Notesale: Turn your study into money

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Kimberley Sheridan

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Coursework Header Sheet
202869-18

Course
Coursework
Tutor

BUSI1490: Business Proj 1 (Contexts/Fra)
Macroeconomics
AK Kofinas

Course School/Level
Assessment Weight
Submission Deadline

EN/UG
7
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Where material has been used from
other sources it has been properly acknowledged in accordance with the University's Regulations
regarding Cheating and Plagiarism
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China is currently the second biggest economy in the world set to become the world's
largest economy by 2017, Media Eghbal, 2013
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354 billion at the end of 2012 a 6
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High year on year growth
for last two decades China’s growth has been booming at around 10% increase,
on average, per year when most countries are not growing at all or even shrinking,
OECD/IEA, 2006
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This is one of the
most basic facts in macroeconomics, confirmed by every single observation and
supported by every single theory at our command’, Noah Smith, 2011
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The only question is, when?
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Growing economy demands in
raw material; fast growth
significantly increases energy
consumption as countries
consume more energy on
buildings, transportation,
agriculture, and industries
Barliwala & Reddy, 1993
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Kimberley Sheridan

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Large working population
‘The working-age population measure is used to give an estimate of the total number of
potential workers within an economy’, Investopedia, 2013
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Most
economists simply believe 10% cannot be sustained long term, especially with majority
of china’s trading partners not growing at all
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Ronald J
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For the first time in
many years, core work age group 20 to 45 decreased by 3
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- This is the result of the one couple, one child
policy
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Recent Growth rate of china’s economy

Data for the graph above was pulled from the information given by the BBC's report,
'China growth shows signs of pick-up from 13-year low', name of writer un-known
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8% in 2012, down from 9
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That was the slowest annual rate of
growth since 1999
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Figures for the US, the world's largest economy,
and Japan, the third largest, are expected to show growth of about 2%
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4%
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Types of slowdown
However, we can look at the different effects that china's economic slowdown could have
according to its current situation and the types of slowdown that could occur
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I
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how rapidly
China's economy will slow and by how much? There are four extreme types of slow
down, we don't currently know what type of slow down it will be, but we can speculate;

Slow drop

Fast drop

Deep
drop

Type one; slow/deep

Type two; Fast/deep

Shallow
drop

Type three; slow/shallow

Type four; Fast/shallow

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Slow slowdown means the slowdown is a steady gradual decrease instead of a
sharp/fast drop
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The fast drop causes panic which causes feedback; the knock
of confidence adds to the drop
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�

Deep slowdown means slowdown will be drastic to zero growth or even negative
growth
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Type One - Slow / Deep
This type of economic slowdown is very damaging to the global economy but not as
damaging as type 2, because the slowdown is steady and gradual
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For example they could work to increase trade with countries other than China
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China and
other effected countries do not have time to assess the situation and there for panic
causing chaos
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The
slowdown is steady and gradual so China and other effected countries don't panic
therefore effects will be very small if any
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Kimberley Sheridan

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Part 3: What are the effects of China’s slowdown?
The scale of effects created from the slowdown, on the global economy, depends on the
type of the slowdown
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Slowdown and commodity demand
One effect of china's economic growth slowing is the reduction of imports into china
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e
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Most energy production requires the consumption of commodities, i
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coal, oil and gas,
Below is a graph of china’s energy generation between 1972 and 2005 from BBC, 2012,
‘China’s economic miracle’, This shows by how much and how fast, china’s energy
production has increased during the rapid economy growth
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Chinas Increasing Energy Generation

As consumption of commodities is increasing to high levels China’s raw material
demands rise
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Kimberley Sheridan

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Below is the chart of China's imports and exports and trends from year 1980 - 2009,
showing the increasing trade of the developing economy before the slowdown in 2008,
were we can see imports and exports were negatively affected
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Starmass, date unknown

The slowdown has affected different industries to various degrees, with
construction-related sectors faring the worst
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the China-led boom in resources could be
coming to an end', Jamil Anderlini, Financial times, 2013
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Import demands
into china slow
down

Other economies
my slow or even
strink

As demand for
materials decreases
Prices fall

Chinas economic growth
slows down

general slow down
of trade

Contries that
export to china
will suffer and
slow

contries that export to the
contries that export to
china will suffer and slow

1
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g
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Supply and demand rule states that lower demand means lower prices so the price of
raw material falls
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Countries that trade with china are often developing countries themselves
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4
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5
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6
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This may lead to loss of jobs causing people to worry, spend less and save their money
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When there is a lack of confidence they save and tend to avoid investment, so confidence
level has a large effect on growth or slow down
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References
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Batliwala, S
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K
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(1993)
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Population Summit Of The World’s Scientific Academies
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Retrieved from:
http://www
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org
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POP
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bbc
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uk/news/world-asia-china-20069627
bbc's report, 'China growth shows signs of pick-up from 13-year low'
Our finite world, 2011, ‘Is it really possible to decouple GDP Growth from
Energy Growth?’
http://ourfiniteworld
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http://www
...
com/terms/w/working-age-population
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ft
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html#axzz2
MD5xxaWR
Media Eghbal, Country Insight Manager at Euromonitor International, 2013;
http://finchannel
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Noah Smith, 2011
http://noahpinionblog
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co
...
html
OECD/IEA, 2006, International energy agency, ’world energy outlook 2006’
http://www
...
org/media/weowebsite/2008-1994/WEO2006
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Degen, 'China’s challenges to future sustainable economic growth and
the implications for the United States', 2009
Starmass, date unknown
http://www
...
com/china-review/imports-exports/import-export-trends
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http://www
...
com/news-subclass-cnt

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