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Economics: Still Rolling: China's GDP Term Paper

Once again however, Shengxia and Baije do not explain their arguments nor do they show exactly how the Chinese GDP evened out the trade balance with the U.S., nor how it supported the economy of its regional neighbors. In terms of the elements threatening the future stability of the country and its economy, the authors point out that the Chinese authorities have been quick to identify these threats; they will as such address them in an efficient manner. They will for instance instate regulations capping the levels of loans to be granted to the population with the specific aim of reducing inflation and over-consumption. Examples of such measures include the limitation of the bank loans to a 7.5 million Yuan for the year, and a rumored 0.27% increase in the interest rates. At this stage, it is however unclear what exact measures the officials will take, and if these are drawn from the experience of the United States and other countries in their own dealing with the crisis, or whether they are tailored to the unique characteristics of the Chinese market place. What is however certain is that these limitations will raise difficulties in the path of a free market growth. The capping of the loans will for instance reduce investment opportunities and will as such reduce not only borrowings and debt, but economic growth.

Additionally, there is talk about reducing the current levels of production, with...

Yet, the downside would be that of job loss, with the indubitable incremental unemployment rates and decreasing living standards for the population. Still, it should be noted that these negative impacts would only be felt on the short-term, but will generate the undeniable impact of sustainable and stable growth for the future.
Finally, another problem noted by Shengxia and Baije is that of a potentially real estate burst, problem which should also be resolved as the population's access to borrowed capitals decreases. All in all, Still Rolling…is an article about the Chinese economy in the context of the internationalized economic crisis, revealing however particularities different from those encountered within the United States or other Western societies. The appeal to the reader would have been enhanced if the two authors had introduced a context to better explain the uniqueness of the situation.

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References:

1. Shengxia, S., Baijie, A., January 23, 2010, Still Rolling: China's GDP Hits 8.7%, Alibaba, http://news.alibaba.com/article/detail/business-in-china/100237200-1-still-rolling%253A-china%2527s-gdp-hits.html last accessed on January 25, 2010

2. Chinability, 2009, http://www.chinability.com/GDP.htm last accessed on January 25, 2010
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