CHINA GDP GROWTH RATE

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 China's economy is the second largest in the world after that of the United States China has seen rapid economic growth in the past 30 years, however the economy has seen some ups and downs during periods Growth mainly due to boom in export of products Despite a series of tightening measures by Beijing China's GDP growth sped up unexpectedly in the fourth quarter

TRENDS SEEN IN CHINESE ECONOMY

Quarterly GDP Highlight

Year 2010 2009 2008

March 11.9 6.2 10.6

July 10.3 7.9 10.1

September 9.6 9.1 9.0

December 9.8 10.7 6.8

Highlights In Chinese Economy

Despite deep recession and plunging world economy, there is on substantial decrease in GDP rate of China GDP grew 9.8% in the fourth quarter faster than the third quarter's 9.6% increase 10.3% in 2010, above 2009's 9.2% expansion Inflation decreased to 4.6 percent in December, 0.5 percentage points lower the 5.1 percent in November

2009-2010 Major Events

In 2009, inflation stood around 3.3% near the government expected 3% Drastic changes in 2010:
Industrial value added output rose from 4.7% of 2009 to 15.7% in 2010(More than 3 folds) China's fixed-asset investment rose 23.8 percent from a year earlier Urban and fixed-asset investment rose to 24.14 trillion Yuan, up 24.5 percent and 19.7 respectively Large scale industry profit soared by 49.4 %

Increasing Inflation
Inflation in China was last reported at 4.9 percent in February of 2011 (PUT the data about inflation hai

China Moving To Capital Intensive Economy(Analysis nai ho)

The investment in fixed asset rose by 23.8% and profits of large-scale industrial enterprises increased by 49.4 percent The value added percentage changed from Suggesting that the economy is shifting towards capital based economy Previously, it was more labor intensive

 Major Problem for Government

Continue growth in GDP Control the inflation rate

Analysis
Value added method of GDP calculation Inflation rate Refers to a general rise in prices measured against a standard level of purchasing power. The measures of inflation used in China are: GDP deflator(Say few words about each of them) CPI PPI Relation Between Inflation and GDP: GDP growth and Inflation correlated With rise in GDP rate, there is increase in inflation(show the data) Therefore, inflation does not necessarily mean bad for the economy Government wants to control the inflation rates, but same time does not want to limit growth, there is a paradox

 From the case it is seen that the base year is taken as the previous year in China

Discrepancies in Inflation Rates calculations

CPI inflation accounting may show distorted view of the inflation(as in this case due to holidays, the spending pattern changed)

Conclusion (Importance of GDP)

It acts as a yard stick for the government Economic policies are set around the GDP calculations Growth and inflation go side by side GDP provides a view about the economy and suggests where the country needs improvement China has been proactive in bringing reforms whenever the GDP had plummeted, (e.g. It brought reforms in exchange rates and promoted internal consumption when the GDP fell.)