Inflation in China in the last ten years
Discuss about the Research on Country Development.
The main objective of this report is to understand which the aspects that need to be covered while analyzing the overall economy of a country. In order to obtain an idea about the economy of a country the per capita income of the country, the GDP growth, the inflation rate, the unemployment rate and other similar aspects need to be evaluated. This report shall highlight analyze the economy of China by evaluating these aspects.
|
Year |
Value |
Change |
|
2017 |
2.4% |
19.82% |
|
2016 |
2% |
39% |
|
2015 |
1.4% |
-27.52% |
|
2014 |
2% |
-24.24% |
|
2013 |
2.6% |
-0.83% |
|
2012 |
2.6% |
-51% |
|
2011 |
5.4% |
63.64% |
|
2010 |
3.3% |
-571.43% |
|
2009 |
-0.7% |
-111.86% |
|
2008 |
5.9% |
22.92% |
|
2007 |
4.8% |
220% |
|
2006 |
1.5% |
(knoema.com, 2017)
The table given above presents the inflation rate in China from 2006 to 2017. Inflation that is measured by consumer price index represents percentage change in cost to consumer in acquiring a basket of services or goods, annually. On referring to the table given above, it can be seen that the there has been huge fluctuation in the rate of inflation in the recent years. The inflation rate can be seen to be fluctuating drastically between the years 2006 to 2017. However, the tendency of the inflation rate to increase started in the year 1997 (Rusticelli, Turner & Cavalleri, 2015).
|
Year |
Value (in billion US dollars) |
Change% |
|
2017 |
11795.3 |
5.14% |
|
2016 |
11218.28 |
-0.07% |
|
2015 |
11226.19 |
6.57% |
|
2014 |
10534.53 |
9.34% |
|
2013 |
9635.03 |
12.42% |
|
2012 |
8570.35 |
13.94% |
|
2011 |
7522.1 |
24.00% |
|
2010 |
6066.35 |
18.44% |
|
2009 |
5121.68 |
11.24% |
|
2008 |
4604.29 |
28.92% |
|
2007 |
3571.45 |
28.73% |
|
2006 |
2774.31 |
(knoema.com, 2017)
Gross domestic product (GDP) an be defined as the total of gross value added by all the producers of the country who are residents of the country inclusive of any taxes that leviable on the product and after deducting any subsidies. GDP is calculated without the deduction of any depreciation on fabricated assets or degradation and depletion of natural resources. It can be seen in the table given above that there has been an increase in the GDP of China consistently in the last ten years. However, the increase in the GDP of China has been in a declining rate. In the last 20 years, the GDP of China has witnessed a growth from 965.32 to 11218.28 billion US dollars (Tan & Floros, 2012). This substantial increase in the GDP of China indicates that China is progressing towards becoming one of the strongest economies in the world.
|
Year |
Value |
Change% |
|
2017 |
6.6% |
-1.76% |
|
2016 |
6.7% |
-2.90% |
|
2015 |
6.9% |
-5.48% |
|
2014 |
7.3% |
-6.41% |
|
2013 |
7.8% |
-1.27% |
|
2012 |
7.9% |
-16.84% |
|
2011 |
9.5% |
-10.43% |
|
2010 |
10.6% |
15.28% |
|
2009 |
9.2% |
-4.17% |
|
2008 |
9.6% |
-32.39% |
|
2007 |
14.2% |
11.81% |
|
2006 |
12.7% |
(knoema.com, 2017)
Real Gross Domestic Product measures value of goods and services produced by an economy in a particular year. The value of these goods and services is expressed in terms of base year prices. This base year price is referred to as ‘constant price’ or ‘constant dollar GDP’ or ‘inflation correct’. In other words, real GDP presents the value of goods and services based on prices that are inflation adjusted. In can be seen in the table given above that the real GDP of the country has been declining since 2011.
|
Year |
Value |
Change |
|
2017 |
4% |
0.00% |
|
2016 |
4% |
-0.74% |
|
2015 |
4.1% |
0.98% |
|
2014 |
4.1% |
0.99% |
|
2013 |
4.1% |
-0.98% |
|
2012 |
4.1% |
0.00% |
|
2011 |
4.1% |
-1.21% |
|
2010 |
4.1% |
-3.72% |
|
2009 |
4.3% |
2.38% |
|
2008 |
4.2% |
5.00% |
|
2007 |
4% |
-2.44% |
|
2006 |
4.1% |
Gross Domestic Product
(knoema.com, 2017)
Unemployment rate means the section of the labor force that is willing to work but is jobless. The unemployment rate is high when the economy is weak and has fewer jobs to offer. Similarly, if the economy is strong and has plenty of jobs to offer then the unemployment rate is low. As it can be seen that the unemployment rate in China is 4% in 2017 (Li-feng, 2012). On a close observation of table it can that China has been quite successful in reducing its unemployment rate over the years. This is a positive indicator about the health of any economy.
GDP per capita income is computed by dividing the GDP by the total number of people in a country.
|
Year |
Value (US dollars) |
Change% |
|
2017 |
8481 |
4.53% |
|
2016 |
8113 |
-0.66% |
|
2015 |
8167 |
6.04% |
|
2004 |
7702 |
8.77% |
|
2013 |
7081 |
11.87% |
|
2012 |
6329 |
13.37% |
|
2011 |
5583 |
23.40% |
|
2010 |
4524 |
17.88% |
|
2009 |
3838 |
10.70% |
|
2008 |
3467 |
28.27% |
|
2007 |
2703 |
28.07% |
|
2006 |
2111 |
(knoema.com, 2017),
It can be seen from the table given that China has been successful in increasing the GDP year after year. This is again a positive indicator of the economy of China.
|
Year |
Value (billion international dollars) |
Change% |
|
2017 |
23194.41 |
8.94% |
|
2016 |
21291.77 |
8.10% |
|
2015 |
19695.74 |
8.05% |
|
2014 |
18228.36 |
9.22% |
|
2013 |
16689.4 |
9.54% |
|
2012 |
15235.77 |
9.89% |
|
2011 |
13864.86 |
11.76% |
|
2010 |
12.405.88 |
11.96% |
|
2009 |
11080.89 |
10.03% |
|
2008 |
10070.85 |
11.75% |
|
2007 |
9011.95 |
17.24% |
|
2006 |
7686.84 |
(knoema.com, 2017)
GDP based on purchasing power parity means that GDP converted into international dollars using rates of purchasing power parity. Purchasing power parity between two countries A and B can be defined as a ratio of the number of units of goods the currency of country A can purchase divided by the number of units the same currency can buy in country B. It can be seen from the table given above that the purchasing power of China has been increasing consistently. China. It has managed to increase its purchasing power from $7686.84 in 2006 to $23194.41 billion. This indicates that the Chinese economy is rapidly growing.
|
Year |
Value |
Change% |
|
2017 |
49.3% |
6.67% |
|
2016 |
46.2% |
8.51% |
|
2015 |
42.6% |
6.73% |
|
2014 |
39.9% |
7.90% |
|
2013 |
37% |
7.60% |
|
2012 |
34.3% |
1.88% |
|
2011 |
33.6% |
-0.31% |
|
2010 |
33.7% |
-1.76% |
|
2009 |
34.3% |
27.21% |
|
2008 |
27% |
-7.01% |
|
2007 |
29% |
14.40% |
|
2006 |
25.4% |
(knoema.com, 2017)
Gross debt as a percentage GDP can be defined as the ratio between the government debt of a country and the GDP of the country. The lower is ratio the better it is. A lower ratio indicated that the country has sufficient funds to repay its loans. From the table given above it is evident that the debt of China has been increasing consistently. The government should make and implement adequate policies to curb this approach.
|
Year |
Value |
Change% |
|
2017 |
1.3% |
-27.70% |
|
2016 |
1.8% |
-35.36% |
|
2015 |
2.7% |
20.88% |
|
2014 |
2.2% |
45.71% |
|
2013 |
1.5% |
-38.80% |
|
2012 |
2.5% |
38.92% |
|
2011 |
1.8% |
-53.85% |
|
2010 |
3.9% |
-17.47% |
|
2009 |
4.8% |
-48.00% |
|
2008 |
9.1% |
-7.63% |
|
2007 |
9.9% |
18.33% |
|
2006 |
8.4% |
(knoema.com, 2017)
Current account transactions refer to all the transactions other than financial and capital terms. In the table given above, the current account balance have been expressed as a percentage of GDP. China current account balance as a percentage of GDP was 1.8 % in 2016 and went down from 2.7 % previous year.
|
Year |
Value |
Change% |
|
2013 |
1.9% |
-71.41% |
|
2012 |
6.5% |
-18.10% |
|
2011 |
7.9% |
-29.69% |
|
2010 |
11.2% |
-23.69% |
|
2008 |
14.7% |
-21.87% |
|
2005 |
18.8% |
-41.31% |
|
2002 |
32% |
-21.19% |
|
1999 |
40.5% |
-3.59% |
|
1996 |
42.1% |
-26.23% |
|
1993 |
57% |
-14.39% |
|
1990 |
66.6% |
9.43% |
|
1987 |
60.8% |
(knoema.com, 2017)
Real GDP Growth Rate
From the table given above it can be seen that the poverty in China has been declining rapidly over the years. This is yet another indicator of a strong and healthy economy Cai & Lu, 2013).
The labor conditions in China are still in the process of evolving from an unskilled labor force to a sophisticated and skilled labor force. However, human right abuses still exist in some factories. The overalls situation of labor have changed, with enhanced union activity, better wages, and greater levels of education bringing an improvement the plight of workers since 2008 (Li, Sato & Sicular,2013).
Conclusion
It can be concluded from the above discussion that that overall Chinese economy is rapidly developing and can be said to be one of the strongest economies of the world. However the government needs to take steps to reduce the government debt and increase the current account balance. Further labor conditions also require some improvement. Moreover, the government also needs to take steps ensure that the there is minimum rise in the price of goods or services due to inflation.
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