This paper will describe the present and future macroeconomic situation in China based on in-depth literature review. It covers the five sectors of economy (real sector, public sector, monetary sector, external sector, labour market) and demographic development.
The People’s Republic of China, established in 1949, is a socialist one-party state ruled by the Chinese Communist Party (CCP). In the late 1970s, China started to shift from a centrally planned economy to a market based economy. Its export- and investment-led growth model has transformed China into the second largest economy in the world. Despite its economic success, China remains a developing country and its market reforms are incomplete. The gross national income per capita is still only 50% of the world average and over 120 million people of its 1.3 billion population still live below the US$1.25-a-day international poverty line. The country is experiencing a strong inequality, not just among the income of its population, but also among the regions: The three wealthiest and most important economic regions are all on the east coast, while the west of the country is generally poorer.
In the following, the macro environment of companies in China will be evaluated as it has major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and hence the extent of business growth and expansion; exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. The framework to review the macro environment is an economic review and outlook in which the demographic situation, the real sector, the public sector, the monetary sector, the external sector, and the labour market are described and the future situation is predicted.
The time frame for future outlooks is t=7 years (2013-2020).
Table of Contents
1 INTRODUCTION
2 ECONOMIC REVIEW AND OUTLOOK
2.1 DEMOGRAPHICS
2.1.1 Age
2.1.2 Gender
2.1.3 Income Levels and Distribution of Wealth
2.1.4 Ethnic Groups
2.1.5 Outlook
2.2 THE REAL SECTOR
2.2.1 The Economy’s Structure
2.2.2 Purchasing Power and Consumption
2.2.3 Outlook
2.3 THE PUBLIC SECTOR
2.3.1 Public Budget Performance
2.3.2 Public Debt
2.3.3 State Involvement & Economic Barriers
2.3.4 Outlook
2.4 THE MONETARY SECTOR
2.4.1 Price Stability, Inflation and Monetary Policy Trends
2.4.2 Interest Rates
2.4.3 Outlook
2.5 THE EXTERNAL SECTOR
2.5.1 Balance of Payments
2.5.2 Exchange Rates
2.5.3 Outlook
2.6 THE LABOUR MARKET
2.6.1 Labour Availability: Workforce Structure and Employment Status
2.6.2 Labour costs, Wages, Productivity and Unionization
2.6.3 Outlook
3 SUMMARY
Objectives and Themes
This paper aims to provide a comprehensive macroeconomic evaluation and outlook for China from 2013 to 2020. The primary research goal is to analyze the economic framework that influences business operations and decision-making within the Chinese market by examining key structural and demographic factors.
- Analysis of China's demographic shifts, including aging population and income distribution.
- Evaluation of the real sector, specifically the transition from export-led to consumption-driven growth.
- Assessment of the public and monetary sectors, focusing on policy, debt, and inflation.
- Review of the external sector and the impact of exchange rate policies on international trade.
- Investigation of the labour market, including wage trends, education levels, and employment status.
Excerpt from the Book
2.3.3 State Involvement & Economic Barriers
In the 1960s and 1970s, a large share of the country's economic output was controlled by the government. It set production goals, controlled prices, and allocated resources. As a result, by the end of the 1970’s, nearly 75% of China’s industrial production was manufactured by state-owned enterprises based on centrally planned output targets. In the 1980s, the government started to combine central planning with market-oriented reforms. These reforms led to average annual growth rates of 10% in agricultural and industrial output. In the 1990s, the country further opened up, many foreign companies began entering China, and China’s economy boomed.
Today, political power in China is centralised in the CCP. With the support of the People's Liberation Army and a well-developed internal security system, the political stability is ensured. The amount of information that people and organizations receive is strictly controlled by the Chinese government. Press freedom is as much restricted as freedom of speech. Also, judicial power is not independent. As a result, political developments in China are mostly intransparent, clouded, and difficult to evaluate.
Summary of Chapters
1 INTRODUCTION: This chapter outlines the paper's scope, providing a brief overview of China's transformation into a major economy while acknowledging its status as a developing nation with structural challenges.
2 ECONOMIC REVIEW AND OUTLOOK: This main section details the five economic sectors and demographic trends, analyzing historical data and providing forecasts for the 2013-2020 period.
3 SUMMARY: This final chapter synthesizes the findings, noting that despite political and structural obstacles, the shift toward increased internal demand and consumption makes China an attractive market for multinational firms.
Keywords
China, Macroeconomics, GDP, One-child policy, Consumption, Labour market, Inflation, Exchange rates, Economic growth, Demographics, Trade balance, Industry sector, Urbanization, Reform, Investment.
Frequently Asked Questions
What is the core focus of this publication?
The publication provides an in-depth macroeconomic analysis of China's current economic situation and presents an outlook for the period between 2013 and 2020.
Which specific areas of the economy are analyzed?
The analysis covers five main sectors: the real sector, the public sector, the monetary sector, the external sector, and the labour market, complemented by a demographic study.
What is the primary objective of this economic review?
The objective is to evaluate the macro environment in China to help companies understand the conditions that affect their business operations, strategy, and decision-making processes.
What research methods were employed?
The report is based on a rigorous and in-depth literature review, utilizing data from international institutions such as the World Bank, IMF, and the Economist Intelligence Unit.
What topics are addressed in the main body of the work?
The main body examines factors such as population age and gender imbalances, income distribution, GDP growth models, public debt, monetary policy trends, trade balances, and workforce dynamics.
Which keywords define the scope of this document?
Key terms include China's macroeconomics, GDP growth, demographic shifts, internal consumption, industrial output, and labour market transformation.
How does the one-child policy affect China's future economic outlook?
The one-child policy has led to a rapid aging of the population and a significant gender imbalance, both of which are expected to create challenges for the labor force and social security in the coming years.
Why is China aiming to shift from an investment-driven to a consumption-driven economy?
The government aims to reduce vulnerability to global economic changes and foster more stable, long-term growth by leveraging the country's vast population and increasing internal demand.
What role does the CCP play in China's current economic landscape?
The CCP holds centralized power, strictly controlling information and political processes, which results in a business environment characterized by potential opaqueness and difficulty for external observers to evaluate.
- Quote paper
- Christian Wollscheid (Author), 2014, China: Economic Review and Outlook 2013 - 2020, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/271909
