China Since the Beginning of Term Paper

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This is not necessarily because the economy will not develop further, but it cannot remain at the same rate. Besides the problems listed previously that can affect the development of the economy as a sustainable economy, the simple fact that China has been developing at this rate for over 20 years is a reason enough to believe it cannot sustain a similar growth over the next 20. There were extraordinary circumstances that have led to this growth, besides the introduction of different reforms that stimulated the economy.

Businesses and different countries suddenly became interested in such a huge market such as the Chinese one and foreign investments soared in these decades. The reason for which they are still growing is that the Chinese economy is still extraordinarily attractive and has still a lot to show for. However, we can expect a certain point in time when, despite being still a growing economy, it will fail to attract the capital it is attracting now, this being reoriented to other areas of the globe. This does not necessarily mean that the Chinese economy will crumble. As a sustainable economy, it will be able to manage on lower growth rates and will concentrate on consolidation rather than on fast expansion.

So, following through on this idea, it is less likely that something will happen, economically or politically, if the growth rate drops. In my opinion, the main challenges that the Chinese government is facing are related to the economic growth in itself and the consequences that this produces, such as income inequality. A drop in the growth rate will most likely lead to a slow and desired process of consolidation and a new direction from the government in this sense.

It will not have any political reverberations, especially if we look at the fact that politics are still strongly in the hand of the Chinese Communist Party, despite the economic liberalization, and to the fact that these are not necessarily interconnected.

As we have seen in this project, the Chinese economy has sustained an economic growth of around 10% over the last 20 years. This was due to governmental reforms that encouraged private initiative, the creation of privately owned economic entities and the attraction of foreign capital, to the fact that the opening of the Chinese economy brought a new attractive investing destination and to the fact that the Chinese GDP was at a significantly low level when the liberalization process in economy began, at the end of the 1970s.

While this rate of growth is likely to continue to grow over the next 20 years, it is less likely that it will be able to grow at a similar speed, because the economy will become more mature and less capable of absorbing capital to the degree to which it has over this past period of time. The rhythm of growth will most likely decrease as the government will become more interested in consolidating the expansion.

The Chinese government will also need to look into turning this extraordinary growth into a sustainable one with an emphasis on keeping inflation and controllable levels and committing to a flexible exchange rate relative to the most important international currencies.

As previously emphasized, an economic growth needs to be sustainable as well. This is probably where the Chinese government still needs to take measures, especially in controlling inflation and in committing to reducing class discrepancies.

Bibliography

1. Chinese Economy. The U.S.-China Business Council. Published June 2007 on http://www.uschina.org/info/analysis/2007/june-china-economy.html.Last retrieved on August 7, 2007

2. Economic Survey of China 2005: Key challenges for the Chinese economy. Published September 2005 on http://www.oecd.org/document/7/0,3343,en_2649_37443_35343687_1_1_1_37443,00.html.Last retrieved on August 7, 2007

3. Scahs, Jeffrey D. January 2004. Welcome to the Asian Century by 2050, China and maybe India will overtake the U.S. economy in size. Fortune - CNN Money. On the Internet at http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/12/357912/index.htm.Last retrieved August 7, 2007

4. Staff Writers. August 2007. China Economic Boom Polluting Seas and Skies of East Asia. Terra Daily. On the Internet at http://www.terradaily.com/reports/China_Economic_Boom_Polluting_Seas_And_Skies_Of_East_Asia_999.html.Last retrieved on August 7, 2007

Chinese Economy. The U.S.-China Business Council. Published June 2007 on http://www.uschina.org/info/analysis/2007/june-china-economy.html.Last retrieved on August 7, 2007

Economic Survey of China 2005: Key challenges for the Chinese economy. Published September 2005 on http://www.oecd.org/document/7/0,3343,en_2649_37443_35343687_1_1_1_37443,00.html.Last retrieved on August 7, 2007

Scahs, Jeffrey D. January 2004. Welcome to the Asian Century by 2050, China and maybe India will overtake the U.S. economy in size. Fortune - CNN Money. On the Internet at http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/12/357912/index.htm.Last retrieved August 7, 2007

Economic Survey of China 2005: Key challenges for the Chinese economy. Published September 2005 on http://www.oecd.org/document/7/0,3343,en_2649_37443_35343687_1_1_1_37443,00.html.Last retrieved on August 7, 2007

Staff Writers. August 2007. China Economic Boom Polluting Seas and Skies of East Asia. Terra Daily. On the Internet at http://www.terradaily.com/reports/China_Economic_Boom_Polluting_Seas_And_Skies_Of_East_Asia_999.html.Last retrieved on August 7, 2007[continue]

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