Growing income inequality Property boom Inefficient banking sector Unemployment Undervaluation of Yuan overheading Economy
  20. 20. india is dependent upon china’s technological equipments while china depending upon india’s bamboo,tea,dry fish and other raw materials. in the 12th 5year plans,both the countries have put objectives to improve economic relation. fight of low GDP. agricultural growth barrier. High DQI(development quality index) and low HQI(health quality index) tight policymaking v/s unpredictable policymaking The key comparision factors Chinese economy : an Indian point of View
  21. 21. high rate of FDI flow the bilateral trade concept Large imports emerging as a menufecturing hub Leap in the world trade low export intensity Inequality in imports Dynamic economic growth v/s initaiation economic growth
  22. 22. Geographical diversification stiff competition land acquisition conspiracy poor ASEAN relation the “look east policy”
  23. 23. Initial condition in 1980china india Production factors and physical setting for economy Good basic public health & education Wide spectrum of formal industrial companies Much weaker basic public health and education Some strong large conglomerates; many small firms Economic institutions Institutional set up often not compatable With market economy. Institutional set up broadly compatible with market economy Other institutions and aspects Egalitarian land reform & distribution 40% rural people (almost) landless → Thus without subsistence floor Little gender imbalance Major gender inequality (literacy, participation) Relatively homogenous society Heterogeneous society (religion, language, caste)
  24. 24. China and India in 1980 GDP per capita (US$2005) 219 304 India China Capital-labur ratio (US$2005) 1105 1650 Labor force/population 49 36 Average number of years of education 4.7 2.3 Total factor productivity (level) 1/ 11 18
  25. 25. FUTURE PROSPECTS In near future,China has a strong chance of emerging as a tecnological superpower and stepback U.S. As IMF has projected,China can up their trade growths from 7.5% to 7.9%by the end of the year Till 2020, GDP is planned to be amount to 38 trillion, per capita GDP will reach 26,000 yuan. low labour costs to bring to strenghthen China’s industrial growth. boost the tourism sector by innovating newer policies and add wealth to the economy
  26. 26. CONCLUSION Expected growth in the economy Current scenario- a battling moment for India Future threat to the U.S. as well as for the developed countries.
  27. 27. SOURCES Wikipedia The times of india The econmic times The Economist Peoples magazine china Forbes Time Reports of Heritage foundation and Wall Street journal Thomas j. Rowsky’s report on China’s institutional investments Swapan and Biswan k. bhattacharya repoprt on India-China trade relations Baladasd Ghosal report,

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