The high growth of GDP, not only the material life of our people has been greatly improved and enriched, enhanced China's international competitiveness and attractiveness, but also greatly enhance China's international political status. However, GDP exposed its defects with increasing of the resources and environmental issues. Like the news article write, although China's GDP in recent years has greatly improved, China and developed countries still have a big gap. GDP does not reflect the real employment situation and the improvement of social welfare.
The GDP slowdown of China is a good opportunity for structural adjustment. One of the most important measures is to remove the irritating ...view middle of the document...
More rapid liberalization of the exchange rate and the capital account, which could potentially square the conundrum, is inhibited by the immaturity of the domestic financial system and the risks posed to domestic demand growth (Claire, 2008). As these contradictory pressures intensify, the potential of a hard landing for growth is increasing.
There are three reasons why the GDP as a whole showed a downward trend.
First, this is the result of active regulation. 2008, the international financial crisis has also spread to China. In order to overcome this crisis, China adopted a series of policy incentives to support the growth of the economy. China decided to adopt a proactive fiscal policy and loose monetary policy and the 4 trillion investments in 2009. This series of policy incentives played a positive role to overcome the financial crisis. However, any one of the country's economic growth cannot reliance on long-term policy stimulus, like the human health cannot rely on medication to maintain in a long time. Therefore, China has made one of the most important initiatives is to remove the irritating policy, to turn to rely on economic endogenous forces to achieve growth. For example, monetary policy from moderately loose to stable, and the policy of the vehicle purchase tax reduced by half which below 1.6L displacement was canceled. This will inevitably lead to the fall in economic growth during a given period.
Second, the current global economic recovery is slow, demand is weak and the trade protectionism is resurging. This reduces the volume of exports in China and weakened the rate of contribution to national economies.
Third, the fact of China's economy, over the years there has been some unbalanced, uncoordinated, unsustainable, and have become increasingly prominent. These problems led to the economic downward trend too.
The economic slowdown is an opportunity. The biggest problem of China is the economic structural adjustment and economic growth mode transformation problem. There is no space for structural adjustment if economic growth too fast. Therefore, the moderate fall of economic growth rate create a condition to increase the economic adjustment and transformation of economic growth. It also created a premise to price stability. On the other hand, the economic growth rate dropped too large can also cause problems. In 2008 and 2009, economic growth rate down to 6.2%. At that time China has 15 percent of businesses closed down and millions of people unemployed. These bring troubles in the financial income, corporate profits, income and employment.
Therefore, steady growth is the most important. This means cannot continue to stimulate economic growth, but should make it stable at a suitable range. Steady growth was mainly stable external demand and domestic demand. Stable external demand is that the series of supportive policies to stabilize export and stability of the RMB exchange rate. It should also to improve and...