Economic Analysis of Government Intervention

CHINA'S IMPROVING ECONOMY

SUSPECTED PROBLEMS

FINANCIAL OPPORTUNITIES

FOR PARTCIPATING NATIONS

CHINA'S MOST SURPRISING TURN

GDP INFORMATION

CHINA'S IMPROVING ECONOMY

China has been an independent nation since the beginning of time, specifically its financial institutions are state owned. Although under developed, and one of the slowest developing countries, China was a proud and self-sufficient country, desiring to be individual, and dependent upon no other nation. Many years of being independent have severely limited the incoming and outgoing of financial funds and support, and as a result, China has reached its lowest economic downfall in history. Last December, China agreed to sustain an agreement with the World Trade Organization, after debating over the idea for the past fifteen years. The goals of entering an agreement with the World Trade Organization, were reducing the unemployment rate, and improving the China's economy. One of the obligations on China's part was they must submit to openness of their previously closed markets, such as banking, insurance, telecommunications, and agriculture. Although the overall outcome is optimistic, they are anticipating some problems, which the China government is unsure how this will be handled. (Lardy, Nicholas, 2002)

SUSPECTED ARISING PROBLEMS

Although in some instances, employment is expected to drastically improve, in some other cases, unemployment is expected to increase. Being an underdeveloped country for so many years with little or no progress, it is unrealistic to expect positive changes to take place immediately, regardless of how extreme and beneficial the new business arrangements and developments.. At the present moment, before any progressive economic changes can be expected, China must concentrate on staying afloat. Avoiding bankruptcy and total financial collapse, is the Chinese governments immediate concern. China has lost all inside resources, and must now depend on the acceptance and willingness to trade from other nations. (Lardy, 2002)

Other nations may be reluctant to trading with China, because China has not established credibility and trustworthiness with other countries. In addition to this, China has contributed nothing to these other nations, government or financially wise, that it must now depend upon, for banking, insurance, and other services. The sudden change, or reluctance to change, may cause conflict between China and the United States, Taiwan or Japan. The China government has a reputation for being corrupt and untrustworthy. Any high developing country entering into an agreement with China is considered risky. (Lardy, 2002)

There are no guarantees of China's economic growth and productive success, and investing in the international project carries no certainties. Unfortunately, at the beginning of this year, some economic draw backs concerning China's financial recovery, did occur, although this is not an overall indication of their progress or level of risks Recovery of the retail sales loss was rapidly regained. (editors of Xinhua News, 2002)

Another major impact on the recovery of China is the recent attack on the United States, which weakened an already weak economy. Although the attack on America was probably one of the greatest tragedies in history, the U.S. leaders are preventing an economic recovery. The suggestion of building a memorial out of New York's Twin Towers would greatly reduce America's financial recovery, and holding on to an incident that prolongs suffering, and enhances a negative image. In addition to this, it is giving the terrorists more power than they deserve. America's hesitation to continue with its normal business functions is inhibiting the power to help China, and which is limiting our own economic growth.

FINANCIAL OPPORTUNITIES FOR PARTICIPATING NATIONS?

Despite the anticipated problems and reluctances, China is one of the fastest growing economic countries, and would definitely be an advantage to invest in one of China's financial markets. Demand for financial support and services from China are rapidly increasing. In addition to the financial growth express of China, China will have access to all the newest and latest banking technologies, because they are just arriving into the economic market. (N. A. Xinhua News Agency, 2002)

Evidence is indicating that China will exceed all expectations and experience an immediate growth rate within the first few months of accepting the World Trade Organization Agreement, and progress even faster than this after the initial seven months. The most efficient source of stimulated economic growth is by boosting the investments of treasury bonds. China's government invested contracts are expected to increase and multiply at an incredible rate this year.

CHINA'S MOST SURPRISING TURN

The most surprising investment China is participating in is the telecommunications market. Advanced telecommunications, such as cell phones, computers, (DSL, internet), and satellite dishes are extensions of highly developed communities, and considered to be luxuries. For a nation with an extreme low level of development, investment in such advanced technologies and telecommunications is a major step forward. Participation in the telecomm industry is probably the most beneficial investment, making the biggest contribution to China's economic productivity. (Xinha News, 2002)

Although, in America, certain aspects of telecommunication products are considered luxuries, these advanced technologies enhances the productivity and the speed of financial economic growth. Banks funds are transferred quicker, business arrangements and agreements are made in a matter of minutes, accounts are opened faster, all of which are made possible by faxes, internet, cell phones, lap-top computers and many other telecommunication items we referred to as conveniences, that we could easily live without. China's economy will expand faster than average, or expected, if they invest generously in telecommunications, because the advance electronics will allow them to speed up sales, open accounts, and make other profitable business contacts.

GDP INFORMATION

In the first quarter of China's World Trade Organization agreement, China's economy grew a surprisingly increase of 7.6%, much faster than what was anticipated. Major and unexpected economic progress rapidly increased from there, and as of now, China's economy shows no signs of slowing down. Experts disagree on exactly the decision made which allowed China's economic improvement to progress as rapidly as it did, but because of the possibilities of faster and better communication, the telecomm is probably the main contribution to China's economic growth and unsuspected success.

Suspected economic growth, or GDP, for the year of 2002, is expected to stay 7.0 and 7.6%, if the success rate stays the same. "Exports grew by 9.9% in the first quarter of 2002 from a year ago, compared with a year -- on-year growth of 6.5% in the fourth quarter of 2001, and the 3.9% in the third quarter of 2001" (Editors of Xunhua, 2002).

Although China's economic productivity is increasing faster than expected, China has the potential of making even faster gains, and economic growth and success. The main problem which is impeding China's economic development, is China's government controlling or slowing down the investment agreements and arrangements. Reluctance or over caution to open up investment opportunities in banking, insurance, and telecommunications with other nations is obviously limiting the control of the outgoing and incoming funds that would support China's economic growth and success. (Editors of Xinhua, 2002).