China and the Global Economy - Running Head CHINA AND THE...

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Running Head: CHINA AND THE GLOBAL ECONOMY 1 China and the Global Economy Name Institution
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CHINA AND THE GLOBAL ECONOMY 2 Abstract The most important necessity for any economy, developed and developing alike, is wealth creation. In an effort to generate wealth in any country, both governmental and non- governmental organizations must collaboratively strive to involve people in highly viable economic activities. Over the decades, the growth of China as a main economic power is often viewed by economic analysts as among the greatest economic success stories in contemporary world. Following the 1978 reforms, China reported a steady rise in the rate of growth which was entirely attributed to the rise in Total Factor Productivity. As such, this paper seeks to examine China from a macroeconomic point of view, their contribution towards the growth of China as a major economic power and provide policy suggestions based on specific conditions in the country.
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CHINA AND THE GLOBAL ECONOMY 3 Introduction Since its formation in 1949, the Chinese government has continuously emerged to be a one-party state with substantial amount of influence among the communists. Findings indicate that, a great part of China’s sectorial productivity was mainly directed by centrally controlled state owned enterprises. As a result, this inhibited the growth of foreign invested firms in China. Moreover, research reveals that, the centrally planned economy in China greatly contributed towards unproductive market conditions. This is due to the fact that, the existing government policies, had proven to place little stress on the significance of competition among industries. In effect, this led to a decline in individuals’ living standards in China in comparison to other developing nations. Following the struggle towards ensuring that China was on the correct path to modernization, Deng Xiaoping introduced different reform policies. These reforms aimed at changing China from a class struggle and proletarian state to one characterized by rapid economic growth and social reconstruction. Under his leadership, China’s first economic reforms started in 1978 with much attention accorded on the agricultural production sector, particularly in the rural areas. The gradual change of economic reforms from a centrally planned market based system to a free market based economy led to rapid growth in China’s economy. Throughout these reforms and policies, Deng Xiaoping placed much emphasis upon the maintenance of a socialist system in China (Vogel, 2011). Gross Domestic Product The Gross Domestic Product (GDP), is one of the primary indicators used to measure a country’s status in terms of economic development and growth. Private consumption, net exports
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CHINA AND THE GLOBAL ECONOMY 4 as well as government expenditure are the main sources of GDP in China (Morrison, 2015). GDP refers to the total monetary value of all goods and services produced over a given period of time in a given economy. More often than not, current GDP is expressed in relation to previous
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