...INTRODUCTION In the year 2008 the world saw one of the greatest financial crisis since the great depression of the 1930s. This financial crisis also known as the “Great Recession” caused various problems for different economies worldwide. The collapse of the Lehman Brothers bank, a sprawling global bank, in September 2008 almost brought down the world’s financial system. Large sums of tax payer based bail-outs were needed in order to shore up the company. However, the issuing credit crunch made matters worse as it turns the global financial crisis into the worst resection of the last eighty years (The Economist, 2013). The case of the global financial crisis was based upon the bank’s lending policies and the status of the housing sector. Basically, when banks make a loan, new money is created and just before the recession, banks created huge sums of new money by making new loans. In just seven years the banks doubled the amount of money and the amount of debt within the economy. Thereafter, the banks used this new money to increase the prices on houses instead of allowing money to flow to business outside the financial sector. From the money banks created between 2000 and 2007, thirty one percent went to residential properties, which pushed the prices of houses up faster than wages, twenty percent went to commercial real estate, increasing the prices on office buildings and thirty two percent went to the financial sector while only eight percent went to business outside the financial...
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...Bank Office, Beijing www.worldbank.org.cn www.worldbank.org/china CHINA QUARTERLY UPDATE SUSTAINING GROWTH April 2012 The China Quarterly Update reviews recent economic developments in China, updates the economic outlook and lays out key policy challenges. This issue was produced by Philip Schellekens (task team leader) and Xiaoli Wan, in collaboration with Xiaofan Liu, Philip O’Keefe, Dewen Wang and Min Zhao, and under the overall guidance of Klaus Rohland, Sudhir Shetty, Bert Hofman and Ardo Hansson. Comments are gratefully acknowledged from country economists in the East Asia and Pacific Poverty Reduction and Economic Management Unit. The team would also like to thank Jianqing Chen, Tianshu Chen, Li Li, Li Ouyang and Yan Wang for support in the production and dissemination of this report. The findings, interpretations, and conclusions expressed in this report do not necessarily reflect the views of the Executive Directors of the World Bank or governments they represent. This report takes into account information available up to end of March 2012. Questions and feedback can be addressed to Philip Schellekens (pschellekens@worldbank.org). EXECUTIVE SUMMARY RECENT ECONOMIC DEVELOPMENTS The Chinese economy is in the midst of a gradual slowdown. A weaker global economic environment and tighter domestic policies combined to slow GDP growth from 10.4 percent in 2010 to 9.2 percent in 2011. Slow growth in the Euro area and sluggish recovery in the US limited the contribution...
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...N.A.: ‘Cheap House Is Not Allowed’ Will China’s real estate bubble burst? Since the onset of the global financial crisis in 2007, China has faced some critical problems linked with the excess of liquidity in its internal market, due to the stimulus plan launched by the Government to soften the effects of the crisis. As a result China is now fighting against a high rate of inflation (especially food prices) and a high cost of property. While the inflation issue has been partially solved in the first term of this year, the fear for the real-estate market trend is still alive. This essay aims to critically analyse the real estate market in China, which is also strictly linked with the health of this country’s economy, by examining this issue from two different perspectives: from the point of view of those scholars who believe that the Chinese bubble will burst and from the point of view of those who believe that the Chinese market is still safe. First of all the essay will give the historical and economic background of the price rises in the Chinese real estate market, from the birth of this important economic sector to the global financial crisis. Secondly, in the core part, this paper will explain the main theory regarding the possibility of the real estate bubble burst and the counter argument. To better understand the actual situation in China there will be also a short comparison with the burst of the American bubble in 2007. In the conclusive paragraph some predictions...
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...General Political Environment 14 3.5.7. Investment Environment 14 3.5.8. Political Violence 14 3.5.9. Brazil Political Outlook 15 3.6 China Corporate Governance Law 15 3.7 Brazil Corporate Governance Law 16 4.0 FOREIGN EXCHANGE RISK 17 4.1 Brazil Foreign Exchange Risk 17 4.2China Foreign Exchange Risk 18 5.0 EXPANDED OPPORTUNITY SET 18 5.1 Brazil Opportunity Set 19 5.2 China Opportunity Set 19 6.0 ECONOMICAL OUTLOOK 19 6.1 Country Currency (FOREX) 19 6.1.1. Brazil Currency Outlook 19 6.1.1.1. USDBRL- Brazil Real Exchange Rate 20 6.2.2. China Currency Outlook 21 6.2.2.1. USDCNY-China Yuan Exchange Rate 21 6.3...
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...with growth rates averaging 10% over the past 30 years. China is also the largest exporter and second largest importer of goods in the world. On a per capita income basis, China ranked 90th by nominal GDP and 91st by GDP (PPP) in 2011, according to the International Monetary Fund (IMF). The provinces in the coastal regions of China tend to be more industrialized, while regions in the hinterland are less developed. As China's economic importance has grown, so has attention to the structure and health of the economy. As the Chinese economy is internationalized, so does the standardized economic forecast officially launched in China by Purchasing Managers Index in 2005. Most economic growth of China is created from Special Economic Zones of the People's Republic of China. The construction of the road system of Beijing–Shanghai Expressway was completed and opened to public usage in early 2000 for access of transportation on logistics, travel and tourism around the most populous and densely economic active areas of Chinese Mainland II. Population A. Total The demographics of the People's Republic of China are identified by a large population with a relatively small youth division, which is partially a result of the China's one-child policy. Nowadays, China's population is over 1.3 billion, the largest of any country in the world. According to the 2010 census, 91.51% of the population was of the Han Chinese, and 8.49% were minorities. China's population growth rate is only 0...
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...Aluminum Industry in Australia 17 2. Airline Industry in China 18 PART II-Capital Budget Analysis 1. Weighted Average Cost of Capital 19 2. Net Present Value 20 3. Scenario Analysis 21 PART III – Conclusion: Investment Decision 23 References 24 Appendixes 26 PART I – Analysis: Australia vs. China A. Country Analysis I. Economic Environment Australia Australia is a market oriented financial system which includes the world’s 13th largest economy and the 9th highest per capita Gross Domestic Product (GDP), with almost two consecutive decades of growth and the unemployment rate falling to a generational low. As a result of nearly three decades of structural and policy reforms, Australian’s economy has proven to be a competitive player in the increasingly integrated global markets. In terms of country risk, Australia’s favorable attitude towards private enterprise and its well-protected property rights incent growth and propagate stability conveying comfort to international investors that its government will not take actions that adversely affect the value of companies operating there such as expropriation. Australia's economy is dominated by its services sector; yet, it is the agricultural and mining sectors that account for the bulk of Australia's exports. Australia's...
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...A REPORT ON THE BRICS COUNTRIES ECONOMIC POLICIES Submitted to Submitted by Prof. Padmakali Banerjee BA ECONOMICS HONS (4th sem) Contents 1. Introduction to BRICs 2. Brazil 3. Russia 4. India 5. China BRICS • In economics, BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India and China which are all deemed to be at a similar stage of newly advanced economic development. • The acronym was coined by Jim O'Neill in a 2001 paper entitled "Building Better Global Economic BRICs" • It is typically rendered as "the BRICs" or "the BRIC countries" or "the BRIC economies" or alternatively as the "Big Four". • It has been replaced by BRICS since the 2010 inclusion of South Africa in the bloc. • In 2010, however, while the four BRIC countries accounted for over a quarter of the world's land area and more than 40% of the world's population. • Projections on the future power of the BRIC economies vary widely. Some sources suggest that they might overtake the G7 economies by 2027. • According to a paper published in 2005, Mexico and South Korea were the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed, as they were already members of the OECD. Current leader Brazil - Dilma Rousseff, President China - Xi Jinping, President India...
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...Indian and Chinese policies to tackle inflation Abstract: India and china the two Asian giant, have shown economic growth in last few decades. The expansion of the economy brought high inflation in both countries. Inflation impacts all types of the consumers while rich or poor, it will become a real problem if the countries didn’t adopt policies to decrease the inflation rate. India and china have a very fast economic growth with fast population. The government and the central bank have to work beside to curb the inflation using two main policies are monetary policy and fiscal policy. In the monetary policy the central bank has to manage the many supply in the market and also control and decline the inflation, in terms of fiscal policy the government try to see the tax level to impact in the inflation rate. Monetary policy has more effect than fiscal policy, but also there are challenges implementations of the policies. Argument 1(monetary policy) India has faced a hyperinflation in years 2009 to 2011 to unprecedented level. The inflation in India affects the saving of the Indian household which decreased the value of saving in that nation. The monetary authorities are trying to impact the money supply directly without creating deformation in the economy by changes CRR (cash reserve ratio), repo and reverse repo rate. The main objective is to maintain price stability. The RBI (reserve bank of India) trying to control the money supply by using which called contractionary...
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...FIN 382 COMPANY ANALYSIS GROUP ASSIGNMENT PREPARED FOR : PUAN NORSALIZA BINTI ABU BAKAR PREPARED BY : KHAIRIL AZMAN BIN RADZALI 2010459076 DHARWIS BIN HASNIM 2010699142 MUHAMMAD FAIDI BIN SAFARRUDIN 2010408132 ELMIRUSHUDA BINTI AMERUDIN 2010248112 FAZLIAH NOOR BINTI MOHD FOUZI 2010834506 GROUP : JBM114 6A DUE DATE : 21st DECEMBER 2012 ECONOMY ANALYSIS 1.0 WORLD ECONOMY The world economy can be evaluated in various ways, depending on the model used, and this valuation can then be represented in various ways. It is inseparable from the geography and ecology of Earth, and is therefore somewhat of a misnomer, since, while definitions and representations of the "world economy" vary widely, they must at a minimum exclude any consideration of resources or value based outside of the Earth. For example, while attempts could be made to calculate the value of currently unexploited mining opportunities in unclaimed territory in Antarctica, the same opportunities on Mars would not be considered a part of the world economy – even if currently exploited in some way – and could be considered of latent value only in the same way as uncreated intellectual property, such as a previously unconceived invention. It is common to limit questions of the world economy exclusively to human economic activity, and the world economy is typically judged in monetary terms, even in cases in which there is no efficient market to help valuate certain goods or services,...
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...the following year, ASEAN and China signed the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China.The objectives of this Agreement are to: (a) | strengthen and enhance economic, trade and investment co-operation between the Parties; | (b) | progressively liberalise and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime; | (c) | explore new areas and develop appropriate measures for closer economic co-operation between the Parties; and | (d) | facilitate the more effective economic integration of the newer ASEAN Member States and bridge the development gap among the Parties. | | | | The Agreement on Trade in Goods was signed in 2004 and implemented in 1 July 2005 by the ASEAN countries and 20 July 2005 by China. Under this Agreement, the 6 original ASEAN members and China have to eliminate tariffs on 90% of their products by 2010, while Cambodia, Lao PDR, Myanmar and Vietnam, have until 2015 to do so. | | | | | | The Trade In Services Agreement entered into force in July 2007. Under this agreement, services and services suppliers/providers in the region will enjoy improved market access and national treatment in sectors/subsectors where commitments have been made. | | | | | | The Investment Agreement was implemented on 15 February 2010. The Agreement will help to create a more transparent and facilitative environment, and give companies from ASEAN a competitive...
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...Renminbi Undervalued? One-way appreciation? Since July 2005, first time being revalued after 11 years of fixing at 8.27, Chinese Yuan has been heading towards only one direction – all the way from 8.27 to 6.27. Although Yuan is a highly regulated currency by government, Chinese officials could no longer peg the Yuan as it used to be in a closed economy because WTO had opened up doors for Chinese manufacturers in 2001 to export cheap goods and services to developed countries. With trillions of foreign capital flooding into the country, Yuan has appreciated over 30% over seven years. However, this one-way money flow cannot be sustained. Though it is not sure whether Yuan is at the absolute equilibrium, it is currently neither significantly undervalued nor overvalued. This essay is going to explain why Yuan is modestly priced with analysis in both the fundamentals and money flows. Needs for appreciation in past In theory, two open economies should have equivalent purchasing power – that is, if 10 units of foreign currency can buy something that is valued at 1 unit of domestic currency, the implied equilibrium exchange rate should also be 10(domestic as based money). Otherwise, there is an arbitrage opportunity. We call this Purchase Power Parity. In reality, despite some limitations about this theory, it explains most of the valuation problem in China. Take a look at China’s Balance of Payments over 2003-2010 and it is obvious to observe huge surplus annually in both current...
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...How China rises What lessons can be drawn from China's spectacular and sustained economic growth? As Hu Jintau remarked at the 17th Congress of the Chinese Communist Party, the period since the previous Congress five years ago has been extraordinary. China's economic achievements have been arousing not only astonishment and admiration but also some anxiety. In the past twelve months alone, The People's Republic of China (PRC) has overtaken Canada as the biggest source of imports to the USA, and overtaken the USA as the biggest source of imports to the European Union. Concern about the low level of investment in Africa has been displaced by concern about the effects of the high level of Chinese investment in Africa; there is now even anxiety about the effects of investment by Chinese state-owned firms into the Western economies. The Chinese Communist Party is also expressing concerns. The themes of its 2007 Congress included protection of the environment and the achievement of social harmony. According to some estimates, China has displaced the USA as the world's biggest source of greenhouse gases. Inequality is rising as fast as pollution: China now has over 800 individuals with a personal wealth of more than a hundred million US dollars each, up from 500 in 2006; while the average income in rural areas of China is 480 dollars per year. Made in China. Hu Jintau's remark on the extraordinary nature of the most recent years can be faulted in only one sense: China has...
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...question which is providing evidence showing how the developing world but in particular Africa are imitating the success of the BRICS. Finally the essay will finish with a conclusion which will summarise the main points which have been explained and discussed throughout the essay. The BRICS have been successful in the last decade, but forecasters believe that by 2050, the BRICs could become a very important source of new global spending and by the year 2032 Japan’s economy would become smaller that India’s and USA’s economy could shrink below China’s economy by the year 2041. If the BRICS combined their economies together, it would be larger than the G6 (Japan, United Kingdom, Germany, France, Italy, United States) by the 2039 (Wilson & Purushothaman, 2003, p. 3). Originally the term was the BRIC, however in December 24th 2010, South Africa were formally invited to join the global powerhouses to create the ‘BRICS’ (Seria, 2010). Research which was undertaken by the International Monetary Fund (IMF) has given statistics which show by the year 2014, the BRICS will have contributed at least 60% to the world growth (Hervieu, 2011). Many believe certain...
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...Introduction In 2014, China experienced one of the biggest anti-corruption campaigns in its 65-year history, regarding the battle's scale, term, and the breadth and the levels of the captured authorities' positions. This battle is seen to have a country wide negative effect on China's general consumption. The effects are so particularly felt on the luxury purchases and the government related purchases. Indeed, in the current political environment and with a continuous decrease of the land division, the nation is still ready to keep up the development of its GDP with a shocking number of 7.5% in 2014. On the other hand, numerous reports from the macroeconomic business and worldwide financial organizations, (for example, the World Bank) have since anticipated a slower economic development for the current year, 2015. This paper provides a report on China's macroeconomic condition, particularly the position in the international trade and the contemporary policies in 2015. Macroeconomic Development China predominantly imports raw materials and in turn it predominantly exports industrial products, both developed and developing countries. It reported a trade surplus of US$ 49.6b and US$ 25.6b in December 2013 and 2013 respectively. Throughout last year, exports rose by 9.7% to US$ 227.5b in December. Interestingly, shipments tumbled to Japan at -7.2%. Figure1. In the appendix represent the trend of China’s Balance of Trade between January 2014 and January 2015. Imports diminished by 2.4% to...
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...monthly growth rate of import price in China in the presence of 19 potentially relevant predictors, including international trade related variables, broad economic trend measurement, world CPI and world commodity prices and indices from January 1994 to January 2013. Simulated out-of-sample autoregressive model serves as the benchmark model. Individual autoregressive distributed lag (ARDL) model, simple averaging combination forecast, approximate Bayesian model averaging combination forecast, discount MSFE combination forecast and diffusion indices forecast are built to compete the benchmark model. We found that all combination forecasts outperform benchmark forecast but are not statistically significant by using Clark & West test. The ARDL model with the predictor of China export price and China PPI beat the benchmark model significantly. Finally, resorting to Diebold and Mariano test, we found that the predictor of PPI in China performs best in forecasting the growth rate of import price in China. Jiang 3 1. Introduction In the past 20 years, China has undertaken market oriented economic reforms and achieved an average annual growth rate of 9.62%. The expansion of economic activities and growth of household expenditure and further decrease of custom tax level have led to a surge in demand of imported goods. China has become one of the largest importers in the world, which has a total value of imported goods of USD 1818 billion in 2012, average growth...
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