Why China's Economy Is Slowing?

Hung’s stated goals are as follows. First, he aims to outline the historical origins of the capitalist boom in China as well as the conditions which predicated said boom. He also names four conceptions against history to explore the global effects of China’s capitalist boom and the limit of that boom. Firstly, he seeks to challenge the notion that China is challenging the United States neoliberal order. Secondly, he examines the belief that the increasing incomes of poor Chinese citizens helps to reverse worldwide income polarization. Thirdly, he analyzes the claim that China’s rise is challenging Western dominion over the world, and is radically altering the world order. Lastly, he plans to evaluate the assertion that China has been emerging as the most powerful driver of growth since the global financial crisis. He plans to devote a single chapter to the refutation of each of these views and explanations of why they overstate the importance of China, in addition to several introductory chapters describing China’s rise. He aims to prove with this work that China is no different than the other major capitalist powers, that its boom is dependent on the global neoliberal order, that its boom contributes to rampant inequality, and, in sum, that China is just a foundation of the capitalist status quo.

Global market conditions have presented opportunities for investors to purchase assets for less. United States (U.S.) real estate prices are depressed and many firms in the West are starved for cash. The Chinese see this as a prime opportunity to rummage through the bargain bins and to gain technological know-how and international

There is a fierce competition for world dominance as China is poised to overtake the United States as the preeminent world power. China’s growing gross domestic product (GDP) rivals that of the US with economists predicting the Chinese economy will surpass that of the US by 2020 (Morrision, 2014; Strauss, 2013). In 2012, China had a GDP of $8.22 trillion (World Bank, 2014a) experiencing an annual average growth rate of 9.86% between 1999 and 2012 (World Bank, 2014b); whereas the US had a GDP of $16.24 trillion in 2012 (World Bank, 2014a) with an average growth rate of 2.15% from 1999 to 2012 (World Bank, 2014b). More than half of the GDP growth in the past decade can be attributed to labor income growth among college educated employees. Even during economic recession, income growth among college graduates had a positive effect on GDP (OECD, 2012).

Since the onset of the global financial crisis in 2007, China has faced some critical problems linked with the excess of liquidity in its internal market, due to the stimulus plan launched by the Government to soften the effects of the crisis. As a result China is now fighting against a high rate of inflation (especially food prices) and a high cost of property. While the inflation issue has been partially solved in the first term of this year, the fear for the real-estate market trend is still alive.

In the past 10 years, China’s residential real estate sector plays an important role in the economy and has been a key driver of growth. At the same time, a $580-billion stimulus package in 2008 helped China prevent a sharp slowdown in economic growth. This action has been considered timely and effective by most observers. However, there also have been concerns that banks loosened their lending standards too much as a result of the huge stimulus, among other factors. This led to excessive lending to individual home purchasers and rapidly rising housing prices that, in turn, may eventually lead to an increase in nonperforming loans at financial institutions should those prices collapse.

China had a GDP per capita level similar to Zambia, less than half of the Asian average and was lower than two-thirds of the African average at the outset of the reforms in 1978 (Eckart, 2016). China was poor. Since then, China has grown exponentially experiencing nearly 10% GDP grown per year until 2014 raising GDP from 155 current US Dollars in 1978 to 7,590 US Dollars in 2014 (Eckart, 2016). China, who accounts for 18% of the world’s population, was able to lift 800 million people out of poverty and growth in the middle class. This document will examine China’s financial and currency markets.

This essay aims to show the successful policies of Chinese government has used to increase the rate of economic growth from 1998 to 2006 and evaluate them. Economic growth rate is the percentage increase in output over a twelve-month period (Sloman, 2010: 562). From 2000 to 2007, China 's average growth rate was 9.2% in per year, and nearly 35% of world GDP growth (In term of PPP). As a big country, its population making up over one-fifth of the world 's population, but this rapid of growth is unprecedented (Fenby, 2008). Madison (1997) summarized the development history of the world economy of two hundred years, and considered that, in the long term, the big four factors determine the sustained high growth of output per person: technology、the accumulation of material capital、and accumulation of human capital.

The rapid growth in the Chinese economy since 1978 has captured the attention of most of the international and business organizations. Some of the people have negative views about the future growth of China, whereas, others fear that China will turn out be a very strong nation in economic terms. According to Nicholas Lardy, huge economic problems will be confronted by China as there is a great probability of social unrest in future in the People's Republic of China. In addition to that, there would be an increase in the indebted state owned enterprises. This increase in social unrest and nonperforming loans will lead towards a decline in the economic growth of the Chinese Economy. (Holz 2005)

The People 's Republic of China has had one of the wildest real estate sectors of any large-scale global economy. Chinese real estate value have been appreciating dramatically and at least abroad in the United States, media outlets have been covering this topic in an extremely sensationalistic way reporting "ghost cities," and "real-estate bubbles" at their bursting point.

For the past three decades, critics have immersed themselves in the discourse of China’s rapid economic growth and development. For a socialist regime, the emergence on China’s remarkable economic achievement has been one of the world’s most unprecedented success stories. Sai-leung Ng (2000) emphasized on China’s success, describing China as the country with the most rapid economic growth of the time. Paul Collier (2007) noted that individuals in the west were starting to get worried that China was converging to quickly with the western economy. To support Collier’s comment, Jean-Francois Huchet (2006) rated the Chinese economy among the top five leading economies in the world.

The economy of China has been on the rise at a rapid rate for more than three decades. Most of this growth higher productivity of labor highly contributed to this economic growth. On the contrary, as the economy widens, rate of employment diminishes along with a steady increase of the youth population. This paper focuses on understanding the efforts that led to the growth as well as the setbacks that China might encounter over the coming years. The challenge would be to maintain its rapid leap of economic growth. Key questions consist ofhow China will sustain its investments; whether these investments will lose productivity as the labor - capital ratio keeps on rising, whether employment rates will sustain urban migration.In the bottom line scenario, growth of the economy falls steadilyat a rate of six and a half percent by the year 2030 from the current ten percent (Chowand Kui-Wai 146).

China is one of the major economical players in today’s international market. China’s economy is the “seconds largest in the world after the United States” (Joseph, 63). This is a striking achievement due to fact that China is a “developing country”. China has achieved a great amount of success through the collaboration of political and economical regimes. The economical growth in China led to “one of the biggest improvements in human welfare anywhere at anytime” (Kristof, 15). Currently, China is experiencing a real-estate bubble. This eventually will hit a climax, disrupting the real-estate market within China. This real estate bubble that China is undergoing is considered one of the "biggest housing

Despite the high levels of corruption, investors do not seem to be deterred from doing business in China. Some believe that corruption acts as an effective “grease” to speed up the many layers of bureaucratic inefficiencies for starting of businesses in China (Meon, Weill, 2008). Furthermore, the policy of regional competition in China has caused the competitive lowering of bribes in order to attract businessmen with a lower “unavoidable cost” of doing business in the region. (Li, Peng 2001). Another reason would be the high predictability of corrupt practices in China (Campos, Lien, Pradhan, 2001), to the extent where investors factor “bribes and gifts” as a portion of their budget. Hence it does not appear as a deterrent to businesses when they enter the market (Dickson, 2008). Corruption due to “Guanxi” is also explained to enhance efficiency, because “Guanxi” contributes to high levels of public trust that encourages business ventures due to the availability of valuable information that reduces uncertainty (Li, Wu

In economics view housing price control is only a short-term solution for maintain the stable price. In the long run government shouldn’t interfere too much in a mature property market as the market itself has the ability to adjust the price and balance the demand and supply. Moreover, whether the local property industry actually can achieve the goals that government set and is the new property tax will continue implement in other cities or it will be abolished is still uncertain. As we can see, there is a gap between the government policy and actual practice due to the real Chinese society situation and people’s conception. Housing price has become one of the most urgent issue in China for a period of years and actually in later 2008 and 2009 some big cities’ housing price had a obvious decrease, such as Guangzhou city. The main reason is not because of governmental macro-control but the global financial crisis.

This chapter reviews relevant academic literatures on the research topic from both theoretical and empirical sides. The first section is a brief introduction of theoretical background, which is primarily about “新经济增长理论”. The second section presents some empirical studies on identification of institutional factors as well as the relationship between institutions and economic growth. Most studies are based on cross-country data and pay more attention to developed countries. The third section displayed a few facts about China’s economic growth. Then empirical findings on China’s