Economic Status of China: Growth, Trade, and Policy Analysis

This report provides a comprehensive analysis of China's economic status, focusing on its growth trajectory, trade relations (particularly with Australia), and the impact of government policies. The analysis reviews the nation's economic reforms, including the 'reform and opening up' policy, and assesses the impact of these policies on poverty reduction and GDP growth. The report examines key economic indicators, such as GDP growth rates, employment figures, and the balance of payments. It also discusses the challenges China faces, including trade tensions with the United States and the need to transition from high-speed to quality-oriented growth. The report concludes that China's economic future remains strong, despite facing some risks, and that its trade relationship with Australia is beneficial for both economies. The analysis is based on the review of the article named ‘People’s Republic of China’ and other relevant research papers.

Running head: ECONOMIC STATUS OF CHINA
ECONOMIC STATUS OF CHINA
Name of the Student
Name of the University
Author Note
Course ID:

1ECONOMIC STATUS OF CHINA
Introduction
The paper will review the article named ‘People’s Republic of China’ and will
analyze the China-Australia trading condition based on the review of the article (Imf.org
2019). It will focus on China’s economic condition. China’s recent surplus of account is
continuously falling, and credit accelerates growth by less amount. Economic growth did not
affected much because export accelerated the growth. However, the growth in consumption
slowed down, and even the progress was found absent in many other aspects.
The government of China should adopt policies to solve the mentioned policies. This
will then help in the growth in those aspects. The government should focus on innovating the
policy structure, rise in market forces, growth in credit and increase the speed of
counterbalancing efforts.
Thus, China's future aspects remain strong. This is because, after the financial crisis,
China is improving its global trade condition, holding a strong domestic function and
important growth in reforms (Ambler, Witzel and Xi 2016). Their further aim in the future is
to minimize the risk they are facing recently so that China can increase its growth in those
dimensions where their growth have slowed down.
Review of the article
Overview of China’s economy
China celebrated the 40th anniversary for the policy of “reform and opening up” in the
year 2018. Due to the introduction of the policy, the economy of the chosen country has
progressed recently from being one of the underdeveloped countries in the world. Recently,
almost 800 million individuals in that country improved their financial condition and came
out of poverty. Even the country's GDP is now converging with the United States GDP.

2ECONOMIC STATUS OF CHINA
The country is now trying to evolve its economic growth from fast-moving to a high
standard. They will focus on improving the conditions of inhabitants’ standard of living. In
order to achieve them, the country’s authorities should adopt policies such as “Supply-Side
Structural Reform” and “Three Critical Battles”. The government goal is to the advancement
of technology in the industry, enhance the factors than indicates growth and to encourage
competitiveness among the nation. Reframing the institution by the government enhanced the
reform agenda (Zhao and Tang 2018).
China is considered as the fast-evolving economy because they have interconnection
with the financial market globally. Since the economy of China is evolving faster; therefore,
their global trade share and investment is found to be increasing. Thus, China's trading
strategy is also improving. The “Belt and Road Initiative (BRI)” policy taken by China is
bringing a prospect in their economic growth, but there are risks involved (Zhang et al.
2018).
Development seen in China recently
The growth of the economy has continued to be robust. From the year 2013, the GDP
rate of growth has been found around 6.7-6.9 per cent. After 2010, the highest rise in GDP
rate was observed in the year 2017, which continued till early 2018. The rate of GDP was
around 6.9 per cent. The nominal GDP rate was found to be high in 2016 because of an
increase in the producer price index (PPI). The rate of employment also grew from 2013 to
2019. Since the international reserves of China are high; therefore, the country has
transformed globally to floating from a fixed exchange rate. With the new policy, that is
"macro-prudential structure for capital flows”, the risk faced by the country has been
addressed. The risk involved was from currency and maturity mismatch, and from
disproportionate trans-border financing (Lippit 2018). In the recently developed tension

3ECONOMIC STATUS OF CHINA
between China and the United States, the country responded with broad methods to the
imposition of tariffs on Chinese products. However, they have kept an option of opening up
of new plans.
The measure of increasing the Wealth Management Products (WMP) has shortened
the extent of a shadow banking company and helped in inter-linkage between the non-bank
sector and banking sector. Due to relaxation in the financial sectors as well as a huge rise in
saving rate of China, the management business sector of China has currently experienced
rapid growth. However, this progress helped in controlling the gaps. Currently, the capacity
for coal and steel will continue to decline (Yuan 2018). Therefore, they are making a target
for solving the problem by 2020. In China, the construction of houses fell because of high
housing prices. The size of debt increased with respect to GDP but fell in non-financial
sectors. The economy remained unstable in the year 2017. They tried to rebalance them, but
have shown a decline in many extents like in investment growth, the deficit in the current
account and credit efficiency. The debt is regulated to the M2 growth, loans of bank and
“Total Social Financing (TSF)”. The market forces usually have a track on the exchange rate
for the national currency of China RMB.
Policies introduced by the authorities
The policies are designed in such a way that the policymakers transmitted their focus
from high-speed oriented growth to more quality-oriented growth. Therefore, the policy will
improve the credit efficiency, speeding up of counterbalancing determinations, market force
improvement and innovation to the previous policies (Lanteigne 2015). The administration
should only focus on the macro finances for making the nation strong. Moreover, the policy
was designed to improve the liquidity status to ensure growth. Credit is needed to improve
product efficiency. Fiscal policy supported deleveraging the growth in the system. It is

4ECONOMIC STATUS OF CHINA
anticipated that there is a need for tightening the monetary policy. Over the years, fiscal
policies are designed to maintain balanced structural growth. Digitalization has led to long-
run growth in the economy. However, it is detected to be a wish for the nation (Chen, Liu and
Lu 2016).
China's authorities agreed to improve the quality of economic growth. They found
that the innovation to the policies would result in steady growth, unemployment and inflation.
The authorities of China predicted that even the lowering of taxes would result in an increase
in the GDP rate of growth around 2.6 per cent. They even experienced sustained growth in
counterbalancing and even found that digitalization can bring the opening to innovation in the
economic structure of China (Rudskoy et al. 2019). The government helps in allocating
resources and the authorities even observed a rise in the number of employees. In China, the
authorities plan to make a strategy, which will market-oriented. The authorities did not agree
to the decision of the commitment by China in free trade policy during the time of trade
tension, which occurred between China and the U.S (Li, He and Lin 2018). They were not
satisfied with the restrictive law of investment and trade. Since China is not a member of
OECD, therefore the authorities disagreed the opening-up forces of China.
Risks and Forecasts
In the year, 2018, the predicted growth was 6.6 per cent. The authorities remained
focused on the target rate of growth of GDP by 2020 to remove the tensions faced in China.
After the introduction of policies, the risks involved are likely to reduce. The risks involved
were in the field of investment made internationally and in the trading sector, financial sector
and in the country’s capital flows (Yi 2019). The authority was confident that the predicted
growth rate would result positively, but their fear remained the same with respect to the

5ECONOMIC STATUS OF CHINA
mentioned risks and debt of the country. This was because China is known to be a fast-
growing economy.
Analysis of the paper
After reviewing the paper, it can be analyzed that the policies that are adopted by the
government of China will help in accelerating economic growth. The speed of the growth
may be slowed down because the policies that are introduced will help in more quality-based
growth. The predicted growth of GDP rate for the year 2018 is found to be true because
China experienced a rise in their rate of GDP growth. The trade tension that is occurring
between the United States and China can hamper the inflation rate as well as the GDP rate of
China. Thus, China has agreed to sign the free trade agreement will help in improving the
economic status of China in recent times.
China is considered as the largest exporter of Australia. The most exported goods of
Australia to China is steel and iron ore. Under floating exchange rate, China does not require
to maintain higher volumes of international resource (Zhang and Zhang 2018). Thus, the
remaining resources will help in importing more goods from Australia (Qi and Zhang 2018).
Therefore, the economic growth of China improves. From the article, it is already found that
iron and steel recently are declining. Therefore, the demand for those products will increase
in recent times. Therefore, they will export more of these goods from the country of
Australia. Therefore, this will help the Australian economy to improve from the 2008
financial crisis.
Conclusion
The report concludes that China is, focusing on more quality-based growth. Therefore
the poverty level is reducing, and the education rate is increasing. Recently it is found that the
youths of China are moving abroad to acquire higher studies, and after pursuing the degree,

6ECONOMIC STATUS OF CHINA
they are coming back to their country. Thus, now those youths are improvising or introducing
new strategies that are also helping the country's economic status to grow. In this way, the
country, China, has grown very rapidly in recent times. Within a few years, the economy of
China has known to be a fast-evolving economy. Thus, the policies that are adopted by the
Chinese Government are promoting to a better economic condition of the mentioned country
China even they are facing trade tensions from the United States. At the end of the analysis, it
can be seen that the trade condition of Australia and China are improving.

7ECONOMIC STATUS OF CHINA
Reference
Ambler, T., Witzel, M. and Xi, C., 2016. Doing business in China. Routledge.
Chen, M., Liu, W. and Lu, D., 2016. Challenges and the way forward in China’s new-type
urbanization. Land Use Policy, 55, pp.334-339.
Imf.org 2019. People's Republic of China: 2018 Article IV Consultation-Press Release; Staff
Report; Staff Statement and Statement by the Executive Director for the People's Republic of
China. [online] IMF. Available at:
https://www.imf.org/en/Publications/CR/Issues/2018/07/25/Peoples-Republic-of-China-
2018-Article-IV-Consultation-Press-Release-Staff-Report-Staff-46121 [Accessed 27 Sep.
2019].
Li, C., He, C. and Lin, C., 2018. Economic Impacts of the Possible China–US Trade
War. Emerging Markets Finance and Trade, 54(7), pp.1557-1577.
Lanteigne, M., 2015. Chinese foreign policy: an introduction. Routledge.
Lippit, V.D., 2018. The economic development of China. Routledge.
Qi, C. and Zhang, J.X., 2018. The economic impacts of the China-Australia Free Trade
Agreement-A general equilibrium analysis. China Economic Review, 47, pp.1-11.
Rudskoy, A., Borovkov, A., Romanov, P. and Kolosova, O., 2019, March. Reducing global
risks in the process of transition to the digital economy. In IOP Conference Series: Materials
Science and Engineering (Vol. 497, No. 1, p. 012088). IOP Publishing.
Yi, G., 2019. Money, banking, and financial markets in China. Routledge.
Yuan, J., 2018. The future of coal in China. Resources, Conservation and Recycling, 129,
pp.290-292.

8ECONOMIC STATUS OF CHINA
Zhang, L., Luo, M., Yang, D. and Li, K., 2018. Impacts of trade liberalization on Chinese
economy with Belt and Road initiative. Maritime Policy & Management, 45(3), pp.301-318.
Zhang, Y. and Zhang, S., 2018. The impacts of GDP, trade structure, exchange rate and FDI
inflows on China's carbon emissions. Energy policy, 120, pp.347-353.
Zhao, J. and Tang, J., 2018. Industrial structure change and economic growth: A China-
Russia comparison. China Economic Review, 47, pp.219-233.