The paper "China and the World Economy" is a perfect example of a macro & microeconomics case study. Chen & Tian (2011) observed that since 1990, China has advanced into one of the world’ s fastest-growing economies, a success that The Economist calls the nation’ s “ great leap forward” . After 1994, the country’ s actual GDP per capita developed at an amazing average rate of 12.4 percent annually over this time, whereas real fixed asset per capita grew by 14.8 percent annually. China quickly rose to be the global fourth-biggest economy when a real total GDP grew from 542.5 billion U. S dollars to 2.61 trillion US dollars in a period of 10 years, the country followed U. S., Japan, and Germany. The 2005 reports that focused on purchasing power parity showed that China’ s aggregate GDP of 8.16 trillion US dollars even surpassed Japan and rose to become the world’ s third-biggest economy, behind the U. S.
and the European Union. This signifies an outstanding success given that China only ranked No. 10 in the globe in 1992. This quick growth was a result of intense structural reforms. There are two most significant structural reforms that were put in place in the financial state-owned industrial sector and the financial sector (Palley, 2008). The restructuring of the financial sector is commonly referred to as “ a crucial element of a long-term growth strategy” , whereas the restructuring of the state-owned industrial sector is commonly perceived to be one of the main issues in China’ s economic improvement.
There are several factors that lead to the fast growth of the economy. Foreign direct investment (FDI) is a capital that is invested in a nation that offers manufacturing and service abilities for the world and native consumer markets.
This has played a major role in China’ s rapid economic growth. FDI is the contributory factor in bringing goods and services to the international marketplace. The entrance of foreign investment displays investor confidence in the geopolitical and trade climate of the host nation (Chen & Tian, 2011).
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