China's Economhy - Overcoming Challenges and Constraints
30 important questions on China's Economhy - Overcoming Challenges and Constraints
What kind of challenges does China have to overcome to continue economic growth?
- Human Resource (Development)
- WTO & Globalization
- Rising unemployment
- Social constraints
- Physical constraints
Why will China's human resources pose a constraint on industrial development in the long run?
When was China admitted to the World Trade Organization (WTO)?
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Before China's official accession into the WTO, it already took measures to intensify its trade reforms. Give two examples of these measures.
- Lowering tariff rates
- Merging the dual exchange rate
Name a positive effect of China being admitted to the WTO.
- Foreign direct investments (FDI) increased to all-time highs.
- Many foreign businesses established a stronghold in the Chinese market.
- China has easier access to world markets for its exports and Chinese products are subjected to less unfair treatment or discrimination in certain markets.
What disruptive WTO effect was expected by commentators?
Why was it not surprising that China was able to manage its post-WTO economy with full confidence?
- China had huge trade surpluses year after year
- The influx of FDI continued
- China's foreign exchange reserves kept on rising
Which sectors were particularly vulnerable to the international competition?
Why was the government reluctant to close unprofitable state enterprises before 1997?
The government was reluctant to close unprofitable state enterprises before. How did this affect the state-owned commercial banks?
How did the government reform the banking sector and bring down the high proportions of NPLs?
- Setting up a state-run assets management corporation for each of China's state banks (4 in total) and introduced the debt-equity swap scheme.
- Writing off $500 billion of the NPLs
- Corporatization and ownership diverification of state-owned commercial banks
- Participation of foreign banks in restructuring the bank sector
What is a sign that the corporate governance of state banks has improved?
Besides the efforts of the government, there is another reason why the high proportion of NPLs could be dealt with effectively. What is that reason?
What factors have led to the growing structural unemployment in China?
- The economy undergoing vigorous macroeconomic reforms
- Businesses are forced to restructure for greater efficiency to meet WTO challenges
What is the consequence of the rising unemployment for China's economy?
Why has there been an increase in rural discontent in many areas?
What measures has the government taken in recent years to improve the conditions of workers and the unemployed?
- It has started human resource development programs, which includes job retraining.
- Social security programs: a national minimum living guarantee scheme was established and steps are taken to establish pension systems and insurance schemes for unemployment, health care and work-related injuries.
In 2008 the government invested heavily in infrastructure and speculative loans to avoid an economic slowdown. Why are investors worried that these measures will not work again if a new economic slowdown appears?
What kind of negative social externalities have risen because of the rapid economic growth?
- Rising social expectations
- Rising crime
- Rising superstition
What is the solution to deal with the negative social externalities which have appeared as by-products of economic growth according to the author?
Corruption is a social problem in China. How can corruption hamper economic growth?
- Increasing transaction costs
- Reducing efficiency
- Slowing trade and investment
Official statistics indicate that there is an increasing income disparity between urban and rural areas. But why is the economic plight of rural people much worse than these official statistics indicate?
Which aspects does the discussion of the rural problem usually involve?
- The agricultural problem (nongye)
- The village problem (nongcun)
- The peasant problem (nongmin)
What does nongye involve?
China has largely solved its food production problem (nongye). How?
Why may physical constraints be the biggest challenge to China's growth and development?
China experimented with the Green GDP. What is that?
China set a couple of targets to reduce pollution in the period 2006-2010. Name two of these targets and explain how these targets were (largely) met.
- Reduce chemical oxygen demand in water and sulphur dioxide (2% per year) in order to reduce acid rain.
- Reduce energy consumption by 20% per unit of GDP.
Which problems does China's agricultural production face?
- Rises in food prices
- Pollution
- Water shortages (China's average freshwater resource per head is 31% below the world average and in North China only 16% of water resources can be found while about 60% of cultivated land is located here).
Which project has been set up in North China to deal with water shortages?
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