This
paper briefly describes the trends observed in the economic development of
China over the past decade from 2005-2014. To aid in deriving an accurate
representation of China’s economy in 2005-2014, macroeconomic indicators such
as the Real Gross Domestic Product(GDP), Real GDP Growth Rate, GDP
Per Capita, Inflation Rate and Employment
Rate will be used.

 

China is one of
addition the richest country in the world with a robust and fast-growing
economy. With its population counting at 1,415,045,928,
China is infamous in being the most-populous nation
contributing to widen its pool of talented workers. China
is renowned for being highly efficient and a strong competitor to many
countries in multiple areas of business, at the forefront of numerous technological
advancements. In addition, China is known for its largest export industry in
the world, with its exports focused shined on computers, broadcasting
equipment, telephones and light fixtures to several countries around the world
mainly to United States(US), Hong Kong(HK) and Japan. On the other hand,
China’s main major import industries is focused on integrated circuits, Crude
Petroleum, Gold, Iron Ore and Cars from Germany, South Korea and United States.
Always known for striking a positive trade balance between their export and
import industries, China is known to be a blooming country.

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The
first macroeconomic indicators used in analysing an economy is through its Real
Gross Domestic Product(GDP). Real GDP is the value of final goods and services
produced every year when valued at a constant value. By analysing the Real GDP
in a country, it would aid the government to make well-informed decisions if
their policies are fruitful, give a direction for voters to judge whether the
government is able to value add service for the country/people and for
investors to make investment decisions whether the country is worth investing
in.

Figure 1- China Real GDP 2005-2014

China
ranks 2nd in terms of its Real GDP value. As evident from Figure 1, there has
been a relatively constant rise in the country’s GDP from the year 2005-2014.
This is a positive result from the large amount of money the government has
spend in their state owned companies that has been known to govern the
industries in the nation.

 

In
2014, the country’s real GDP was at $10.48 trillion in comparison to the Real
GDP in 2005 where it stood only at $2.26 trillion indicating a tremendous
improvement almost 5 folds more.

 

From
2005 – 2006, the increase was not as steep with a change from $2.26 trillion to
$2.75 trillion as compared to 2006-2008 where the Real GDP increased from $2.75
trillion to $4.60 trillion. This was a result of their decision to end the Yuan
fixed exchange rate which angered officials in US, Japan and caused a
depression in the goods value. Perspectives changed in 2006-2008 leading to
countries praising their decision as it displayed potential to stoke global
growth leading to an increase in their GDP.

 

However,
in 2008-2009, as a result of the Great Recession that occurred worldwide, the
nation’s GDP was affected with only a slight improvement to $5.1trillion. After
recovering from the recession, China made a comeback with an increase in the
real GDP from $5.10 trillion in 2009 to $7.57 trillion in the year 2011. Their
economy saw a continuous increase in GDP from 2011 till 2013 but not much of an
increase compared to the years before.

 

Unfortunately,
in 2013-2014, due to its credit binge where debts were exceeding past 250% of
their GDP slowing down their economy, their GDP only saw a minimal increase in
their GDP to $10.48 trillion from $9.6 trillion in 2014.

 

China
has set forward plans to improvise their GDP further by continuously putting
through their efforts in securitization of assets and create a debt-to-equity
swap. In addition, the government is looking forward to implementing a city
based policy to decrease real estate inventories.

 

The
second macroeconomic indicators used in analysing a country’s economy is
through its Real GDP Growth Rate. The Real GDP growth rate of a country is the
annual percentage change of Real GDP from the previous year to the present.
Taking note of the Real GDP growth rate helps to keep track on how
rapidly/slowly the country’s total economy is expanding. This is an excellent
tool to gauge if a country’s is economically progressing or failing.

Figure 2 – China Real GDP Growth Rate

China
is in the 10th position in comparison with other countries in terms of its Real
GDP Growth Rate. In 2005 – 2007, China saw a constant increase in their GDP
growth rate from 11.4% to 14.23%.

 

However
upon being hit by the Great recession in 2008, their GDP growth rate dropped to
9.65% and dropped further in 2009 till 9.40%.

In
2010, the country saw a glimpse of improvement in their GDP growth rate till
10.64%.

 

However,
the improvement was short lived. In 2011, their GDP growth rate dropped to
9.54% and further plunged to 7.86% in 2012. The economy saw a continuous
decrease in their growth rate thereon with its 2013 growth rate to be at 7.76%
and decreasing further to 7.3% in 2014.

 

The
reason for the constant decrease in its GDP growth rate is due to the growth in
the state sector and the economic and financial risks that could result in
further downfall in the event the economic
collapse when rectifying process is carried out.

 

The
third macroeconomic indicators used in analysing a country’s economy is through
its GDP per capita. The Real GDP per capita indicates the GDP per person in the
country. For instance, if a country GDP value is $1,000,000 and the country
population is 10,000, the country’s GDP per capita would be $1,000,000 / 10,000
= $100. This is an essential indicator when comparing one country to another
since it displays the relative performance of the respective countries.