MAEC Project TR01 Group 1 by Evelyn Ng https://padlet.com/evelynng17/MAEC_Group_one Donovan Sim, Elliot Seow, Evelyn Ng, Ng Leting, Yeo Munyi en-us 2016-05-12 12:31:41 UTC 2024-01-08 06:25:50 UTC hello@padlet.com https://padlet-assets.storage.googleapis.com/portrait/sticky.jpg What is China's economic growth rate for fiscal year 2015? Is it going into a recession?  evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110584602 (PIC)]]> 2016-05-12 15:37:34 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110584602 Article #1: GDP evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110789452 In China, their GDP is divided into three main groups: Primary (farming, plantation etc),Secondary( Construction and Industry) and Tertiary (Trades etc).  The Secondary group is most crucial to China's economy given China's large population size. China has ample of land ,natural resources and most importantly cheap labour and these are main reasons why many countries chose to manufacture their products here. This directly caused an increase in China's GDP.

Reasons: The bigger an economy gets, the harder it is to keep growing. China's working population and investment was at its peak in 2012, and has been lowering afterwards. China's technology gap with richer countries has also narrowed, which means productivity growth will decrease too.

Magnitude & impacts: an all-time low economic growth rate slowed to 6.9%, never before in the last 25 years, services account for half of the GDP, two-sided growth picture - heavy industry weighed on and light industry with pricing power greatly exceeding that of heavy industry, substantial rebalancing from severe downward pressure on output prices in overcapacity sectors, stock markets intially climbed around the region before all sliding back or into the negative territory, Shanghai Composite 20% down from December high & trading 40% down from 52-week high in June, China's power generation first annual decline since 1968 dropping 0.2% from 2014, financial services had a bad reputation after the margin financing crash. 

Trend: According to this article, China's Real GDP growth rate declined to a 6.9% and although this figure does not lift China out of this dark times, it is still a comforting sign for economists and the Chinese government that China is still performing well. However as compared to previous years, the communist country has disappointed in GDP growth rate and figures have dropped from 7.7% in 2013 and 7.3% in 2014 to a new-low of 6.9% in 2015. However their GDP based on current prices have increased marginally from USD 10,430.7 billion in 2014 and USD 10,982.8 billion in 2015. 
(World GDP Ranking 2015 | Data and Charts,2016) Also China's secondary group declined to 6% however their tertiary sector expanded to 8.3%. 
 

Government policies to curb this problem: To mitigate the negative effects, the Chinese government is planning to come up with policies that " interest rate and reserve requirement ratio cuts from the central bank, the People's Bank of China". Fiscal policy can also be adopted to ensure that the country's GDP continues to grow. These are done to improve the economy especially when China is in debt, property markets and banking sector declining.
]]> 2016-05-13 15:15:57 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110789452 Article #2: UNEMPLOYMENT evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110789495 In economic terms, a person is only considered unemployed when he is able to work and is finding jobs but has not found it yet. Under the adult population there are two main groups under this- Labour force(economically active) and outside workforce(economically inactive). Those outside the workforce include discouraged workers and full-time students and on the other hand, both employed and unemployed workers are classified under the workforce.

Reasons: China is having troubles growing its economy. In order to cut costs and save money, more and more workers are being retrenched, resulting in high level of unemployment.  China's increasing population especially in those rural areas are causing the lack of jobs too. 

Magnitude: China's poor performance led to retrenchment of 5-6 million state workers over the next two to three years, making it the country's largest retrenchment program yet.

Impact: With a high level of unemployment rate comes many costs. Firstly, the personal costs suffered by those unemployed. They would have to bear the embarrassment from their friends and relatives and if they were the breadwinner of a household, how and where can the family get money and unemployment incentives from? Answer is: The government. A government has to account and care for all its people regardless of the nation's economic status. As such the Communist government will have to adjust their budget to reallocate sufficient funds to help those families in need. Sectors like defence and healthcare may not get adequate fundings to function well, affecting the country.  Most importantly, social riots. When citizens are dissatisfied with their living standards they may choose to display their frustrations and voices via riots. Society will be in chaos then and innocent people's lives will be directly affected negatively. Also the rate of frictional unemployment will also increase. The amount of job vacancies in the country has significantly decreased and simultaneously the number of graduates in China is increasing due to population boom. Consequently theses new graduates will take much longer to find a new job to support himself and for some people, they may need to move to other populated cities like Shang Hai or Beijing or even other countries to work. This may lead to brain drain of the country.

Trend: China is facing an economic recession currently and the Chinese government is considering plans to layoff workers in the coal and steel industries(Heavy industry). As mentioned in this article, they are considering to layoff "5-6 million state workers over the next two to three years"(Shao,Spring,2016) which means that there will be lesser civil servants in the Chinese government. Simultaneously China will create more new jobs to solve the raising unemployment issue,ideally below 4.5% in 2016, and they will create plans to merge firms that are in-debt to ensure that these firms will go out of their crisis and achieve economic prosperity.

Government policies to curb this problem:]]> 2016-05-13 15:16:09 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110789495 Article #3: INFLATION evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110789594 Inflation is defined as a sustained and continuous increase in the general prices of goods and services in the economy. With inflation comes the erosion of purchasing power and individuals in the economy can purchase lesser during an inflation year. There are two causes of inflation- Demand-Pull inflation and Cost-push inflation and inflation is unhealthy to any economy. An index to measure inflation is the Consumer Price Index (CPI) which measure changes in the average prices of consumers goods and services.

Reasons:
Chinese governments strict currency control that had artificially depreciated the foreign exchange rate of the Yuan.

Cost-push inflation is inflation that is mostly caused by an increase in the cost of production. Increases in the cost of production can come different sources; for instance, wages, price of crude oil, prices of raw materials, construction, equipment and so on. It occurs when there is competition, or shortage of, resources to produce goods and services. The general price level in the economy is “pushed up” by the pressure on the cost of production.

Trend: inflation held steady as of April 2016. The consumer price index rose 2.3 per cent from a year earlier in April and also rose 2.3 per cent in March.

Impact(economy/individuals):
As China’s economy gains strength, and the American economy weakens, imported food & energy resources become ore expensive, consumer led demand causes a direct increase in business activities & production cost, pockets of assets bubbles forming in the China property market especially in first tier cities like Shanghai & Beijing. Furthermore in China, the rich are getting richer whereas the poor are getting poorer. With inflation going on, prices of goods and services are constantly increasing and when majority of the Chinese population is not earning more, they have lesser money to purchase items and this compromise the population's standard of living. Besides, anger and dissatisfaction towards the upper class would rise as the majority of the population see themselves struggling to make ends meet while others continue to live a wealthy and well-off live.

Government policies to curb this problem:
The appreciation of the RMB is one of the most immediate ways that China's government can limit the pace of inflation which is probably one of the most important reason that it is doing it.

Also, controlling money supply from the People’s Bank of China through controlling forex rates, sterilization process, printing currency, reserve ratio changes and discount rate changes are some measures China can adopt to ensure inflation is kept under control. (S. Seth, 2015). However it is important that China does not overprint to curb inflation as it may accidentally lead to hyperinflation where money becomes worthless. Controlling its forex rates is important as controls the amount of foreign currency flowing into the economy and thereby influencing the purchasing power of the Chinese Yuan. 

]]> 2016-05-13 15:16:31 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110789594 Reference list evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110871755 1. Knoema, (2016), World GDP Ranking 2015 | Data and Charts , Retrieved 14 May 2016 from,https://knoema.com/nwnfkne/world-gdp-ranking-2015-data-and-charts
2. http://www.tradingeconomics.com/china/inflation-cpi

]]> 2016-05-14 11:33:11 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110871755 Brief introduction to China's economy evelynng17 https://padlet.com/evelynng17/MAEC_Group_one/wish/110912387 The communist country was once an extremely backward and rural country before the great economic reform in the late 70s. Under their first leader,Mao Ze Dong, China then mainly focused on agriculture sector and heavy industries like coal mining and steel production. Soon after his death in the late 70s,his successor made plans for China's economic reconstruction and today China has continued to achieve economic prosperity and growth over the past few decades and today it has emerged as one of the world's leading economies. However in 2015, China's economy declined and this affected the interdependent economies of the world negatively, worrying many economists, leaving them wondering whether and when would China walk out of this difficult times.  ]]> 2016-05-15 13:23:32 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110912387 Article on recession donovansim189 https://padlet.com/evelynng17/MAEC_Group_one/wish/110971366 In the first quarter of the year 2016, China's economy is going down and this is bad due to many countries working with China. Thankfully as of now, China is not at risk but needs to be closely monitored because if China were to really be involved in a recession. This leads Asia's entire financial edifice to potential danger and give rise to a plethora of unnecessary problems that may arise. ]]> 2016-05-16 05:55:48 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110971366 flawlessvintage https://padlet.com/evelynng17/MAEC_Group_one/wish/110972328 China's inflation rate]]> 2016-05-16 06:12:33 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110972328 Article: What's going on with China's Economy? letingng https://padlet.com/evelynng17/MAEC_Group_one/wish/110974306
China's stock market experienced a free fall in the first week of trading this year. China made a huge mistake by installing circuit breakers. A circuit breaker shuts down the trading day when the market is down by a certain percentage. It also incites panic in the marginal investors because they become uninformed of the market when circuit breakers are used. An investor will only panic when China installs a circuit breaker in fear of a market crash.]]> 2016-05-16 06:43:50 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/110974306 Youth unemployment in major cities in China and inclusion of the rural population donovansim189 https://padlet.com/evelynng17/MAEC_Group_one/wish/116067234 The unemployment rate for China is quite high as compared to other nations with similar economic background as China. This is because many locals living in the rural parts of China are included in the labour force participation rate although they are not working, making the numbers very high. Hence, inclusion of the rural population into the workforce can both increase the labour force participation rate as well as decrease unemployment. With that, the Chinese government has put in place certain policies to help the locals in the rural areas pick up skills so that they can contribute effectively to the workforce. 
Additionally, since the youths that are above 15 are included in the labour force participation rate, the government is encouraging them to work part time so as to help contribute to the economy of the country. ]]> 2016-07-07 14:01:58 UTC https://padlet.com/evelynng17/MAEC_Group_one/wish/116067234