i excecutive summary

However, recent years have seen a slowdown in China''''s economic growth.This has raised concerns about the sustainability of China''''s economic model and the impact it could have on the glob

ACADEMIC REPORTGROUP ASSIGNMENT – ECO 121

Semester: SUMMER - Class: IB1804 - Year 2023

Lecture: Nguyễn Minh Ngọc QuỳnhMembers of group

CHINA

Table of Contents

I EXECUTIVE SUMMARY 2

II.GDP 2

III.CPI 9

IV.UNEMPLOYMENT 14

V.REVIEW AND GIVE THE CONCLUSION 15

VI.REFERENCE 16

I EXCECUTIVE SUMMARY

In September 2015, the leaders of countries, including Chinese President Xi Jinping, attended theUnited Nations Development Summit and adopted the 30-Year Agenda for Sustainable Development,thereby creating a momentous topic for the next 15 years

Being the largest developing country in the world, China has always prioritized development Thiswas emphasized during the Fourth Session of the Twelfth National People's Congress on March 16,

2016, when the Outline "13th Five-Year Plan" was approved The plan focuses on innovating,coordinating, greening, developing, opening up to the world, and striving for win-win cooperation.China aims to prioritize growth that benefits people's well-being by stepping up economic, political,and cultural development, building a society, creating ecological civilization, and ensuring theconstruction of a well-off society comprehensively according to the plan

China also values the new-style international relations program with mutual benefit as the core Thisinvolves establishing partnerships and comprehensive cooperation, promoting development in threemajor areas: economy, society, and environment Countries should implement this program based onthe principle of “common but differentiated responsibility,” taking into account their own conditionsand capabilities

II GDP

China is the second-largest economy in the world and has been a major contributor to global growth over the past few decades However, recent years have seen a slowdown in China's economic growth.This has raised concerns about the sustainability of China's economic model and the impact it could have on the global economy

In 2019, China's GDP growth rate was 5.95%, which was already a significant decline from previous years However, the COVID-19 pandemic in 2020 caused a further decline in GDP growth rate, dropping to 2.24% The pandemic had a severe impact on China's economy, with the country being one of the first to be hit by the virus The lockdowns and restrictions severely impacted businesses, supply chains, and employment, leading to a significant decline in economic activity

Despite this, China's economy has shown signs of recovery in 2021 with a remarkable 8.45%, which was the highest growth rate in decades This growth can be attributed to several factors, including thegovernment's stimulus measures, the rebound of the manufacturing sector, and the continued growth

of e-commerce and online activities

In 2022, China's GDP increased by 2.99%, much lower than the official target of "about 5.5%" and sharply lower than the growth rate of 8.45% in 2021 If not included growth of 2.2% after the first Covid-19 outbreak in 2020

However, it is expected that China's GDP growth rate will slow down in the coming years The ongoing pandemic continues to pose challenges to the economy, and the trade war with the United States has also affected China's GDP The trade war with the United States caused a 0.8% reduction inChina's GDP growth rate in 2019 Although the trade tensions eased in 2020, the Biden administrationhas taken a tough stance on China, which could further affect China's GDP growth

Figure 1.1 Growth rate of real GDP in China from 2012 to 2022

Source: Statista

Note: GDP= Gross Domestic Product

Benefitting from the effective control of COVID-19 in 2021, China's service sector experienced asteady recovery, signalling a positive outlook for the country's economic growth Following theunprecedented challenges faced in 2020, the contribution of the service sector to China's GDP growthrebounded to 54.9% in 2021, showcasing a notable improvement from the previous year

The resurgence of the service sector played a vital role in revitalizing the Chinese economy As thepandemic restrictions were gradually lifted, sectors such as retail, hospitality, tourism, transportation,and financial services experienced a resurgence in activity Consumers regained confidence inengaging with these industries, leading to increased spending and demand for services This positivetrend contributed to the recovery of the service sector and its subsequent impact on overall economicgrowth

Nevertheless, despite the encouraging progress, the service sector has not yet fully returned to its pre- pandemic levels The lingering effects of the COVID-19 pandemic, coupled with ongoing global uncertainties, continue to pose challenges for the sector Consumer behavior has shifted, with some individuals remaining cautious about discretionary spending and travel, impacting the recovery of certain service industries Furthermore, international travel restrictions have affected sectors like tourism, limiting the influx of foreign visitors and impacting revenue

Figure 2.2 Sectors contribution to GDP growth

Source: IMF World Economic Outlook

In the first semester of 2022, the construction and real estate sectors in China experienced a relativedecrease in their contribution to GDP compared to the previous year The construction sector'scontribution shrank from 7.2% in 2020 to 6.3% in 2022, while the real estate sector saw a declinefrom 7.3% to 6.7% during the same period

This relative decrease was triggered in 2020 by the Government's efforts to tighten its regulatorypolicy of these sectors In 2020, the government recognized the need to address certain challenges andrisks associated with the construction and real estate industries As a result, they implementedmeasures aimed at curbing speculative investment, reducing housing market volatility, and promotingsustainable development

The government's regulatory policies included stricter control over land supply, tightening ofmortgage lending regulations, and increased scrutiny on property developers' financing activities.These measures were intended to prevent excessive speculation, curb rising property prices, and foster

a more stable and sustainable housing market While these policies were necessary for long-termeconomic stability, they had an immediate impact on the construction and real estate sectors.The tightening of regulatory policies had several effects on the construction sector It led to a decrease

in the number of new construction projects, as developers became more cautious in their investments.Additionally, the availability of land for development became more limited, affecting the overallgrowth of the construction industry As a result, the sector's contribution to GDP experienced adecline Similarly, the real estate sector was affected by the regulatory changes The implementation

of stricter lending regulations made it more challenging for potential homebuyers to obtain mortgages,leading to a decrease in housing demand This, in turn, impacted property sales and slowed down thegrowth of the real estate sector Consequently, the sector's contribution to GDP also experienced adecline

Figure 2.3 Construction and real estate share of GDP

Source: IMF World Economic Outlook

In 2021, China's economy witnessed a notable shift in its growth drivers, with consumptionreclaiming its position as the primary engine of economic expansion Consumption contributed to asubstantial 65.4% of China's GDP growth, signalling a robust recovery in domestic demand andconsumer confidence This resurgence in consumption was a significant milestone for the Chineseeconomy, reflecting the successful control of the COVID-19 pandemic and the subsequentrevitalization of consumer spending

Alongside consumption, exports also played a vital role in driving China's economic growth in 2021.With the gradual recovery of global trade and increased demand for Chinese goods, exportscontributed to 20.9% of the country's growth China's manufacturing prowess and export-orientedindustries played a pivotal role in capitalizing on the global economic recovery and strengthening thenation's external trade position

However, amidst the resurgence of consumption and the strong performance of exports, thecontribution of investment to China's GDP growth experienced a notable decline Investment'scontribution dropped from an average of 37.2% in the three years preceding the COVID-19 pandemic(2017-2019) to a mere 13.7% in 2021, marking the lowest level in nearly three decades

Figure 2.4 Contribution to GDP growth

Source: IMF World Economic Outlook

China's trade sector demonstrated exceptional strength and resilience in 2021, achieving remarkablegrowth in the total value of imports and exports The combined value of China's trade surged by animpressive 21.4%, reaching 39.1 trillion RMB (approximately 5.8 trillion USD) This remarkableperformance reflects China's continued integration into the global economy and its pivotal role as amajor player in international trade

China's major trading partners in 2021 closely mirrored those of previous years, with the rankingremaining consistent The Association of Southeast Asian Nations (ASEAN) maintained its position

as China's largest trading partner, accounting for 15% of the total trade value The close geographicalproximity, robust economic ties, and strong trade relationships between China and ASEAN membercountries have contributed to their sustained trade volumes

The United States, despite the challenges posed by ongoing trade tensions, remained an importanttrading partner for China, occupying the third position with a 13% share of the total trade value Theeconomic interdependence between the world's two largest economies, coupled with their extensivetrade linkages across various sectors, continues to shape their bilateral trade relationship

Japan, a longstanding trading partner of China, ranked fourth in 2021, accounting for 7% of the total trade value The proximity of the two nations, as well as the complementary nature of their economies, has fostered a mutually beneficial trade partnership

Figure 2.5 Trade value

Source: IMF World Economic Outlook

China's central and local government debt exhibited a continuous upward trajectory in 2021,following a substantial surge experienced in the previous year By the end of 2021, the outstandinggovernment debt reached a significant amount of 53.74 trillion RMB, equivalent to 47.4% of thecountry's GDP This growing debt burden reflects the government's efforts to stimulate the economy,address the challenges posed by the COVID-19 pandemic, and support key sectors

The increase in government debt can be attributed to various factors In response to the economicfallout caused by the pandemic, the Chinese government implemented extensive fiscal measures,including increased government spending, tax cuts, and infrastructure investment, to bolster economicrecovery These actions resulted in a surge in debt issuance to finance these expansionary policies andsupport vital sectors of the economy

It is worth noting that despite the increase in government debt, China's overall debt-to-GDP ratioremained within a manageable range With a debt-to-GDP ratio of 47.4%, China's debt burden islower than that of many other major economies The government has been proactive in implementingmeasures to control and mitigate potential risks associated with debt accumulation, ensuring a stableeconomic environment

In terms of budget deficit, China recorded a deficit equivalent to 3.1% of GDP in 2021 This deficitreflects the difference between government expenditures and revenues The budget deficit serves as an

important tool for the government to inject liquidity into the economy, finance public investment, andsupport social welfare programs.

For 2022, the government has set a target deficit-to-GDP ratio of 2.8% This indicates a measuredapproach to fiscal policy, aiming to strike a balance between supporting economic growth andensuring fiscal sustainability The government's focus on maintaining a reasonable deficit levelhighlights its commitment to managing debt risks and promoting long-term economic stability.Figure 2.6 Budget deficit and goverment debt

Source: IMF World Economic Outlook

Foreign direct investment (FDI) into China demonstrated significant growth in 2021, reaching arecord high of 173 billion USD, reflecting the country's attractiveness as an investment destination.This represents a substantial increase of 20% compared to the previous year, underscoring China'sresilience and appeal to international investors despite the challenges posed by the global economiclandscape

China's ability to attract FDI can be attributed to several factors Firstly, the country's large consumermarket, with a burgeoning middle class and rising disposable incomes, presents significantopportunities for businesses seeking to tap into a vast consumer base Additionally, China's robustinfrastructure, skilled workforce, and advanced manufacturing capabilities further enhance its appeal

to foreign investors

In contrast to FDI, outbound direct investment (ODI) from China has experienced fluctuations ODIrefers to Chinese companies' investments in foreign markets While the growth of ODI had beenrobust in previous years, it has been on a decreasing trend recently In 2021, ODI amounted to 145billion USD, indicating a decline compared to previous years

The decrease in ODI can be attributed to several factors Firstly, the Chinese government hasimplemented stricter capital controls and regulations on outbound investments to manage risksassociated with capital outflows and safeguard the stability of the financial system These measuresaim to prevent excessive overseas investments and ensure the prudent use of capital.

Figure 2.7 ODI and FDI

Source: IMF World Economic Outlook

Note: FDI= Foreign direct investment

ODI= Outbound direct investment

Notably, the price of pork in China grew by 97% year on year last month, easing from a 110.2% spike

in November 2019, as the government's steps to restore pork production began to take effect.CPI in China has risen steadily over the last year as African swine disease decimated the country's pig herd With the Lunar New Year vacation in late January, the peak season for pig consumption, Beijing has released more than 100,000 tons of pork in stock since the middle of last month to alleviate supply tension

According to NBS, the strain on pork supply in China has lessened due to good improvements in animal output, a strategy of exporting pigs from stockpiles, and an increase in imports

OCBC bank's Tommy Xie predicts that consumer prices in the world's second-largest economy wouldfall modestly in 2020, however hog prices are expected to stay high in the first half of this year