Foreign Trade University Faculty of Business Administration

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Instructor: Mr. Hoang Xuan Binh Students: Tran Ha Dung Nguyen Hai Duong Pham Canh Toan Doan My Hanh Vu Thi Trang Nguyen Ha Phuong Luong Thi Lan Phuong Ngo Trong uan Bui uang Dung Nguyen Viet Ha Nguyen Tien Duc

Doan Thi Minh Duyen Nguyen Thi Minh Trang

Hanoi !"#$"!"

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Page %. Introduction & I. 'eason (or choosing the to)ic &

II. %n o*er*ie+ o( China,s macroeconomy macroeconomics !. .DP gro+th rate $. Ba/ance o( trade &. 0DI inde1 2 -. China3 the +or/d,s (actory 2 B. %na/ysis 4 I. De(inition o( an o*erheating economy 4

II. Signa/s o( an o*erheating economy 4 !. In(/ation 4

$. 'etai/ sa/es 5 &. Loan gro+th 6 -. Money su))/y 7 III. Causes and e((ects 7 !. Causes 7 i. ii. $. 8((ects !$ i. ii. IV. So/utions !2 !. 'aise interest rates !2 $. Pre*ent 9u99/es !4 &. 'enmin9i a))reciation !4 C. Conc/usion !5 8((ects o( an o*erheating economy in genera/ !$ In the situation o( China !$ 8((ects o( an o*erheating economy in genera/ 7 In the situation o( China !"

I.

8*a/uation and )rediction to+ard China,s economy !5 !. 8*a/uation !5 $. Prediction !7

II. Lessons (or emerging countries $$ 'e(erences $-

A' I TR"DU$TI"
I' Reason for c(oosing t(e to)ic
:*er the )ast (e+ years3 e*eryone around the +or/d has seen the *ery (ast de*e/o)ment o( a country in %sia # China. %s a transition economy3 since !7563 (rom a )redominant/y centra//y )/anned economy3 China has 9een mo*ing to+ards a more mar;et#oriented 9a/ance in its economic system and China no+adays is considered as the num9er one t< search /= >! o( $!? ch@ ; )hAi /= num9er one3 nBu nCi /= num9er one *s tDnh hDnh hiEn tFi thD cGng HIng nhJng cKi HoFn sau ; /ogic cho /Lm3 sao /Fi >together +ithM?3 o( the $! emerging mar;ets3 together +ith South Norea3 8gy)t3 Peru3 Po/and3 'ussiaMOc/assi(ied 9y MSCI Barra in May $"!"P. China o*ertoo; the Q.S. /ast year as the 9iggest automo9i/e mar;et and .ermany as the /argest e1)orter. The nation is the +or/d,s No. ! 9uyer o( iron ore and co))er and the second# 9iggest im)orter o( crude oi/3 and has under)inned demand (or e1)orts 9y its %sian neigh9ors. In %ugust !4th $"!"3 e*en China sur)assed Ra)an as the +or/d,s second#/argest economy /ast Suarter3 ca))ing the nation,s three # decade rise (rom Communist iso/ation to emerging su)er)o+er.

There(ore3 the economy o( China has 9ecome a red#hot issue recent/y +ith )eo)/e (rom a// o*er the +or/d in genera/ and economists in )articu/ar. Many Suestions and issues are considered a9out the China,s o*erheating economy: Did China rea//y )ass Ra)an to 9ecome the +or/d,s second#/argest economy +hi/e its a*erage )er ca)ita income remains re/ati*e/y /o+T Can China o*erta;e the QS in the (utureT Uhich /essons (rom China that de*e/o)ing countries /i;e Vietnam may /earnT ConseSuent/y3 our grou) decided to choose this to)ic in order to )ractice theories that +e ha*e /earned (rom the macroeconomics su9Vect through a rea/ and hot caseW ho+e*er. Ho+e*er3 +e don,t do not try to 9e a serious economist (inding out causes or so/utions (or the 9ooming economy o( China. Uhat +e aim to do is )er(orming a /atest o*er*ie+ and a com)rehensi*e ana/ysis a9out this hot issue and )utting /earned theories into )ractice.

II' "vervie* of $(ina+s macroeconomy, - to ng(i la macroeconomics ,D

1. GDP growth rate

The s)eed o( gro+th in .DP o( China can 9e considered as that o( an e1)ress train. The a*erage .DP gro+th rate +as a massi*e!".$5X )er year during (our year )eriod - nam naoT. %(ter a (ree (a// to 4X during a terri9/e recession in $""63 this inde1 made a (u// reco*ery in $"!"3 reaching to more than !"X in the third Suarter o( this year. More remar;a9/y3 on Rune3 China,s .DP o((icia//y o*ertoo; that o( Ra)an3 turning China to 9ecome the second 9iggest economy. Cau nay nen dua so /ieu *ao3 ;hong )hai thang 4 ma /a Suy $ nhe YY3 during the second Suarter o( this year3 China,s .DP Z [!.&- 9i//ion3 Ra)an,s .DP Z [!.$7 9i//ion. Minh cung nen dua cai .DP gro+th rate *ao nua3 *i minh dang noi *e .DP gro+th rate /ai noi sang cai .DP :D3 to nghi the YY. Cung trong Suy $3 .DP gro+th rate o( China +as !".&X3 o( Ra)an +as ".&5X. 2. Balance of trade

%s can 9e seen c/ear/y on the gra)h3 the 9a/ance o( trade o( China +as genera//y )ositi*e3 a)art (rom the second Suarter o( $"!". This (igure a/so +ent through a )eriod o( erratic 9eha*ior as due to the g/o9a/ economic insta9i/ity. Ho+e*er3 !6.5- 9i//ion QSD )er year is a )retty good num9er in com)arison +ith other countries.
3. FDI index:

This inde1 Uhat inde1T >The ta9/e )resentsM.. This inde1? Oto ; 9iet cai 9ang nay /ay tu trang nao nen ; *iet duocP 9an nao /ay cai 9ang nay thi nen chu thich o 9en duoi day /a 9ang gi3 chu 1em thi ; hieu dau has enVoyed a shar) increase o*er the years. In $""63 it hit a )ea; o( more than !2" 9i//ion QSD 9e(ore going do+n 9y near/y 2" 9i//ion QSD in the ne1t year. Ho+e*er3 China is sti// considered as the most attracti*e in*estment destination. den day /a duoc roi :D among other nations
4. China, the worlds factory

There is a gro+ing trend that chea) and high Sua/ity goods (rom China ha*e eaten a+ay )ro(it margins at many industries +or/d+ide. :*er the )ast $" years3 China has raced ahead to 9ecome the +or/d\s (ourth#9iggest industria/ )roducer3 a(ter the Qnited States3 Ra)an and .ermany. Neu dung hien tai hoan thanh thi China dung thu & tu nam $""5 roi nen minh sua thanh >third#9iggest industria/ )roducer3 a(ter the Qnited States and Ra)an? It has gone (rom 9eing a ma;er o( most/y /o+#tech )roducts /i;e Christmas decorations3 toys3 (oot+ear and c/othing to )roducing TVs3 (ridges and other hi tech )roducts. Cai nay /ay o BBC tu nam $""$3 gio ; dung nua roi3 T high tech day ra day ma3 9o cau nay di. China\s *ast )oo/ o( chea) /a9our is a maVor reason (or its success. Uages are a (raction o( those in de*e/o)ed countries. But China\s +inning (ormu/a is the ]nice me/ding] o( uns;i//ed +or;ers and ine1)ensi*e 9ut +e//#educated midd/e managers. In s)ite o( a// a9o*e achie*ements3 China,s economic gro+th is o*erheating3 +hich +ou/d /ead to Suite a (e+ serious conseSuences. In the rest o( our assignment3 +e +ou/d /i;e to ma;e this matter c/ear and understanda9/e (or you. san 1uat hang hoa