China: Macro and Micro Aspects of Economy

2288 Words10 Pages
This paper examines the macro and micro economic aspects of pursing a new investment strategy in China focused on the selling of our heavy machinery to China. It will detail the high growth potential of this investment while balancing the associated risks inherent in this proposal. It will detail the fundamentals that compel us to pursue markets in the PRC and speak to China’s overwhelming comparative advantages when measured against the rest of the world and particularly other developing nations which also offer greater rates of return. In the past we have utilized China’s currency rates, use of VAT, and lower wages to export cheaper components for our manufacturing. This paper will endorse a change from exporting to importing to…show more content…
The Chinese government estimated that 20 million migrant workers had lost their jobs in 2008 because of the global economic crisis. The Shanghai Stock Exchange lost nearly two-thirds of its value from the end of 2007 to end of 2008. Below, the chart provides a visual impact of the global crisis on Chinese imports and exports: These outcomes would have and have pushed some countries to the brink of default. Unlike the Irish and Spaniards, the Chinese GDP Growth has not been spurred by the housing market bubbles and overconsumption that have placed in dire straits. The Chinese have been savers so; when the exports severely declined they embarked on a historic stimulus program that totaled $586 billion. The package was used to finance public transport infrastructure such as railways, highways, and ports and private infrastructure including affordable housing, irrigation for farming, electricity production, technological innovation and education. Despite the setbacks levied by the financial crisis, China’s economy offers very positive short and long term growth prospects. The WEO database has China’s GDP growth forecast pegged at 9.5% for every year from 2012 to 2016. With an average growth rate of 11.2% over the last five years, this forecast represents the IMF’s belief that
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