3.

Since April 2020 China’s GDP has displayed highly volatility after an extended period of time
with a consistent level of growth, currently at 0.8% (investing.com, 2023).Which is correlated
with the movement of the CSI300 (the Shanghai index of the 300 largest companies).

Unemployment is at lining at 5.2% (investing.com, 2023) after falling from its recent highs. PMI
is bellow the critical 50 at a value of 49.2 (S&P GLOBAL, 2023). The service sector is still growing
with a NMI value of 54.1 (S&P GLOBAL, 2023). In ation has reduced drastically with the most
recent CPI reading of 0.2% (investing.com, 2023) and PPI with a de ationary reading of -4.40%
(investing.com, 2023).

The Chinese economy has become a signi cant player since it started its industrialisation in the
50’s. Whilst it is still a signi cant sector, there is now signi cant growth in more tertiary to
quaternary industries, as can be seen by the rise in GDP associated with services, now
accounting for 52.8% of total GDP vs 39.9% for manufacturing. The remaining 7.3% is allocated
to agriculture(Statistica, 2023).

4. The Chinese country follows a socialist structure however there has been increasing
integration with more of a capitalist approach with changes in ownership and the opening of a
stock market etc… Allowing it to compete and interact with external economies allowing it to
grow to become the second larges economy in the world after the United States. Chinese
monetary policy framework has lacked any proper documentation for decades and still remains
unknown (Bradley Jones and Joel Bowman, 2019,p. 1). However there is now signi cant
evidence that there is progression towards alignment with other advanced economies. In
particular monetary policy actions targeted at factors such as in ation, industrial output, money
growth and consumption, acting in ways more typical of economies following more of a capitalist
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 market approach with less direct government intervention. Its progress is still developing.
(Fernald, Spiegel and Swanson, 2014 as cited in Bradley Jones and Joel Bowman, 2019, p.2).
Whilst there has been signi cant alignment there is still large di erences in approach. One such
example is the role of the Peoples Bank of China (PBOC). The central bank has no independence
in the decisions that it makes. It advises the State Council which then makes the nal decisions
on the approach to be taken and direction of the economy.

Current scal policy is directed towards stimulating the economy through tax reliefs amounting to
927.4 billion yuan. There is also a push to compete for foreign investment. Whilst the actual
amount spent on encouraging foreign investment is uncertain as it is spent by the local
authorities. There are guidelines from the state council directing support to more equal
opportunities for foreign-invested rms as compared to domestic-funded rms and in allowing
greater movement of people into the country from abroad alongside canvasing. There is also a
push to improve intellectual property and commercial secret safe guarding, which has been a
problem in the recent past (Luo Shanshan, 2023). Employment is also being supported with a
8% increase in employment subsidy funds.

In the Monetary policy has seen two separate drops in interest rates in response to the
disin ationary environment that the economy is in at the current time.

5. China for years has been a net exporter and now has become the largest exporter in the world
and so hence dominates supply chains for manufactured products. On the ip side despite itself
having huge natural resources its imports tend to be focused on natural resources ie iron
ore ,petroleum etc… to support its outsized manufacturing, so puts pressure on global natural
resource supply chains. This demand has lead government backed Chinese companies to start
buying equity stakes/providing loans to mining companies in a bid to ensure supply.

China with its position as the worlds largest exporter means that it relies heavily on trading
relationships across the world, the most important and signi cant of which is the USA. This
relationship with the US has become increasingly strained in recent times. This has been caused
by concerns by the US over the US-China trade de cit, claims of intellectual theft and the rapid
growth of chinas economy which now comes second to the US in total GDP size and threatens
the USA’s dominance on the world stage. This has culminated in the US putting tari s on Chinese
goods and limiting the access of Chinese companies to technology and information sectors in the
US, with the Chinese retaliating by putting tari s on US exports. The result of these steps is to be
a signi cant reduction in the total exported volumes, putting prices up, which has particularly
e ected China through reduced exports into the US. Outside of the US, china has been extending
its in uence and ability to move goods through Asia and into Europe with the Belt and Road
initiative (BRI). This is an initiative that is looking at the improvements in infrastructure globally
both in ports for sea routes and rail networks over land that will allow Chinese companies greater
ability to move their goods direct to consumer, and natural resource rich countries to move
product into china, in an attempt to allow Chinese manufacturing to continue to grow. As part of
the initiative, Chinese loan providers are lending money at preferential rates, raising concerns over
Chinese dept dependency.

Financial sector. The Chinese central bank - The Peoples Bank of China - has roles in the setting
the monetary policy of which interest rates is one of them, it also regulates repo rates, maintains
the USD pegged value of its currency and collects deposit insurance. Currently, the stock market
is moving down however bond yields remain positive.
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