- Course Introduction and syllabus
- 4 Key Drivers of China's Economy
- Review of Macro Terms
The Next China and the World Economy
Population
High Savings
The Role of the Government
Arriving daily from the rural areas to the city.
China's Rural-Urban Migration
Savings/GDP | x | GDP/Population | = | Per Capita Savings | |
---|---|---|---|---|---|
China | .51 | x | USD 5,420 | = | USD 2,764 |
United States | .16 | x | USD 51,197 | = | USD 8,192 |
Break into groups and introduce yourselves (name, hometown, major, favorite dish you ate during 春节)
Then, discuss the following:
Do you think China has reached the Lewis turning point? Can a two-child policy or dismantling the Hukou system help?
Why is China’s Savings Rate So High?
“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.” Adam Smith. The Wealth of Nations (1776).
“It is not possible for one to teach others while he cannot teach his own family. Therefore, the ruler, without going beyond his family, completes the lessons for the state.” Confucius. The Great Learning (500 BC).
Five-Year Plans | Economic Report of the President |
---|---|
GDP to grow by 7% annually on average. | Consumption and Saving |
More than 45 million jobs to be created in urban areas. | Developments in Housing Markets |
Rise in domestic consumption. | Business Fixed Investment |
Service sector value-added output to account for 47% of GDP, up 4 percentage points. | Business Inventories |
Annual grain production capacity to be no less than 540 million tons. | Government Outlays, Consumption, and Investment |
Construction and renovation of 36 million apartments for low-income families. | State and Local Government |
Expenditure on R&D to account for 2.2% of GDP. | Real Exports and Imports |
Indicator | 2010 | 2015 | Avg. annual growth rate | |
---|---|---|---|---|
– GDP (trillion yuan) | 39.8 | 55.8 | 7% | Expected |
– Urbanization rate (%) | 47.5 | 51.5 | 4% | Expected |
People's livelihood | ||||
– Per capita disposable urban income | 19109 | > 26810 | > 7% | Expected |
– Per capita disposable rural income | 5919 | > 8310 | > 7% | Expected |
– Number of enrollment in basic medical insurance in urban/rural areas (%) | 3% | Binding | ||
– Number of low-income apartments built in urban areas (units) | 36 mill | Binding | ||
– Total population | 1.341 billion | < 1.39 billion | < 7.2% | Binding |
– Average life expectancy (years of age) | 73.5 | 74.5 | 1 year | Expected |
Real Estate Bubble
Stock Market Bubble
Municipal Debt
Excess Capacity
Capital Flight
… We will look at each of these risks during the course.
In your groups, discuss the following:
Nominal Variable: Prices we can see in the day-to-day
Real variables: Attempt remove the effects of price changes over time, which confound what is happening in a real sense.
e.g. The nominal price of a bowl of rice increases by 50% from year t to year t+1. If we eat one bowl in each year, we consume the same but we spend 50% more in year t+1. Real consumption is 1 bowl of rice.
Price indexes can remove the price effect from nominal variables by converting them to real variables; can be used to measure inflation.
Price indexes are numerical measures of average prices for goods and services, and are used to compare average price changes over time.
Important Indices: Consumer Price Index (CPI), Production Price Index (PPI), GDP deflator, etc.
Flow variables: economic phenomenon that appear during a period of time.
Income Statement (Flow) | Balance Sheet (Stock) |
---|---|
Inflation | Price |
Savings | Wealth |
Balance of payments | Foreign exchange reserves |
Birth Rate | Labor force |
Open market operations | Money supply |
Investment | Capital stock |
Budget deficit | Public debt |
Current account deficit | External debt |