Impact of economic and political factors in China since the 20th century

A REPORT ON THE IMPACT OF ECONOMIC AND POLITICAL FACTORS IN CHINA SINCE THE 20TH CENTURY

Impact of economic and political factors in China since the 20th century

ABSTRACT: The fluctuations in Industry and Manufacturing, Services, External Trade, Foreign Investment, Transportation and Infrastructure, Science and Technology sectors affecting the political and economic conditions of China. Lenovo and its impact on political and economic conditions of China: How it enhances the employment rate in China and Worldwide and contributing to Chinas GDP.

Impact of economic and political factors in China since the 20th century

Chinas Macroeconomic Analysis

A Broad Overview of Chinese politico-economy since the 20th century Since 1948, the government had active part in economy of China. In 1950s the government monopolised the foreign trade system. Its part reduced significantly since 1978 when financial changes were made. Then in1982 the specified that the Constitution has to aid Chinas economic development by making decision on financial guidelines and goals, organizing and employing nationwide financial plan assuring budget. In the modern era, China's influence in the world economy was minimal until the late 1980s. At that time, economic reforms initiated after 1978 began to generate significant and steady growth in investment, consumption and standards of living. China now participates extensively in the world market and mostly state owned but also some private sector companies play a major role in the economy. Since 1978 hundreds of millions have been lifted out of poverty yet hundreds of millions of rural population as well as millions of migrant workers remain unattended: According to China's official statistics, the poverty rate fell from 53% in 1981 to 2.5% in 2005. However, in 2009, as many as 150 million Chinese were living on less than $1.25 a day. The infant mortality rate fell by 39.5% between 1990 and 2005, and maternal mortality by 41.1% As its role in world trade has steadily grown, its importance to the international economy has also increased apace. China's foreign trade has grown faster than its GDP for the past 25 years. Since 1978, China began to make major reforms to its economy. The government also had focused on foreign trade as a major vehicle for economic growth. In the 1990s, the Chinese economy continued to grow at a rapid pace, at about 9.5%, accompanied by a rapidly increasing inflation, which reached over 20 percent in 1994. During the 15th National Communist Party Congress that met in September 1997, President Jiang Zemin announced plans to sell, merge, or close the vast majority of SOEs in his call for increased "non-public ownership". The 9th National People's Congress endorsed the plans at its March 1998 session. In 2000, China claimed success in its three year effort to make the majority of large state owned enterprises (SOEs) profitable.
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Impact of economic and political factors in China since the 20th century The Chinese Communist Party's Third Plenum, held in October 2003, Chinese legislators unveiled several proposed amendments to the state constitution. One of the most significant was a proposal to provide protection for private property rights. Legislators also indicated there would be a new emphasis on certain aspects of overall government economic policy. The National People's Congress approved the amendments when it met in March 2004. The Fifth Plenum in October 2005 approved the 11th Five-Year Economic Program (20062010). China's economy grew at an average rate of 10% per year during the period 19902004, the highest growth rate in the world. China's GDP grew 10.0% in 2003, 10.1%, in 2004, and even faster 10.4% in 2005 despite attempts by the government to cool the economy. China's total trade in 2010 surpassed $2.97 trillion, making China the world's second-largest trading nation after the U.S. Such high growth is necessary if China is to generate the 15 million jobs needed annually. In 2007 growth happened at 13%. China's gross domestic product stood at US$3.38 trillion while Germany's GDP was USD $3.32 trillion for 2007. This made China the world's third largest economy by gross domestic product. Based on these figures, in 2007 China recorded its fastest growth since 1994 when the GDP grew by 13.1%. In 2010, China's GDP was valued at $5.87 trillion, surpassed Japan's $5.47 trillion, and became the world's second largest economy after the U.S. Macroeconomic Trends The table below shows the trend of the GDP of China with figures in millions (Chinese yuan)

Year 1955 1960 1965 1970 1975

Gross domestic product 91,000 145,700 171,600 225,300 299,700

Impact of economic and political factors in China since the 20th century

1980 1985 1990 1995 2000 2005 2010

460,906 896,440 1,854,790 6,079,400 9,921,500 18,308,500 25,506,956

Inflation: During the year 2007-2008, the inflation rate increased from 7% to 8.7% in February 2008.There was shortage of gas and fuel in the year 2007 thus an increase in price with fuel selling for $2.65 a gallon. Inflation rate fell again to a low of 6.6% by October 2008. By November 2010, the inflation rate rose up to 5.1%, driven by a 11.7% increase in food prices year on year Industry and Manufacturing: This sector accounts to 46.8% of Chinas GDP. In 2001 investments increased 8.5% over the previous year. In 2002 there was a 16.4% increase, followed by a 30% increase in 2003. The manufacturing sector produced 44.1% of GDP in 2004 and accounted for 11.3% of total employment in 2002. Industry and construction produced 53.1% of China's GDP in 2005. Industry contributed 52.9% of GDP in 2004 and occupied 22.5% of the workforce. Services: This sector accounts to 43% of Chinas GDP. However, its proportion of GDP is still low compared with the ratio in more developed countries External Trade: Worldwide deal makes up a significant part of China's overall economic climate. China's international trade totalled $324 billion dollars in 1997 and $151 billion dollars

Impact of economic and political factors in China since the 20th century in the first half of 1998; the trade surplus stood at $40.0 billion. . China had a trade surplus with the U.S. of $49.7 billion in 1997 and$54.6 billion in 1998. Foreign Investment: Overseas financial commitment continues to be a strong element in China's fast development in community trade and has been an important aspect in the growth of economy. In 1998, foreign direct investment produced about 40% of China's exports, and forex stocks totalled about $145 billion dollars. From 1993 to 2001. China is the second-largest individual of foreign immediate financial commitment after the United States. China obtained $39 billion dollars FDI in 1999 and $41 billion FDI in 2000. China is now one of the leading FDI individuals on the planet, receiving almost $80 billion dollars in 2005 according to World Bank data. In 2006, China received $69.47 billion dollars in foreign immediate investment Transportation and Infrastructure: China's transportation policy, influenced by political, military, and economic concerns, have undergone major changes since 1949. During most of the 1950s, new road and rail links were built, while at the same time old ones were improved. During the 1960s much of the improvement of regional transportation became the responsibility of the local governments, and many small railways were constructed. In late 2007 China became one of the few countries in the world to launch its own indigenously developed high-speed train. There is a development gap between China and other emerging economies such as Brazil, Argentina and India can be attributed to a large extent to China's early focus on ambitious infrastructure projects: while China invested roughly 9% of its GDP on infrastructure in the 1990s and 2000s, most emerging economies invested only 2% to 5% of their GDP. Science and Technology: Since the early 1980s scientific and technological modernization has been given an especially high priority. Plans were made to rebuild the educational structure, continue sending students abroad, negotiate technological purchases and transfer arrangements with the U.S. and others, and develop ways to disseminate scientific and technological information. Areas of most critical interest have included microelectronics, telecommunications, computers, automated manufacturing, and energy. China also has had a space program since the 1960s and, by the late 1990s, had successfully launched more than 25 satellites. At the end of 1996, China had 5,434 state-owned independent research and development institutions at and above the county level. There were another 3,400 research institutions affiliated with universities, 13,744 affiliated with medium and large industrial

Impact of economic and political factors in China since the 20th century enterprises, and 726 affiliated with medium and large construction enterprises. A total of 2.8 million people were engaged in scientific and technological activities. (1)

As far as the present scenario is concerned the fluctuations of GDP is given below: *The fixed asset investment in 2010 increased at rate of 23.1%, and is expected to be 22.5% in 2011. *The nominal increasing rate of the total consumer goods in 2010 is 18.3%, whose contribution rate to the GDP, 55.4%, at first time exceeded that of the total investment. In 2011 the nominal increasing rate will be 17.8%. *The total volume of trade in 2010 increased 32.4%. More specifically, the increasing rate of import is 36.1% and that of export, 29.3%. The total trade surplus is 184 billion US dollars, 5.9% less than in 2009. In 2011, the increasing rate of Chinas total trade volume is expected to slow down, 10% less than in 2010. And the increasing rates of export and import are to be 21.8% and 25.6% respectively. (2)

LENOVOs impact on Economic and Political conditions in China: Lenovo was founded in 1984 under the name legend Beijing with funding from the Chinese academy of sciences. For some years it served as agent for imported computer products until it in 1990s released its own branded product. In 2003 the company changed its name to Lenovo and preparation for moving to the marked abroad and in 2005 they acquired IBMs personal computing division for $1, 75 billion. Lenovo Revenues is split up in 51.5% in corporate segment, 33.5% in consumer segment 8.8% in handheld devices 3.8% in contract manufacturing and 2.4% IT services. As the global financial crisis starts impacting Chinas economy, wearing down domestic and international demand, so does it starts taking hold of Lenovo. In November last year, Lenovos profits in its second quarter plunged 78 percent because of sluggish demands in the corporate sector (corporate segments buy up to 60 percent of its products) and slower business in China. Its share in the global PC market also dropped to 7.7 percent in the third quarter ending December from 8.2 percent a year earlier. (3)

Impact of economic and political factors in China since the 20th century Personal Computer industry in China has experienced a rapid growth in China in recent years, and has played a more and more important role in the national economy. And the rapid growth of China's economy has driven the development of the industries in China. PC industry in China is experiencing rapid development in China resulted from the rapid growth of China's economy. And the good economic environment will lead to the continuous development of the industries in China, especially the manufacturing industry. PC industry is expected to keep growing in the future influenced by the good economy development prospects in China. (4)

The laptop and PC industry is expected to grow at a faster rate in developing countries compared to the developed countries. Therefore, changes in government policies in developing countries like India and China can affect the potential growth rates in their markets. For instance, the removal of import duties on laptops in India in 2005 was one of the factors that resulted in a growth of 94% in laptop sales in 2005.The global economy influences various different factors that affect the growth of the PC industry. In 2008 Lenovo announced that it would lay off about 2500 jobs which amounts to 11% of workforce in whole world. This created some economic fluctuations and indirectly affecting Chinas revenue in other sector. (5) Lenovo, since its opening has improved the economic conditions in China by far. It has increased the employment rate in a vast degree which in turn increased the standard of living and contributing more revenue to the country.

REFERENCE: ELECTRONIC SOURCES Web sites/Pages

Impact of economic and political factors in China since the 20th century (1) http://en.wikipedia.org/wiki/Economy_of_the_People %27s_Republic_of_China#cite_note-27

(2) http://ier.ruc.edu.cn/11-3/2010-2011.pdf

(3) file:///C:/Users/cool/Downloads/Lenovo-%20a%20Chinese%20company%20gone %20global.htm

(4) http://ccsenet.org/journal/index.php/ijbm/article/download/4230/3667

(5) http://articles.economictimes.indiatimes.com/2009-01-08/news/28382817_1_lenovopersonal-computer-william-amelio