EC1133 Macroeconomics Report: Shanghai's Economic Performance Analysis

This report provides a comprehensive analysis of Shanghai's macroeconomics, focusing on key economic indicators such as GDP growth, inflation rates, and unemployment. The analysis covers the period from 2013 to 2017, using data from reputable sources like Ceicdata.com and the World Bank. The report examines the factors contributing to Shanghai's GDP growth, including government policies, industrial output, and economic reforms. It also delves into the inflation rate within the economy, discussing consumer price indices and the impact of inflation on purchasing power. Furthermore, the report analyzes the unemployment rate, highlighting the government's efforts to maintain steady employment. The report concludes by summarizing the overall economic performance of Shanghai and discussing the factors influencing its economic stability and growth. The report also touches upon the economic freedom variables and the rule of law.

Running head: Macroeconomics
MACROECONOMICS
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Macroeconomics
Table of Contents
Introduction......................................................................................................................................3
Analysis...........................................................................................................................................4
GDP growth.....................................................................................................................................4
Inflation rate within the economy....................................................................................................6
Unemployment rate.........................................................................................................................8
Conclusion.......................................................................................................................................9
Reference list.................................................................................................................................11

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Macroeconomics
Introduction
Analysis of the economic status is important because of the fact that it will identify the
gaps in their fiscal and monetary policies. Moreover, in identifying the economic status of the
country like Shanghai will be helpful for the policymakers to forecast the futures of their
economy and will determine future policies so that they can perform better. Inflation, GDP
growth and unemployment rate prevailing within any country is main concerns for the
policymakers. This is because through the inflation control policies the government will be
mainly looking to control the price of the commodities and will monitor how the rising price will
be affecting growth of the economy. Considering the factors in the form of GDP growth and
unemployment rate will definitely help the country in minimizing cost of production and
maximize both quality and quantity of goods.

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Analysis
Understanding of GDP, inflation rate and unemployment rate is going to make an
analysis regarding the improvement in the resource distribution in the economy.
GDP growth
2013 2014 2015 2016 2017
2225.766 2406.087 2564.347 2817.865 3013.386
Growth in GDP in Shanghai (RMB)
Growth in GDP in Shanghai (RMB)
Figure 1: GDP growth rate of Shanghai 2013-2017
(Source: Ceicdata.com, 2019)
Shanghai became the first city in the China to become world’s second largest economy
and the amount of GDP growth is about $469 billion1. The growth in the economy has been
achieved due to joint efforts given by local and national level governments. However, in the last
year, the growth in the GDP in the manufacturing and service sectors were recorded at 5.8% and
7.5% respectively. Since 2011, the industrial growth was high and it was seen that manufacturing
and strategic emerging industries witnessed high growth.
1 "China | CN: GDP: Shanghai | Economic Indicators." Ceicdata.com. N. p., 2019. Web. 29 Apr.
2019.

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The gross industrial output of vehicles increased by 42.6% due to some of the
government policies in the form of green car subsidies, favorable license policies and emergence
of small market. Growth in medicine production within the economy has increased by 11.2% on
yearly basis2. In 1978, China started economic reforms programs that aimed in increasing share
of secondary sector in the form of industries and services towards the GDP of the economy.
While the tertiary sector contributed about 46.1% to the GDP of the economy in 2013, the
secondary sector contributed about 45% to the GDP of the country3.
Not only the economic growth, the Chinese economy also batted well against the global
financial crisis that took place in 2008. During this phase of time, the Chinese economy received
stimulation from the government of about USD 585 billion4. This stimulation has forced the
economy to counter the negativity of the global financial crisis. The government took huge
initiative in investing in the economy so that the economies can increase the development of
their production. It is important in the sense that through the involvement of better policies the
economy of Shanghai has taken the road to increase their GDP. Since 1993, the Chinese
economy faced uninterrupted trade surplus that is actually helping the economy in participating
in the trade and commerce. Reacting to the high growth of the economy, the government took
expansionary fiscal policies. People’s Bank of China (PBOC) is mainly looking at the stability in
the growth of money supply (M2), consumer price index (CPI) and the promotion of economic
growth. This kind of policy is important for the economy like China as they help in flourishing.
2 "Shanghai First Chinese City To Top 3 Trillion Yuan GDP -
Chinadaily.Com.Cn." Chinadaily.com.cn. N. p., 2019. Web. 29 Apr. 2019.
3 "China Economy - GDP, Inflation, CPI And Interest Rate." FocusEconomics | Economic
Forecasts from the World's Leading Economists. N. p., 2019. Web. 29 Apr. 2019.
4 China Economy - GDP, Inflation, CPI And Interest Rate." FocusEconomics | Economic
Forecasts from the World's Leading Economists. N. p., 2019. Web. 29 Apr. 2019

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This is highly important in the sense that through the incorporation in the growth incentive
policies will definitely allow the incorporation of better channelization of resources.
Rule of law
In spite of having of property right, the Chinese economy is depending entirely on the
government for the investment opportunities. Through the implementation of rule of law will
enable the economy to increase their distribution of resources in an effective but still they will be
looking to develop future, the Chinese economy felt that it is important for the government to
intervene in order to minimise the risks that are closely associated with investment.
Judicial effectiveness
The Chinese economy is having high growth in the economy, only because of the policies
of the government that is being implemented in the economy. The economy of Shanghai is going
to highlight the minimisation of discrimination and have allowed the factors to indulge the
development of trade and commerce. Through the implementation of the judicial effectiveness, it
is important for the economy to improve their production ability.
Government integrity
Government integrity is highly important for the economy to increase their delivery of
better quality of goods that will increase the long run production of the economy. The
government integrity is having high influence on the economic growth of Shanghai and through
this integrity; the economy has identified the opportunity in the long run and have taken the
initiative to fly higher.

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Inflation rate within the economy
2013 2014 2015 2016 2017
0
0.5
1
1.5
2
2.5
3
Consumer price index in China
(annual %)
Consumer price index in
China (annual %)
Figure 2: Consumer price index or inflation rate in china
(Source: Data.worldbank.org, 2019)
The overall performance of Chinese economy is having low rate of inflation. In march,
the inflation rate fell to about 0.4% compared to previous month whereas, in the February the
inflation rate got increased by 1%. Severe decline in the price for food especially fresh foods is
one of the main reasons that led to the fall in price of the goods. However, in March, the inflation
rate was around 2.3%. Moreover, along with the consumer price index, the consumer price also
increased and it reached to 0.4% in March. The economists forecasted that consumer inflation
will be around 2.2% in 2019 and it will continue to 2.2% in 20205.
China’s roaring economy witnessed a slowdown in the third quarter, the economy was
getting overheating, and this is the main reason the economy was growing at 9.6%. In order to
reduce the overheating of the economy, the government had to take action. Inflation rate in cities
like Beijing is continuing low rate of inflation and is rebalancing the growth of the economy
5 "China Inflation Rate (CPI) - China Economy Forecast & Outlook." FocusEconomics |
Economic Forecasts from the World's Leading Economists. N. p., 2019. Web. 29 Apr. 2019.

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favoring the domestic consumption. On the other hand, the banks within the country took an
action by surprise. They increased the benchmark interest rate to about 0.25%, this will force the
borrowers to pay more interest rate, and the government wants to give more interest rates for the
people who are saving their money. This is an important strategy in the sense as the consumers
will be highly benefited from the strong economic growth and gross domestic product is getting
valuation about 10.3%6.
On the other hand, the consumers are claiming the fact that everything in Shanghai is
becoming costly and the persistence of inflation is actually eroding away purchasing power
parity of their income. Most of the data that has been published by government is claiming that
food price of wheat, beef and milk products are increasing by 44% but survey done by two
supermarkets in Shanghai is giving different results altogether. One of them claimed that price of
rice increased by 132% since 2007 and other claimed that it was raised by 190%. Both of them
however, concluded that price of tomato increased by 300%7.
Most of the modern economists are not having trust on the data that has been released by
the government. They believe that most of data has been manipulated in order to hide the truth of
the economy. On the other hand, IMF claimed the fact that most of the Asian countries need to
tighten the monetary policy so that the Chinese currency can be revalued against other countries
currency.
6 Barboza, David. "In China, Inflation Raises Concern." Nytimes.com. N. p., 2015. Web. 29 Apr.
2019.
7 Barboza, David. "In China, Inflation Raises Concern." Nytimes.com. N. p., 2015. Web. 29 Apr.
2019.

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Government size
The economy of Shanghai is mainly looking into the development of better economy
with high government spending mainly during the crisis period. On the other hand, through the
introduction of government, spending will allow the economy to go beyond the FDI and
investment may come from internal economy.
Unemployment rate
China’s unemployment rate of 3.95 is the lowest rate of unemployment in many years.
The main challenge of the economy is to go ahead of the structural reforms that may cause a
problem for the Chinese economy. The economy has been successful in maintaining steady
employment rate within its human resources for the past few years. According to human resource
department of the country, about 10.97 million new jobs have been created within an economy
and the growth rate of 300,000 has been achieved compared to last year. More 15 million jobs
need to be created so that recently passed out 8 million graduates can get the job.
2010 2011 2012 2013 2014
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.1
4.11
unemployemnt rate
unemployemnt rate
Percentage
Figure 3: Unemployment rate in China
(Source: Data.worldbank.org, 2019)

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Regulatory efficiency
The economy is maintaining strong growth in the employment rate that will definitely
allow the incorporation of better involvement of policies in the form of boosting up the economy
with better involvement of the government. Through the incorporation of investment within the
economy will definitely allow the economy to increase the innovation in the technological
spillover that will immediately allow the economy to bring changes in the innovation
technologies that will automatically highlight the improvement in the employment rate. This is
important in the sense that through the utilization of resources effectively will allow the labor
market to be more open.
Market openness
Now with the development of market structure, the economy will be bringing in better
motivation through increased rate of average wage rate for the employees. It is important
because the economy of China is now one of the biggest economies in the world that is having
effective policies. It is highly significant because of the fact that through the improvement in the
labor marketing technologies will minimize the gap between the demand and supply of
employees. Looking at the future perspective, the economy of China is aiming to increase the
skills and knowledge of the employees, as they want to improve their employment mobilization
policies that will not only bring skilled employees to the economy but will also improve the
terms of trade. Increase in the innovation will definitely allow the employment to increase, as the
employees will use these advanced levels of technology so that they can increase their innovation
and their productivity is going to increase in the end. On the other hand, using advanced and
modern technologies the economy will be using upgraded technologies. It is important for the
whole economy to increase the shares of the economy by using modern development of the

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resource identification and capitalization of resources the economy will be able to identify the
future opportunities of investment.
Conclusion
The whole study is concluding the fact that the economy of china is going at a stable rate
and the economy of Shanghai is going to invest heavily. Through the improvement in the
investment, the employees in the economy will be able to use modern tools and technology. The
GDP growth of economy is following a upward trend and is showing positive sign so that the
economy can reach the desired level of growth. From the study, it can be concluded that both the
growth of the GDP and the inflation rate is showing good performance. Making improvisation in
the economy and technologies that are being used in producing goods will be beneficial for the
whole economy so that the long run objectives of the growth can be achieved. Economy of
shanghai is contributing heavily to the growth of GDP of China that will definitely move the
country into a step ahead.

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Reference list
"China | CN: GDP: Shanghai | Economic Indicators." Ceicdata.com. N. p., 2019. Web. 29 Apr.
2019.
"China Economy - GDP, Inflation, CPI And Interest Rate." FocusEconomics | Economic
Forecasts from the World's Leading Economists. N. p., 2019. Web. 29 Apr. 2019.
"China Inflation Rate (CPI) - China Economy Forecast & Outlook." FocusEconomics |
Economic Forecasts from the World's Leading Economists. N. p., 2019. Web. 29 Apr. 2019.
"China’S Economic Growth Looks Strong. Maybe Too Strong.." Nytimes.com. N. p., 2019. Web.
29 Apr. 2019.
"Inflation, Consumer Prices (Annual %) | Data." Data.worldbank.org. N. p., 2019. Web. 29 Apr.
2019.
"Is China’S Economy Growing As Fast As China’S GDP?." Carnegie Endowment for
International Peace. N. p., 2019. Web. 29 Apr. 2019.
"Shanghai First Chinese City To Top 3 Trillion Yuan GDP -
Chinadaily.Com.Cn." Chinadaily.com.cn. N. p., 2019. Web. 29 Apr. 2019.
"Unemployment, Total (% Of Total Labor Force) (National Estimate) |
Data." Data.worldbank.org. N. p., 2019. Web. 29 Apr. 2019.
Barboza, David. "In China, Inflation Raises Concern." Nytimes.com. N. p., 2015. Web. 29 Apr.
2019.
Huang, Dechun, et al. "Shanghai Pilot Free Trade Zone and Its Effect on Economic Growth: A
Counter-Factual Approach." Open Journal of Social Sciences 5.09 (2017): 73.
Misreading China's Economy." Foreign Affairs. N. p., 2016. Web. 29 Apr. 2019.