Economic challenges for Chinas sustainability

Its GDP has had a double digit growth every year from 1978 to 2008. This makes China’s economy the fastest to grow sustainably for any major economy in recent years. This growth has helped lift close to one billion people out of poverty. However, since 2009 its GDP has gradually slowed down although it is still ranked well by global standards. This resulted from the 2008-2009 global financial crises. The two major investments that have led to investment growth have been done in real estate and infrastructure. Deflation is another factor that may affect the sustainability of China’s GDP in the next decade. The over a billion population of China has led to an overabundance of homes in China. This overabundance of homes has led to deflation problems in China.

China has had a stagnating growth rate of about 6. 2% of companies in China are expected to have a decrease in revenue according a survey done by CPA Australia. Another challenge facing China’s economy is the high capital outflows. High capital outflows in China have been as a result of the overexposure to the US dollar. The American magazine Bloomberg estimates that over 500 billion dollars left China in 2015. This high capital outflows problems have been as a result of competition between banks on the deposit rates. These plans usually help domestic industries due to the profit being brought in. Another economic problem facing China’s economic growth is most local companies rely on banking systems for loans, aid and support. This builds pressure on the countries monetary policy since it cannot support every industry that has financial needs.

In addition, the Chinese populace does not have the necessary information about the services that the financial institutions and banks offer. Most times the customers go to local authorities complaining on a function or service offered by banks and financial institutions. The differences are clearly noticeable. China’s economy is moving to a substitute kind of growth and development due to its slow down phase. Nevertheless, for development rate to happen, China needs tore-balance its economic system. Depending little on exportation of low quality products and moving and increasing quality deliverance and offer items with higher knowledge and high technology innovation component would help maintain the economy. China can likewise re-balance its economy by driving more growth from household spending on services and on items.

That is the objective of the economic plan of China’s 2010 - 2015goals. China might find it difficult to maintain quick rates of economic development in the years to come. Our studies suggest that might China wish to bring down investment ratio to much less than 40 percent of Gross Domestic Product through the coming ten years, in the meantime retaining the rate of financial development over eight percent (fundamental for preserving full job opportunities), China needs to enhance the development rate of productivity. In most constructive scenario, in which Gross Domestic Product increases at some point in the next ten years is sustained at the same rate as during the last ten years (10. 5 percent), yearly productivity development would need to rise from 3.

In 2017 China set its growth goal to a very low 6. 5 percent. China’s policy to stabilize growth will lean greater on maintaining stability while at the same time promoting structural changes. The government aims to reduce financial risks by building a” firewall” against financial risk. This will help keep an eye on low or assets that are non-performing, shadow banking, internet finance and bond defaults. The initiative was put into the Chinese constitution in October 2017. Its goal is to achieve a yearly Gross Domestic Product of 4. 8% up to 2030. The made in China 2025 Initiative Actualizing the Made in China 2025 Initiative increases the intensity of Chinese industries’ competitiveness, cultivating Chinese brands, boosting development and reduces dependence on outside technology making China a prevailing force in the manufacture of various technologies and innovation advancements.

Evading the middle-income trap China at present is a high middle-income nation. In the literature review it can be seen that the challenges facing China’s Gross Domestic Product can be faced head on and can be managed by the country by having a well organized economic plan and the government overlooking the financial institutions and money lenders. If China was to take no action, the economy would plummet, the Gross Domestic Product would be low which would cause inflation and poverty could strike millions in the country. Strict actions have to be taken to prevent this trend in China’s GDP. REFERENCES Chan, M. M. Wang Jiangui and Ding Shouhai (2006), ‘A re-estimation of China’s agricultural surplus labour – the demonstration and modification of three prevalent methods’, Frontiers of Economics in China, Vol.