Saturday, June 20, 2009

China Economic Review

China has played a very critical role in boosting South-East Asian economy. It's growth story has been quite remarkable. Many experts predict that Chinese economy will overtake US' economy by year-2035. However it is important to review that prediction, given effects of global economic slowdown on Chinese economy.

How has China coped with global economic crisis? China is believed to be one country that has largely been able to protect itself from effects of US subprime crisis and credit crunch. But this nation is undergoing certain structural changes as far as its economy is concerned. Shanghai stock exchange has lost about two-thirds of its value. Chinese export industry is also experiencing difficulties in growth prospects. But despite these challenges, Chinese economy is believed to be independent and strong enough to not only cope with global economic crisis, but also establish itself as an global economic giant. China Economy: Strengths and weaknesses China is one of world's largest receiver of foreign direct investments. World Bank estimates reveal that around $80 billion are invested in China annually. China's job market is also quite impressive, offering employment to about 15 million new workers on a yearly basis. Large-scale poverty eradication and fastest rise in income levels of individuals in China, have lent support to a view that this South-East Asian country, in near future, will surpass US in terms of economic power. Several weaknesses plague China's economy. Corruption at local level governance has been a perennial challenge for this nation. Central government's inability to control affairs of local government has always proved to be a hindrance to China's economic growth. Economic reviews of China have revealed that attempts made by central government to counter this menace has been a slow and long-drawn process. China's economic statistics is calculated on a year-on-year basis and seasonal adjustments are not made. China's economic future China's economic future depends a lot on on how it manages to build upon its strengths and overcome its weaknesses. Chinese government needs to be proactive to prevent a possible financial sector collapse in their country. A sustained rate of growth may help China to surpass US and become world's largest economy.

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