MARKET FORCES : A SUCCESS STORY OF CHINA

by

Abhilasha (01) Ajay (02) Amithab (03) Anup (04) Anusha a (05) Anusha b (06)

FLOW OF PRESENTATION :
INTRODUCTION GDP

IMPORTS & EXPORTS

FDI MACRO ECONOMIC FACTORS CONCLUSION

INTRODUCTION :

GDP - GROWTH RATE OF CHINA :

China's economy is the second largest in the world after that of the United States.
Gross domestic product (GDP) is the current market value of outputs produced within a given period by factors of production within a country

GDP = C+I +G + (X-M)s

PRIMARY SECTOR :
The share of primary industry in GDP has fallen from 28% in 1978, to 10.3% in 2008.This fall occurred because agricultural output grew more slowly than output of other economic sectors.
Only 10-15% of the total land area is used for cultivation.

SECONDARY SECTOR
Industry and manufacture The share of the secondary sector has stayed level at around 48% over the period as a whole. It account for 46.3% of China's GDP. Around 8% of the total manufacturing output in the world comes from China itself. China ranks third worldwide in industrial output.

TERTIARY SECTOR :
At the same time, the share of tertiary industry grew from 24% to 43.4% as services sectors proliferated. China's services output ranks fifth worldwide.

GDP (PURCHASING POWER PARITY) :

PERCAPITA INCOME :

IMPORTS AND EXPORTS :

China top 10 import sources

 China top 10 export markets

IMPORTS AND EXPORTS AS A % OF GDP :

CHINA FDI HISTORY :

TRANSITION :

Chinese Foreign Join Venture Law (1979) Wholly Foreign Owned Enterprises (1986) Economic Zones: Four Zones in 1980 Shantou, Shenzhen, Zhuhai and Xiamen Fourteen cities by 1984 Whole China by late 1900s

RAPID GROWTH IN FDI :

Rapid economic growth in reform period

Abundance of labor and its low costs Rapid expansion of Chinas domestic market Role of overseas Chinese Increasing integration with world economy

WHY FDI? Offsetting the capital deficiency Acquiring advanced technology

Gaining production know-how

Promoting exports

MACRO ECONOMIC FACTORS

1) DEFLATION PERIOD IN CHINA:
Entered a period of deflation for nearly five years at the end of 1997. Government efforts in increasing public investment, the ratio of total investment to GDP remained high at 33 percent in 1998-2002. China to effectively combat deflation, with uninterrupted growth at 8 percent on average during that period

CHINA EMERGED FROM DEFLATION IN 2003

Average annual GDP growth rate reached 10.8 percent in 2003-2008 .

Due to the increase in growth rate, the governments revenue grew rapidly.
The fiscal resources spent on infrastructure investment led to sustainable higher growth.

2) INFLATION IN CHINA :
China will need to normalize the monetary stance but there is no need to worry too much about inflation.

Inflation is unlikely to escalate but expectations matter and there are risks. Food prices are unlikely to continue to rise at the recent pace. There is some risk that the higher food prices spill over into wages and other prices

3) EXCHANGE RATES :
China's currency, the renminbi, remains substantially undervalued, importantly due to that country's massive intervention in the foreign exchange markets, and is a major cause of its large and growing trade surplus.

CONCLUSION

REFERENCES :
www.rbi.com www.indiastat.com www.economywatch.com www.economist.com www.businessweek.com