Article Summary
The article in a nutshell is regarding China’s mass economic
growth within this month and its future prospects. As predicted, within this
month (December), China underwent mass growth in market, highest in the last 3
years some economists say. China as the world’s second largest market, and with
the largest expansion rate, at this projection, China will soon become the
world’s largest market surpassing the United States of America. As an
investment standpoint, Chinese stocks had their highest gain this month than in
the last 3 years, mainly within the production and retail industry experiencing
the most growth. But what is rather
interesting is that “China’s ongoing growth recovery is gaining momentum mainly
driven by domestic demand conditions” opposed to external focuses of export by
the increasing global demand and globalization. In fact, China’s economic
growth rate is expected to even grow further as the government introduces new
expansionary fiscal and monetary policies of further tax reductions, lower
interest rates, increase in money supply and increased government spending.
With such a progressive growth rate, it seems that China’s economic activity
has rebounded and gained momentum. It is expected that the GDP of China to grow
8.4% this quarter from the year past. With mainly a large increase in
industrial (10.1% from the past year) and retail, more foreign investment is
made into the ever growing Chinese economy to meet the nations high domestic
demand as the nation begins to further develop. For example Hyundai Motors
(automaker of South Korea) stated that it intends to increase production in
China by 40% to meet the nation’s growing demand. With such a large and
dominant economy, a future global power, China’s market is one that needs to be
harnessed as the Chinese Government states that it will work best with the
rapid progression and adjust policies when needed. In a nutshell, China, even
as the second largest market in the world, it has a very high and evident
progression rate that is ever growing, which will soon harness the global
economy and become the global power.
Relation to Course
This article had much to relate to the course content which
can be proven through the following content covered:
Demand and Supply: One of the
main topics in the article is the demand and supply of goods and services in
the Chinese Market. As the nation begins the develop, the Chinese population
become of demand for many new goods and services. With such a large and growing
demand, the supply must adjust to accommodate such needs by the Chinese
populace. And so, the article begins to demonstrate the growing Chinese market in
supply that is adjusting to such needs. It shows that this month (December),
the Chinese market has grown more than it has in the past three years. With
vast progression in both the industrial and retail markets, the Chinese market
is adjust to meet the demands domestically, opposed to the high external
headwinds that have come to decrease. In a nutshell, the Chinese market is
expanding its supplies, to avoid a shortage that will soon be caused by the
high and increasing demand. GDP: One of the main topics covered within this article is the vast size of the Chinese market. China’s market is currently the second largest market in the world. The approach to measure a nations market size as discussed in the course is by calculating their GDP. GDP is the total dollar value of all the goods and services produced within a country in a set period of time. The current GDP of the Chinese market is $7.3 Trillion marking it the second largest market in the world behind the United States of America with a total GDP of $15.09 Trillion. But with such a fast progression rate, it is forecasted that the Chinese Economy will soon surpass that of the United States of America, making it the global power.
Fiscal and Monetary Policies: As discussed within the course, governments adjust fiscal and monetary policies to adapt to the changing economy. The Chinese market is ever growing at a rate faster than any other economy in the world. The government must so harness the power of such a vast market. The article describes how the Chinese government is using expansionary fiscal and monetary policies. They are decreasing tax rates, increasing government spendings, decreasing interest rates, and increasing the money supply, all in all striving to stimulate the economy furthermore to expand its power and dominance, to soon surpass that of the United States and become the global power with the world’s largest economy.
Comments
The reason I have selected to do this article, just like all
the other articles is because of my high interest into the matter. Since the
2008 recession, where I became highly interested in economics and investment, I
have done much research into the growing Chinese economy. Seeing its great
incline in progression, I found this market rather interesting with all of the
research I put into it. With such a vast progression, like many economists
stated, the Chinese market looks very appealing for foreign investments. With
many global companies expanding their operations there, to adjust to the vast
and increasing demand, the Chinese market is ever yet growing with large yields
in their stocks especially over the past month. With such large gains, as an
investor perspective, it appeals as a very stable and growing market. This had
me very interested as an investment. This is when I began to do further
research into their market, and began to analyze certain equity mutual funds in
the Chinese Market. A good example of an equity fund that I did thorough
research into is the Goldman Sachs Asian Equity Fund. With a cumulative return
of 15.62%, this Asian Equity Fund is an appealing investment. By doing further
research into the matter, I have become further educated on the matter, and am
debating whether or not I shall make such an investment myself. By reading this
article, I have gained a greater understanding on the matter, as I can make a
better educated and informed decision on whether or not I shall invest into the
Asian market as a whole. This article all in all was a great read as it helped
me better understand the growing Chinese economy better than ever before,
showing a vast increase still to date. I found this article very interesting
and educational, as it will help me make a better informed decision on the
matter. With a great personal connection and interest in my case, I am glad I read
this article as it helped me make stronger and personal connections to external
cases such as Goldman Sachs Equity funds. In conclusion, this article taught me
a lot about the Asian market and made me more informed on the matter, allowing
me to draw connections to foreign investments for my own personal gains.
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