Archive for the ‘China’ Category

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Blog 1: China’s Economy grew 10.3% in 2010

January 20, 2011

 

Due Date: January 20, 2011

Article Source: http://www.bbc.co.uk/news/business-12235625

Article Date: January 20, 2011

Article Title: China’s Economy grew 10.3% in 2010

Summary:

China has been taking many efforts to curb inflation and has seen some of the inflation pressure go down from 5.1% to 4.6%. They were able to accomplish this by raising loan interest rates twice in the past four months; in addition the Yuan strengthened .8% versus the dollar. Finally, with these measures and others in place they were able to see a GDP growth rate of 10.3%.

Reflection:

China has become a major source of income for companies as more and more companies outsource their production to China. This increase in GDP and the reduction in inflation should allow companies to produce products in China for better prices and it allows those who sell overseas to not have as much inflation costs. Also, having a slightly stronger Yuan allows basically anyone who trades with China, produces in China, or has stores in China to benefit so they do not lose as much when changing it back into the dollar. There is also a downside to the international business aspects of this. First, with China raising its loan rates it will cause the U.S. to pay even more as most of our debt comes from China. A lot of international business is related to China and therefore it is better for them to grow even if it includes higher loan rates. Another benefit of having lower inflation in China is that it may allow the consumers to be more at ease. This means that there may be fewer strikes against companies and possibly fewer protests or political unrest. All of this means that companies will be able to keep their employees working and not have to deal with the issues that can arise from their plants (ethical, financial, etc). Finally, it is important for companies that the economy is able to rebalance quickly and smoothly so that they are able to keep their factories running and making a profit without having to move to other countries. It is key to this rebalancing act is that there is increases in consumption over and above the total growth rate. This means that companies will have to be thinking about these two items and how their manufacturing, etc will affect them.