Economic Analysis of China Research Paper Example | Topics and Well Written Essays - 1500 words

Economic Analysis of China - Research Paper Example The economy of the country has become one of the engines for growth since the country got enlisted in the World Trade Organization (WTO). The country emerged as the second largest economy at exchange rate of the market and the share in the output worldwide soared. The sudden emergence of the country has benefitted the globe but the other countries had to involve themselves in some adjustment processes to deal with the increase in the low skilled labor. The current account surplus for the country took the steep step with integration of the country into the global economy. The contribution of the country in global growth is increasing exponentially. The economic cycle of China has the potential to influence the rest of the World, with major influences on the OECD countries. The share of the imports of the country is increasing in the exports of the rest of the economies. The growth performance can be partly explained by the rapid expansion in the stock of capital as well as solid suffi ciency gains. The approach towards deficit as well as debts acted as the constraint for the recognition of the fiscal policy for a long time. Government deficits were absent in the period of 1958 to 1978. In the period of 1979 to 1993, foreign as well as domestic borrowing took place but mostly limited. The borrowing of the government became significant after the year 1993 and government debt took the rising curve which reached to 22% of GDP in the year 2007. In fact the country adopted the fiscal policy of expansionary type after the financial crisis in Asia. As a result there were considerable fiscal deficits. The deficit in the budget witnessed an increase from 0.7% of Gross domestic product in the year 1998 to 2.6% of GDP in 2000. The economy experienced a contraction in deficit which includes the extra budgetary funds as well as the funds for social security. There were positive