Inflation Is Key Risk As China Sees Surge In Trade

1268 words - 6 pages

Article: inflation is key risk as China sees surge in trade

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.( Cited from: en.wikipedia.org, 15 April 2011) .As inflation is a problem for many reasons ,the main one is that once it takes hold ,it is unpredictable. Unpredictable inflation is a problem ...view middle of the document...

The pressures of inflation will be reduced by the currency appreciation of Renminbi. To control the high inflation in China, it depends how the Chinese policy makers would react to high inflation. To reduce inflation, the Chinese central bank would have to reduce, or at least limit the growth of the domestic money supply. (Cited from:www.yahoo.com. Cited 15 April 2011).This can be done in various ways. In the case of high inflation, one of the effective ways to reduce money supply would be to let the Chinese currency CNY appreciate. This would mean that Chinese exports become more expensive and with less international demand for Chinese exports the overall economic growth in China would likely decrease.

Along with the economic growth, the RMB also seems to have a rapid escalation. China has achieved an 8% GDP growth in 2009, and is further predicted to accomplish a 9.6% GDP growth in 2010. Simultaneously, the inflation rates are also shooting up. In February, the consumer price index and producer price index experienced an increase of 2.7%, and 5.4% respectively, which was higher than the previous month. “A small factor of the revaluation is the pressure from the US. A big factor is inflationary pressure in China,” said Gao Shanwen, an economist with Essence Securities in Beijing. As a result of RMB currency revaluation, it has positive and negative effects on China’s economy development. The revaluation is on the overall, a strong net positive effect, for 2 reasons: It allows the Chinese government to potentially prevent future overheating and hard landings in the Chinese economy, while still keeping the exchange rate basically stable; It helps to ease the political tensions relating to trade between US and EU, and China. This announcement has already been welcomed by a number of senior US policy makers.(Cited from:www.dollardex.com/sg,15 April 2011). Increase in the RMB exchange rates will help to minimize import costs of China, and help to reduce domestic inflationary pressure.
[pic]table2
[pic]table3
[pic]table4(Cited from:www.chinarealestatenews.com 15 April 2011).

On the other hand, while the RMB exchange rate has appreciated continuously,the export trade in China will be effect as China is the biggest exporting country in the world. US will have to pay more cash while importing Chinese products. This will not be appreciated by US, especially for its domestic demand. The appreciation will have an impact on the Chinese stock markets, and the profitability of the Taiwan owned companies based in China, especially the export oriented.(Cited from:chinarealestatenews.com 15 April 2011). The value we can use the expenditure approach to measure GDP as the sum of consumption expenditure, investment, government expenditure on goods and services, and net exports. The formula is...

Other assignments on Inflation Is Key Risk As China Sees Surge In Trade

China Globalisation Essay

1652 words - 7 pages land are all very real environmental issues facing China at the moment. Each year more than 500,000 acres of arable land is turned into construction and urban development projects, while China is currently the second largest carbon dioxide emitter in the world. Nevertheless, global pressure, namely from the World Trade Organisation and the World Olympic Committee, has prompted the Chinese government’s response to these environmental challenges

Student Essay

1580 words - 7 pages tires from overseas have lost their job. According to the Business Dictionary (2015) market disruption is “A decline in sales to the extent major economic hardships occur, such as one created by surge in imports at the expense of domestic industry” (p. 1). By following this definition, it can be assumed that the decrease of sales of American tires was caused by the amount of imports of Chinese tires. China is known for its ability of mass

Viva

9551 words - 39 pages August 2011. This is happened because the sectors of agriculture, trade and industry remain the biggest contributors on reduction of unemployment rate in Indonesia. Growing investment and followed by huge consumption also could be the factors of the declining unemployment rate. According to the bar chart above, the inflation rate of Indonesia in 2008 is 9.9%. This can be considered as a high rate. Then, it keeps dropping until year 2010 which

Financial Risk

1797 words - 8 pages Introduction Financial risk takes place when an individual or company is exposed through numerous financial transactions. These transactions may include sales, purchasing, different types of investments, loans, volatile markets due to political situations and more. Financial prices may change as a result of changes in interest rates, inflation, the exchange rate, and many more economic reasons such influences of the European markets as well

Current Situation Of Inflation In Bangladesh

8353 words - 34 pages upraise in inflation rate and how it is affecting our economy as a whole & the people. At the end we recommended some policy options to curb this rising inflation rate. We have found that there are number of factors behind the rising trend of inflation in Bangladesh. The factors contributed the most in the rise hike of essential items, particularly food, are slow growth in agriculture, rise in the world prices of food items, sharp depreciation

Economy

308 words - 2 pages this trend. In 2014 China and America agreed on a deal to share information technology among willing members of the WTO. It should also be noted that not everybody sees this peak as a threat to the global economy. The growth of trade with GDP is not a natural law says Paul Krugman. Only time will tell if trade is in fact declining, however, with more barriers lifted, we should see an increase in supply chains and lift world trade far above this “peak”.

Research On Currency Of Bangladesh

4139 words - 17 pages Analysis of investment opportunity for US-based MNC 17 Analysis of Bangladeshi Taka (BDT) against US Dollar ($) Exchange rates play a vital role in a country's level of trade. This is critical to almost every free market-oriented economy in the world. Numerous factors such as inflation, interest rates, current-account/trade balance, public (government) debt and political environment determine exchange rates and all are related to the trading

Report On Tesco

3649 words - 15 pages in the UK and number 3 worldwide amongst competing grocery chains. Their surge of success has much to do with advancing the corporations technology, such as CRM (Customer Relationship Management) software, this includes the highly successful Tesco Clubcard. Allowing Tesco to build their information technology with customer databases allowed them to develop their stores matching their customers' wants and needs, which is critical to the industry

Econimics Term Paper On Inflation

3165 words - 13 pages Bangladesh, Nepal and Pakistan but positive co-relation in Nepal and Sri Lanka. In Pakistan the consumer price inflation is mainly due to oil price hike and food inflation. So the inflation scenario in South Asia is adverse to economic development as it is above 5% in most of the countries. INTRODUCTION: Inflation is a global phenomenon and significant macroeconomic variable which affect the economic growth of all most all countries of the world

How Would You Explain A Simultaneous Rise In Unemployment And Prices In An Economy?

2598 words - 11 pages Controlling the level of inflation and achieving close to full employment are both major macroeconomic policy objectives which governments try to achieve. Stagflation is a period when there is a persistent rise in prices and slow economic growth. Slow economic growth implies that there is a rise in unemployment as the economy is not working at its full potential. As part of their objectives, governments aim to lower unemployment and try to keep

Fdi Attraction Of Costa Rica

3459 words - 14 pages development within knowledge-intensive industries. Furthermore, the country’s early acceptance and adoption of various trade liberalization schemes have created a destination that a number of economists have been referring as ‘investment haven’ for exported products and services. The case of Costa Rica, henceforth, is exemplary for developing countries, not only in regard to attracting pure FDI, but also supervising its spillover effects as a means to

Similar Documents

Co Relation Of Growth And Inflation In India & China

3147 words - 13 pages model of AD-AS, the short-run AS curve is upwardly sloping meaning any shift in AD curve due to increased demand would increase the price as well as output implying a positive relation between inflation and growth in the short-term. Under this model, there is a trade-off between inflation and output in the short-run but no such link in the long run. Neo-classical economist Tobin (1965) postulated portfolio framework; where individuals shift from

To What Extent The Role Of The People's Mediation Committees In China Now Is Still Significant When Some Cities Tend To Modernize And Others Tend To Conserve Traditionalism?

3644 words - 15 pages traditionally been preferred to the courts for many reasons. Mediation, as one of the different means of dispute resolution, is widely practised in China. To define it, mediation is “an effort by a third party to encourage parties to a dispute to voluntarily reach an agreement to resolve their dispute”. There are currently various types of mediation in China: civil mediation, judicial mediation, administrative mediation and arbitration

A 25 Year Old Individual Is Working Full Time As A Volunteer In A Charity Organization. His Daily Job Is To Distribute Leaflets Door To Door And Take Part In Charity Events. He Is Now Preparing For A...

1915 words - 8 pages Office. Then take the form to your lecturer, along with evidence to back up your request. The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick. The completed form must then be returned to Academic Admin for processing. This is the only way to get an extension. 5. General guidelines for submission of coursework: a) All work must be word-processed and must be of “good” standard

Baky Essay

5354 words - 22 pages , money supply and prices. Thirdly, to keep the economy’s fiscal balance in a comfortable zone, the concerned authorities should take prudent decisions on petroleum subsidies. The direct pass-through of the oil prices at this stage poses high political risk, as the economy is in the midst of sky-rocketing inflation. There is a need for fuel cost economization. Energy prices should be fixed based on the user categories where subsidies from high