University Economics: Macroeconomic Analysis of China Report

This report provides a macroeconomic analysis of China, focusing on forecasting key economic indicators from 2019 to 2023. It begins with an introduction and background, outlining China's economic history and current standing as a major global economy. The report defines essential macroeconomic variables such as real GDP per capita, real GDP per capita growth, inflation rate, unemployment rate, and interest rate. It then presents a five-year forecast for these indicators, calculating a five-year average for each. The predictions suggest moderate to good economic improvement, with steady growth in real GDP per capita, controlled inflation, and a stable unemployment rate. The analysis uses historical data from the World Bank to support its forecasts, and concludes by summarizing the predicted economic conditions for China over the next five years and the potential impacts of these trends. The report also includes a comprehensive reference list of the sources used in the analysis.

Running head: Macroeconomic Analysis of China
Macroeconomic Analysis of China
Name of the Student
Name of the University
Student ID

1Macroeconomic Analysis of China
Table of Contents
Introduction......................................................................................................................................2
Background and history...................................................................................................................2
Definitions.......................................................................................................................................3
Five year average prediction............................................................................................................5
Explanation of predictions...............................................................................................................5
Conclusion.......................................................................................................................................6
Reference List..................................................................................................................................7

2Macroeconomic Analysis of China
Introduction
The report makes and macroeconomic analysis of the economy of China. China is one of
the fastest growing emerging economy. It contributes a significant amount to the GDP of the
world and plays crucial role in maintaining the economy of the world at balance. However, it is
important to understand the economic condition of the country such that coming future
adversities can be predicted and suitable measures can be taken in order to keep the economy of
the country balanced and growing. Thus, to do that the economic indicators namely inflation
rate, unemployment rate, interest rate, real GDP per capita growth rate and real GDP per capita
has been considered (Próchniak, 2018). The report makes forecast of the above mentioned
indicators using the data of last 10 years for each indicators and also calculates the average 5
year forecast for each of them. Thus, the report finds the economic condition of the country for
next five years.
Background and history
China is one of the largest economy in the world. It is the second biggest economy in
terms of GDP. The country is the fastest growing emerging economy and is the most populated
country in the world. It is not regarded as one of the super power (Savchenko, Saliamon-
Mikhieiva & Holynska, 2018). The country is member of almost all the international
organizations including United Nations. The country was previously based on its agricultural
sector for its development but with time it has gradually excelled in the field of technology as
well (Kanie, 2020). Due to availability of cheap and technologically skilled labour many tech
product companies like Apple, Samsung and many more has production facilities in China. The
country has grown tremendously well in the past few years. From the data of unemployment rate
and inflation rate for the last ten years it is evident that the country has done well in these aspects

3Macroeconomic Analysis of China
(Chen, 2018). The real GDP growth rate might be not that good but was consistent all along
except fro the period of financial crisis that occurred in 2008-09. However, in the recent time the
trade war between the US and China has taken a toll on the economy of the country. The US was
which imposed tariff on the exports from China and as a response China retaliated with tariff on
the US exports. Therefore, this is the recent economic downturn the country is facing. However,
it is expected that this trade war will end soon as both the country is paying more that they are
gaining from it.
Definitions
In this report five indicators have ben selected to predict the future of the economy of
China. The indicators are real GDP per capita, real GDP per capita growth, inflation rate,
unemployment rate and interest rate.
Real GDP is the inflation adjusted nominal GDP. It indicates the actual income of the
entire country in a given year. Additionally, real GDP per capita is the average income earned by
each citizen of the country in a given a year (Charfeddine, Klein & Walther, 2018). Therefore,
real GDP per capita is calculated by dividing total real GDP by the population of a country. It is
important because it reflects per head income generated the people of the country. The measure
might not consider each and every people’s income but it gives proper idea of income growth of
the country because in the case of real GDP value only one can understand the total income only
but not the condition of economy or the people living in it (Gimpelson & Treisman, 2018). There
are many countries whose total GDP is lower than China but has higher per capita real GDP.
This is because the population in the country is much lower than China. Thus, per capita measure
is important to understand the proper real GDP distribution.

4Macroeconomic Analysis of China
Real GDP per capita growth is the measure of annual change of real GDP per capita that
occurs in a country. It is thus measured by the calculating the percentage change in real GDP per
capita for a country in yearly basis (Fetai, 2018). This measurement is important because it
shows the pace of growth of the economy of a country. More the growth rate better is the
situation of the economy of a country and more secured is the future of the economy and its
people.
Inflation rate is the measure of price change of goods and services produced in a country.
It is measured by the calculating the percentage change of a basket of goods accrued by
households of country in given year (Oikawa & Ueda, 2018). The price change is calculated by
comparing similar baskets of two consecutive years. From inflation rate many thing scan be
determined such as demand in an economy and production condition. More demand and low
production increases price of goods and vice versa. Inflation rate also indicates the condition of
income growth of a country and thus it is an import ant indicator and its future forecast will help
to find out the possible income condition of the country.
Unemployment rate is one of the important indicators because along with economic
health it indicates social health of a country. Lower is the unemployment rate more is the number
of people working in a country (Galbraith & van Norden, 2019). Therefore, unemployment rate
is measure by calculating the percentage of people in the workforce sitting idle because of not
getting any job. Therefore, more is the unemployment rate lower is the production of a country.
Along with that it indicates the inability of the country top provide amount of job required to
achieve the natural rate of unemployment.
Interest rate is not the extra amount of money charged by bank for providing a certain
amount of loan to an investor (Cairns, 2018). Lower the interest rate more is the borrowings and

5Macroeconomic Analysis of China
thereby more is the investment made in the business sector. A case alternative to this occurs
when the interest rate is geos up. Therefore, it is also an important indicator of economic
condition of a country since on the investment the growth of business sector is dependent and the
more amount of income and jobs will be generated.
Therefore, the prediction of theses indicators will help to understand the economic
condition of the country and thereby the condition of its people. Any condition that is found to be
going against the economy and its people proper measure will be taken to improve it. Therefore,
the impact of the forecast will be good the people of China.
Five year average prediction
Variable/Year 2019 2020 2021 2022 2023
5-year
average
USD$ Real GDP/Capita 8100.11 8496.35 8892.58 9288.82 9685.06 8892.58
Growth rate of Real
GDP/Capita (%) 4 5 5 4 4 4.40
Inflation Rate (%) 1.96 1.92 1.87 1.82 1.77 1.87
Unemployment Rate (%) 4.43 4.41 4.39 4.37 4.35 4.39
Interest Rate (%) 4.09 3.88 3.67 3.45 3.24 3.67
Explanation of predictions
The above prediction of the concerned five indicators of a country are shown in the above
table. In each of the case it can be observed that that indicators are showing moderate to good
improvement in the economy of China in the next five years. If the case of real GDP per capita is
considered then it can be seen that the indicator will steadily increase over the years and also the
value in 2019 and the five year average of real GDP per capita is greater than its value in 2018
(Keynes, 2018). Along with that from the growth rate of real GDP per capita it can be said that
the economy will not progressed at a fast pace but the growth rate will be decent. The inflation

6Macroeconomic Analysis of China
rate will also fall but still wild remain close to 2%. However, some expansionary measures the
country might need to boost it. The unemployment rate will be control and rather will stay in
good condition since it is close to natural rate of unemployment (Petrosky-Nadeau & Valletta,
2019). Similarly, in the case of interest rate the five year forecast shows that it will remain in
good condition and encourage investment in the economy. Thus, it indicates that there is a
possibility of economic growth in future.
It should be noted that the above forecast has been made by taking the trend of the
concerned indicators in the last five years. The historical data that is used in this forecast
calculation is sourced from World Bank. Thus, it is significant for the prediction of economic
condition of China.
Conclusion
The above discussion cab summarized as the forecast of the economic condition of China
that will be seen in the next five years. The report to make forecast has taken the key economic
indicators that that are most effective in understanding the economic condition of the country.
From the discussion it can understood that how the indicators are measured and how they
actually impact the economy that further clarifies the necessity of forecasting these five
indicators. Fro making the forecast last ten years data for each of eth indicators has been
collected. The prediction of the indicators showed that the economy of China will perform
moderately without any policy intervention.

7Macroeconomic Analysis of China
Reference List
Cairns, A. J. (2018). Interest rate models: an introduction. Princeton University Press.
Charfeddine, L., Klein, T., & Walther, T. (2018). Oil Price Changes and US Real GDP Growth:
Is this Time Different?.
Chen, A. (2018). Urban unemployment and segmented labor markets. In Urbanization and Social
Welfare in China (pp. 141-166). Routledge.
Fetai, B. T. (2018). Does financial development accelerate economic growth? An empirical
analysis of European countries in transition. Journal of Financial Economic Policy, 10(3),
426-435.
Galbraith, J. W., & van Norden, S. (2019). Asymmetry in unemployment rate forecast
errors. International Journal of Forecasting.
Gimpelson, V., & Treisman, D. (2018). Misperceiving inequality. Economics & Politics, 30(1),
27-54.
Kanie, N. (2020). Sustainable Development Goals and International Governance: Indicators as a
Key Mechanism for Success. In International Development and the Environment (pp. 17-
25). Springer, Singapore.
Keynes, J. M. (2018). The General Theory of the Rate of Interest. In The General Theory of
Employment, Interest, and Money (pp. 145-153). Palgrave Macmillan, Cham.
Oikawa, K., & Ueda, K. (2018). The optimal inflation rate under Schumpeterian growth. Journal
of Monetary Economics, 100, 114-125.

8Macroeconomic Analysis of China
Petrosky-Nadeau, N., & Valletta, R. G. (2019). Unemployment: Lower for Longer?. FRBSF
Economic Letter, 21.
Próchniak, M. (2018). The impact of product market competition on GDP per capita growth in
the EU countries: does the model of capitalism matter?. Post-Communist
Economies, 30(2), 131-155.
Savchenko, A., Saliamon-Mikhieieva, K., & Holynska, M. (2018). Analysis And Audit Of Key
Economic Indicators Of Economic Entities (A Case Study Of The Dairy Industry). Baltic
Journal of Economic Studies, 4(3), 271-275.