China’s Economic GrowthChina’s Economic Growth

By: Martine DulcineBy: Martine Dulcine

Katiuska PerezKatiuska Perez

Preston RothPreston Roth

China’s Past Economic GrowthChina’s Past Economic Growth

Economic Reform Economic Reform began in the 1970sbegan in the 1970s

Some Reforms Some Reforms included:included:

--Gradual Liberalization of Gradual Liberalization of PricesPrices

-The Opening to Foreign -The Opening to Foreign Trade and Investment Trade and Investment

-Fiscal Decentralization-Fiscal Decentralization

Current Trends in Economic Growth Current Trends in Economic Growth

China has become the China has become the 22ndnd largest economy in largest economy in the worldthe world

GDP Growth in 2005 GDP Growth in 2005 hardly slowedhardly slowed

Consumer Spending Consumer Spending increasedincreased

Although Exports Although Exports decreased in 2005, still decreased in 2005, still remain highremain high

Growth Rates

-5%

0%

5%

10%

15%

20%

Year

%

China

U.S

Present TimePresent Time

Real GDP in 2000 dollars

0.002000.004000.006000.008000.00

10000.0012000.0014000.0016000.00

Year

bil

lio

ns

TOTAL China GDP UNITED STATES

China Still 2China Still 2ndnd to USA in GDP to USA in GDP Small Percentage of U.S. GDPSmall Percentage of U.S. GDP

Effects of China’s Rapid GrowthEffects of China’s Rapid Growth

Shortage of space to Shortage of space to expandexpand

China is the 2China is the 2ndnd highest highest producers of Carbon producers of Carbon DioxideDioxide

Not enough power Not enough power plant to support their plant to support their growthgrowth

Water shortage / water Water shortage / water contamination contamination

What Might Slow Down China’s What Might Slow Down China’s Rapid Growth?Rapid Growth?

Undervalued currencyUndervalued currency Nonperforming bank Nonperforming bank

loansloans Inefficient state-owned Inefficient state-owned

enterprises enterprises Rural-Urban income Rural-Urban income

GapGap

Causes of the Rural-Urban Income Causes of the Rural-Urban Income GapGap

Government programs designed to help Government programs designed to help Urban familiesUrban families

The government buys more than 50% of the The government buys more than 50% of the grain sold by the farm below market pricegrain sold by the farm below market price

Future of Economic Growth in ChinaFuture of Economic Growth in China

Future ProjectionsFuture Projections

Urbanization rateUrbanization rate Small-medium sized Small-medium sized

enterprisesenterprises

Annual Percentage Change in Exports

1

-5

5

13

24

22

35

35

-10 0 10 20 30 40

percentage change US China

2002

2000-04

2003

2004

Forecast of the GDPForecast of the GDP