China Unbalanced

THE CHINA STORY – PRESENTED BY GROUPS ‘D’, ‘E’ AND ‘F’

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China Unbalanced is te re

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Second largest economy - $12.4 Trillion (PPP) , $8.2 Trillion (Nominal) World’s Largest exporter and second largest importer China's Trade Surplus - $426 Billion ($258 Billion from US) Savings 51% and Domestic Consumption 36%

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Controlled Currency – High Export

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Facts

Largest Population – 1.35 Billions

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The Chinese Economy

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Excessive Savings, Investment in Export, Low Domestic Consumption, Inadequate Healthcare, Unsustainable Pension Model

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Global Financial Crisis

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Export Led Economy – A failure
Exports DOWN -

Workers Laid Off

25% in 2009 20 million

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To Get Rich is Glorious
Based on strategy of export which led to growth of Chinese economy in 1978

Ø The great Chinese famine in 1958-1961; Nation was in poverty

Deng’s Legacy
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President Deng’s initiatives and triggering effectArresting population growth Agricultural output increased because of market incentives, optimal utilization of surplus capacity of farmers

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Consequences

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China was a closed economy Inefficient collective agriculture Poor performance of state owned enterprises

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Prior to 1978-

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Consequences
Ø Ø Ø Farmer’s surplus money increased town and village enterprises Led to labour intensive market Export of products- clothes, radios, sneakers etc.

SEZ (Special economic zone)-President Deng’s most famous innovation— ü Ø Ø Ø Factors contributing to FDI in SEZ Cheap labour Adequate power No taxes

However, reforming state owned enterprises had limited success Labour laws and suitable model

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Deng Xiaoping rose to power in 1978 and brought the strategy of Export led Growth

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Change in Regime

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Agricultural output doubled: Making China self sufficient for next 10 years Merchandise trade