Research paper on The Chinese economy

In order to revitalize the economy, the Chinese government has also announced about the investment in the infrastructure projects, the volume of which will make $150 billion (The Guardian, 2012). The announced large-scale investment program is similar in many aspects to the package of measures implemented by the government in 2008 – 2009. That time, the volume of incentive measures announced by the Chinese government made nearly $600 billion, while the size of China’s foreign exchange reserves in early 2009 was 1,5 times less than at the beginning of 2012 (Zhou, 2012). Therefore, in general, it can be said that the Chinese government is currently in no hurry to undertake serious economic stabilization measures. Zhou (2012) marks that Chinese politicians now probably do not see the need for forming a strong response in the sphere of economic measures until the labor market situation worsens, in particular, until job cut start, but yet the data confirm that the number of vacancies in the third quarter is still higher than the number of applicants. At the same time, experts expect from China further stimulus measures, such as providing tax exemption for companies operating in the traditional labor-intensive industries (Koech and Wang, 2012; Zhou, 2012; Teja et al., 2012).

Generally, it is reported that if the Chinese authorities repeat the 2009 experience, they will be able to stimulate the domestic consumer demand, and the impact of the global crisis on China will not be strong. By now, the domestic demand in China equals to 35% of GDP (Laiyun, 2012). The task of the economy refocusing on domestic consumer demand is to be the main target for the new government of China, the transfer of power to which will start at the XVIII Congress of the CPC that opens on November 8. Anyway, the issue of restoring the previously high growth rates of the Chinese economy is still open.