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China’s Growing Economy Shifting the Trends Globally

According to the recent economic statistics the US Dollar remained unchanged at 6.26 Chinese Yuan in March from 6.26 in February of 2015.  From 1981 till 2015 Chinese Yuan is averaged 6.96. It reached the record high of 8.73 in 1994 and record low in January 1981 of 1.53.

China evolving as the most major Economic Power, in a period of three decades is one of the greatest economic development of the recent times. From the time when the economic reforms began i.e. 1979 to 2013 the GDP of China grew at an average annual rate of 10%. For 2015 china has set the target of around 7% for its GDP growth. 500 million people have been raised from the extreme lines of poverty. Having the positions of the world’s largest manufacturer, exporter and the holder of foreign exchange reserves, definitely shows the success graph of China’s economic growth. United States, is the world’s largest economy followed by China at the second place. Predictions are that China in a time of few years will beat the US economy and will be at the top position.



US policy makers have raised questions on the rapid economic growth of China. According to them China is using unfair trade practices by giving subsidies to the domestic producers and by keeping their currency undervalued. However, others say that use of policies to protect their domestic industries has actually played a positive role in their economic growth. Americans are feeling threatened that Chinese low-cost- goods markets will overtake the American markets. Even though America’s second-largest trading partner and third-largest export market is China.

Some other factors playing a strong role in the development of China’s economic growth  are growing demand for energy and raw material along with its appearance as the world’s largest producer of greenhouse gases. According to Chinese government, for maintaining the social stability, economic growth is a must. China has to face so many economic challenges in the path of economic growth. Twisted economic policies of relying just on fixed investments and exports, weak banking system, government’s support for government owned firms, increasing population, flaring economic gaps and the absence of rule of law are some of the major obstacles in the path of economic growth. China has already recognized these problems and is on their way of making policies to eradicate them.

The two main aspects in the quick economic growth of China are large-scale capital investments and rapid productivity growth. These two factors together, have been very constructive and critical in the economic growth of China. A high rate of savings has been sustained traditionally  for a long time by China. Growth in Chinese Household Savings and Corporate Saving, after the economic reforms with a policy of decentralization of economic production, has led the growth commendably. This has resulted in an increase in the China’s Gross Savings as a percentage of GDP. This is the reason that China Gross Savings are at the peak among the major economies. China has been made a large net global lender because, its gross domestic savings have surpassed far from its domestic investments.

As China has already attained an enormous economic growth, now the Chinese Government wants to change its existing model of rapid economic growth at any cost, to the more sensible and smart economic growth model. For that purpose, they prefer more high and advanced technology, green energy and services industries rather than the energy-demanding and high contaminating industries. They are also in a need to acquire a composed and balanced economic growth.

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