This is related to China\'s Economy from 2000-2012 What did the government do du

Question

This is related to China's Economy from 2000-2012 What did the government do during this time to either help or hinder the improvement of the economy? Consider what policies were put in place by the government. This is where you will discuss fiscal policy, monetary policy, and supply side policy. • What was the intended impact of these government policies? Note: government policies are not always effective, this is asking about the objective or goal of the government policies, not necessarily if these worked or not. • What was the actual impact of the government policies? As objectively as possible, were there policies effective or not? Why?

Explanation / Answer

China was the world’s fastest growing major economy with a growth rate of 10%. China is a global hub for manufacturing and is the largest manufacturing economy and exporter of goods in the world. China became a member of the world trade organization in 2001.China’s global economic crisis began in 2008 which affected its economy.China’s exports, imports and FDI inflows declined,GDP growth slowed and many workers lost their jobs. The Chinese government has acknowledged that its current economic growth model needs to be altered and has announced several initiatives to address various economic challenges , Even though the redistributive effect of fiscal policy in China appears to be stronger than what we identify. Fiscal policy, however, can matter not just for redistribution . Fiscal policy has contributed to changes in income inequality.defined as the difference between market and net Gini coefficients, but also for market income inequality. Monetary Policy: The China’s real GDP growth fell from 14.2% in 2007 to 9.6% in 2008, and slowed to 9.2% in 2009. In response, the Chinese government implemented a large economic stimulus package and an expansive monetary policy which boosted the domestic investment and consumptipm and prevent an economic. Slow down in China. The use of a pegged system greatly limits the ability of the central government to use monetary policy to control inflation. to allocate capital according to its most efficient use through a market-based credit system.The Chinese government responded by implementing a $586 billion economic stimulus package, loosening monetary policies to increase bank lending, and providing various incentives to boost domestic consumption. China’s last two five-year plans the 11th FYP (2006-2010) and the 12th FYP (2011-2015) have placed strong emphasis on promoting consumer demand, addressing income disparities such as by boosting spending on social safety net programs, boosting energy efficiency reducing pollution, improving the rule of law, and deepening economic reforms. Those plans have also identified a number of industries and technologies that the government has targeted for. The combination of strong growth of supply and strong growth of demand allowed China to achieve rapid actual GDP growth. China has become a major global economic power. China today is the world’s largest merchandise exporter, major manufacturer and foreign exchange holder. China’s policy was to boost industry through fiscal incentive and to establishing special economic zone particularly for foreign companies and inviting them to invest. Now the China, after U.S.A., is the leading country where foreign companies have been investing capital and transferring technology. This has transformed Chinese economy from an imitation economy to an efficient and to some extend a knowledge economy. All this was the result of good economic policies.This clearly shows that the policies intended were good.

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