NAME : MEGAAVARTHINY MAHENDREN ID NUMBER : DCA17-03133039

COURSE : DIPLOMA IN CORPORATE ADMINISTRARION

TITLE OF ASSIGNMENT : THE ECONOMIC OF CHINA

DATE OF SUBMISSION : 2ND JUNE 2014

LECTURERS NAME : MR. SASITHARAN MANOKARAN

LECTURER SIGNITURE

HEAD OF FACULTY SIGNITURE

STUDENT SIGNITURE

ACKNOWLEDGEMENT

Every work accomplished is a pleasure a sense of satisfaction however a number of people always motivate criticize and appreciate a work with their objective ideas and opinions. Hence we would like to use his opportunity to than all, who have directly or indirectly help us to accomplish this project.

Firstly I would like to thank Mr. Sasitharan sir without whose support this project could not be completed. Next we would like to thank all the people, who gave their valuable time and feedback to the project. We would also like to thank my collage for supporting us with resources, which beyond any doubt have helped me.

Let me also use this opportunity to thank our team members who have contributed to this project with their invaluable opinions and suggestions, which have gone along way in soothing our rough edges as a teammate.

THE GROSS DOMESTIC PRODUCT (GDP) OF CHINAThe Gross Domestic Product (GDP) in china was worth 8230 Billion US dollars in 2012.The GDP value of china represents 13.27 percent of the world ecoomy.GDP in china is reported by the world Bank group.GDP in china averaged 1102.08 USD Billion from 1960 until 2012, reaching an all time high of 8230.00 USD Billion in 2012 and a record low of 46.50 USD Billion in 1962.

ActualPrevioushighestLowestForecastDatesunitFrequancy

8230.007320.008230.0046.509768.86 2014/061960-2012USD BillionYearly

The Gross Domestic Product (GDP) measures of national income and output for a given countrys economy. The Gross Domestic Product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. This page provides china GDP- actual values, historical data, forecost, chart ,statis, economic calendar and news.

GDPLastPreviousHighestLowestForecastUnit

Gross Fixed Capital Formation 241756.802012-06-29215682.00241756.8080.70243937.802012-12-31CNY HML[+]

Gross National Product 516282.102012-06-29468562.40516282.10679.00520586.642012-12-31CNY HML[+]

GDP per capita 3348.012012-12-313120.933348.0185.523685.292014-06-30USD[+]

GDP per capita PPP 7957.622012-12-317417.897957.62523.958759.272014-06-30USD[+]

GDP Growth Rate 1.402014-02-151.702.501.402.062014-06-30Percent[+]

GDP Annual Growth Rate 7.402014-03-317.7014.203.807.402014-06-30Percent[+]

GDP 8230.002012-12-317320.008230.0046.509768.862014-06-30USD Billion[+]

Related NewsLatest News

China cuts Reserve Ratio for Rural Banks Chinas economy Expands 1.4% QoQ in Q. Chinese GDP growth shows in QT China inflation Rate Accelerates in march China Reports Trade surplus in March PBOC widens Yuans Daily Trading Band China inflation Decelerates in February China posts Trade Deficit in February Peoples Bank Of china Drains Funds o curb lending surge China Annual inflation Rate Rises 2.5% in January Brazil Posts Trade Surplus in April Pakistan inflation Rate up to 4 month high US unemployement Rate down to 5-1/2 year low US payrolls Rise more than expected in April Pakistan Trade Deficit Narrows for second straight month Euro Area Unemployement Rate at 11.8% Japanese unemployement rate stable at 3.6% US ISM manufacturing Pmi up to 4-month high Market manufacturing PMI slows slightly in April US consumer spending surges in March

THE COMPONENT OF CHINA

In the consumers spend around 70% of GDP most other developed economies follow this pattern the UK, Italy, Germany and finance are all around 6% of GDP. Even emerging economies such as south Korea and India manage AROUND 55% GDP. China is different . Despite consumption hitting 47%of GDP in the 1990s it has fallen back in recent times to around 36%. Part of the reason behind the fall in the Chinese consumers share of GDP is the enormous amount of external demand for Chinese goods. With the world economy growing many economies have been willing to import cheap manufactured items from China.Therefore exports have been a rising proportion of GDP. If china is to be less reliant on exports and is keen to addresses its trade surplus with the rest of the world , then finding ways of raising internal consumption are important. A rising saving rate is on explanation for falling consumption and certainly china does save more than most. The US households manage to save around 1% of income ; EU economies manage little more at around 15%, but this below the rates of 21% seen a decade ago. The Chinese like or need , to save because of the costs of higher education and the lack of good public health care. But any major uplift in Chinese savings of late has no come from households. Instead it has been firms and government ploughing profits from a booming. Economy into US treasury bonds. Another more interesting explanation for following consumption is the amount of GDP which flows workers as earnings. In the last ten years the share wages to GDP has fallen from 53% to 41%. This compares with a relatively static 56% for the US. This fall in GDP which is apportioned to chinese workers represents a number of factors. First an increasing apply of migrant workers from the country side to the industrialized cities has generated a soft labour market which has kept wages low. Secondly, firms have been incapable of taking on these cheaper workers because capital restrictions for small. Companies have limited the ability to borrow and increase capital. Thirdly large firms with access to finance have prospered. Cheap credit has made borrowing easy and this has led to an increase in capital intensive production processes which require less.

THE PRICE LEVEL OF CHINA

This paper presents an abridged history of Chinas macroeconomy from the early 1950s to 2004. It is abridged because only three macroeconomic variables, money stock M, real output Y and the price level P are analyzed. The basic hypothesis concerning the co-movements of these three variables is due to the work of Milton Friedman (1994). A major proposition guiding our work is that when money supply increases, whatever the cause, real output will first increase before the price level increases but real output will die down more rapidly than prices. This proposition will be used to explain the changes in the price level and output in relation to the changes in money stock in Chinas macroeconomic history from the 1950s to 2004. This is done in section II.

In section III we will explain the price level and inflation statistically by first estimating a linear regression of log P on log (M/P). If this regression is interpreted as a long-run equilibrium relation, or a cointegrating relation, between log P, and log (M/Y), the residuals can be interpreted as deviations from equilibrium or errors in the explanation of log P, to be denoted by u. To explain inflation as measured by log P, we use as explanatory variables its own lagged value, log(M/Y) and u(t-1). The coefficient of u(t-1) is expected to be negative because a value of log P above equilibrium in the last period will tend to dampen price increase in the current period in this error-correction equation to explain inflation. This section updates the work of Chow (1987) and follows the methodology of Engle and Granger (1987). One interesting result is that the parameters of this error-correction equation explaining inflation are temporally stable from 1954 to 2002 as confirmed by the chow (1960) test using 1979, the year economic reform started as break point.

We estimate in section IV a VAR to explain the changes in the three variables, log M, log P and log Y, denoted by the vector x. The VAR is a vector regression of x(t) on x(t-1) and x(t-1). By the maximum likelihood method of Johansen (1991), the coefficient matrix of x(t-1) is found to have rank one, to be written as ab. The vector bx(t-1) corresponds to the regression of log P on log(M/Y) in section III, and turns out to be similar numerically. Using this VAR we compute the impulse responses of log P and log Y to unexpected changes in M2. The dynamic effects are found to be consistent with the major propositions of Milton Friedman stated above on the effects of money supply on price and output, and as recently summarized in Bernanke (2003). Section V compares the impulse responses estimated by using US and Chinese data with M1 replacing M2, and finds that the general patterns are quite similar in spite of the institutional differences between these two countries. Section VI concludes.

It is worthwhile in the introduction to state the possible contribution of this paper and the position that we take to avoid possible misunderstanding. On our presentation of monetary history although the facts are well-known our interpretation is perhaps original and provides a background for the econometric analysis to follow. On the reliability of Chinese data, we believe that the data selected are reliable for econometric analysis as illustrated by examples presented in Chow (2002) and elsewhere. We ask a skeptical reader to keep and open mind and see what the analysis of this paper will show. Concerning the possible effect of institutional changes after 1978, it is our purpose to find out whether the effects of money on prices and output and whether the relation between inflation and the ratio of money supply and output remained the same after economic reform. The fact that China had a planned economy before 1979 does not rule out the possibility that the mechanism explaining inflation remains valid. Just witness the inflation of over 16 percent in 1961 which could be explained by the large reduction in output and a substantial increase in money supply. When the first author started using the error-correction model to explain inflation in 1985, data up to only1984 were available and were used to estimate an equation that was capable of predicting in 1985 (before the fact) see Chow (1987) for a revised version of this study.

In this section we provide a brief explanation of the important movements of price and output in response to changes in money supply where money supply itself can be the result of other factors. This is a simplified economic history but it can be interesting to the extent that money supply changes can be explained and the resulting movements in price and output are consistent with Friedmans proposition as stated at the beginning of this paper. We start with an explanation of the large price changes, and then explain the large output changes. Table 1 provides five sets of data from 1954 to 2002: General retail price index P at the end of the year (column 2), the inflation rate measured by 100 times P(t)/P(t-1) (column 3), real GDP index Y (column 4), M2 at the end of the year in 100 million yuan (column 5) and M1 at the end of the year (column 6).

YearGeneral Retail Price IndexPt/Pt-1*100GDPIndexM2M1

19520.822799.62274.5031464.6

19530.8506103.425.182.0087579.0

19540.8705102.326.690.2096387.4

19550.8793101.028.394.8552189.9

19560.8793100.032.3132.3043120.0

19570.8926101.533.7139.0515133.9

19580.8947100.241.2194.0242213.5

19590.9028100.944.6226.401257.4

19600.9308103.143.9256.6131289.3

19611.082116.230.9286.1142359.2

19621.1229103.828.9233.48353.5

19631.056794.132214.0444365.6

19640.990496.337.2214.5185352.4

19650.987597.343.5246.5319399.6

19660.980199.750.9285.2925454.5

19670.980999.344.5309.5001499.1

19680.96981001.144.2335.6512520.6

19690.97698.952.7336.8679505.6

19700.960399.865320.8612506.6

19710.958199.269.5357.9469553.8

19720.963999.871.5404.8609586.7

19730.9691100.677.5454.3348681.4

19740.9706100.578.3494.3595769.2

19750.9735100.284.9525.0772845.4

19760.9934100.382.6573.4608900.6

19771.000102.089595.6617905.6

19781.02100.7100668.1896954.7

19791.081102.0107.6867.03321208.1

19801.107106.01161178.3031486.2

19811.128102.4122.11453.7831707.0

19821.145101.9133.11761.0871972.9

19831.177101.5147.62247.3872291.5

19841.281102.81703171.0213233.0

19851.358108.8192.94188.0243450.1

19861.457106.02105460.8664393.8

19871.727107.3234.37154.4825173.1

19882.034118.5260.79378.916376.4

19892.077117.8271.311836.636804.6

19902.137102.1281.715293.46950.7

19912.252102.9307.619349.98633.3

19922.549105.4351.425402.211731.5

19933.102113.2398.834879.816280.4

19943.561121.7449.346923.520540.7

19953.778114.8496.560705.523987.1

19963.808106.1544.176094.928514.8

19973.709100.859290995.334826.3

19983.59897.4638.5104498.538953.7

19993.54497.0684.1119897.945837.3

20003.51698.5738.8134610.353147.2

20013.4799.2794.2158301.959871.6

20023.4798.7857.418500770861.8

THE LABOR MARKET OF CHINAChina Labor Market is a news portal offering you the latest information about the Chinese labor market and other related topics. We present the latest news articles, research reports and video material on the changes in the labor market. Stay well informed on the latest events concerning labor laws, labor migration and periodic statistics here at China Labor Market. Stay updated by subscribing to our mailing list and well make sure you dont miss out on the latest news.Cigna: Global Survey Finds China Employers Promote Health in the WorkplaceIn a special report prepared for theGlobal Healthy Workplace Awards and Summit(GHWAS) sponsored by Cigna in Shanghai, nearly half of Chinas employers surveyed say they promote health at the workplace, and 73 percent say they measure specific health outcomes. The preliminary findings, reflecting results from 1,000 employers worldwide, including more than 80 in China, were released today as part of a pre-publication preview of results from the 2014 Buck Consultants global survey, Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies.Since 2007, this survey has investigated emerging trends in employer-sponsored health promotion and wellness programs. Cigna and the GHWAS are the exclusive sponsors of the 2014 survey which will be released in full in May by Buck Consultants, Cigna and the Global Healthy Workplace Awards and Summit.Among the findings: 48% of Chinese respondents offer a health risk appraisal (HRA) while another 22% plan to offer an HRA next year. 73% of Chinese employers surveyed measure specific outcomes from health promotion programs compared to 53% globally. This may be related to occupational health indicators that are better established and easier to track. 54% of surveyed employers have had a strategy for five years or less.We see an encouraging trend in China with regard to promoting healthy workplaces. Both the government and employers have recognized the value of enhancing population health via the workplace and a growing number of programs have surfaced. However, the working environment, physical and psychosocial, still is a significant risk to employee health in many workplaces, said Wolf Kirsten, founder and president of International Health Consulting.Onsite occupational health programs are the most common workplace programs, followed by regular communications, onsite medical facilities and ergonomic programs. Employee meetings are the main channel for communication, while electronic tools such as targeted e-mails and web portals are also used.Safety, both workplace and personal, is at the top in terms of health issues targeted by Chinas employers.Environment, Health and Safety (EHS) professionals often take leadership of health promotion in China, especially in the large manufacturing and mining industries, said Barry Hall, Buck Consultants Global Innovation Research Leader. Perhaps as a result of this focus, improving workplace safety is the top objective of health promotion programs in China indicated by survey respondents.Globally, the survey finds that workplace health promotion programs remain more common in North America compared to the rest of the world. Thirty percent of responding organizations have a fully implemented wellness strategy. This number continues to increase every year, documenting the continued growth in workplace health promotion. Fifty-four percent of multinational employers have global strategies (up from 34 percent in 2007), and those that do not cite differing cultures, laws and practices as well as lack of global oversight for health care as their key obstacles to implementing a global strategy. Employers leading reasons for implementing wellness programs are to reduce sick leave and presenteeism, with improving workforce morale becoming increasingly important, especially in Europe and Australia.Worldwide survey findings will be available and distributed in May.Workplace wellness promotion is a relatively new concept for local employers in China but the level of interest and desire to understand is growing very quickly. The Global Healthy Workplace Awards & Summit undoubtedly creates an ideal platform to share best practices and recognize those who have accomplished effective and innovative programs in the workplace. This award program can serve as a catalyst for employers to drive health and wellness initiatives for their employees to improve their health, wellbeing and sense of security, said Howard Gough, CEO of Cignas Middle East & Asia Pacific Region, Global Employer Segment.The GHWAS attracted employers of all sizes, health system leaders, universities, policy leaders, NGOs, and world-renowned award judges and speakers amid a two-day packed agenda on topics ranging from addressing public health promotion in China, to mental well-being and happiness at work, to creating healthy workplaces for NGO workers.About the Cigna FoundationThe Cigna Foundation is a private foundation funded by contributions from Cigna Corporation (NYSE: CI) and its subsidiaries. The Cigna Foundation supports organizations sharing its commitment to enhancing the health of individuals and families, and the well-being of their communities, with a special focus on those communities where Cigna employees live and work.About CignaCigna Corporation (NYSE: CI) is a global health service company dedicated to helping people improve their health, well-being and sense of security. All products and services are provided exclusively through operating subsidiaries of Cigna Corporation, including Connecticut General Life Insurance Company, Cigna Health and Life Insurance Company, Life Insurance Company of North America and Cigna Life Insurance Company of New York. Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy and vision care benefits, and other related products including group disability, life, and accident coverage. Cigna has sales capability in 30 countries and jurisdictions, with approximately 80 million customer relationships throughout the world. To learn more about Cigna, including links to follow us on Facebook or Twitter, visitwww.cigna.comAbout Buck ConsultantsBuck Consultants, a Xerox Company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nations first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, talent and human resources solutions, compensation, and employee communications. Learn more about Buck Consultants atwww.buckconsultants.com.About GKENGlobal Knowledge Exchange Network on health care (GKEN) is chartered as a not for profit (501c-3) and is focused on advancing emerging better practices in health and health care among developing and developed nations around the globe. Our emphasis is on the health system aspects of health and healthcare. Through engaging thought leaders around the globe we create cross cultural learning that enables improvements in health system practices.About i-geniusi-genius is a world community of social entrepreneurs with members in over 200 countries. It promotes social entrepreneurship and provides training, events and business development support to its global community. Based in London.About International Health ConsultingInternational Health Consulting (IHC) is an independent health promotion consultancy with locations in central Europe and the United States. Armed with a network of over 250 international health promotion professionals worldwide, IHC can develop customized solutions that are tailored to local populations.

China Labor Activist Freed, Says Will Still Help Strikers

A Chinese labour activist has been freed after being detained for more than two days by security agents who he says tried to convince him not to make contact with workers involved in Chinas biggest strike in years. Zhang Zhirus brief detention underscores nervousness among officials about the strike, which began on April 14 at a Yue Yuen Industrial Holdings Ltd shoe manufacturing complex that employs some 40,000 workers in the southern industrial city of Dongguan. A colleague of Zhangs at the Shenzhen Chun feng Labor Dispute Service Center, which he runs, was detained separately on Tuesday and has not been released, Zhang told Reuters by telephone on Friday.

Labor activists say the strike is one of Chinas biggest since market reforms started in the late 1970s. It is already starting to have ripple effects on businesses. German sportswear firm Adidas AG is shifting some orders from the factory to minimise the impact of the strike, and a spokesman for Nike Inc, which also sources shoes from the facility, said on Thursday the Oregon-based company was watching developments closely. Zhang had been working with other activists and lawyers to help workers at Yue Yuen organise and press their demands regarding social insurance payments. He visited the Dongguan site on Monday after an attempt last week was thwarted by security agents.

Speaking on Friday from the southern city of Shenzhen, next to Dongguan, Zhang said domestic security agents summoned him to a meeting on Tuesday and asked him to promise he wouldnt make contact with the workers. He refused, and was taken to what the agents said was a vacation area in the suburbs of nearby Guangzhou, where they removed his mobile phone, confined him to a room and barred him from making outside contact, he said. They tried to convince him to write a statement that he was safe and on a trip for fun with friends, but he refused. He was allowed a telephone call to his wife on Wednesday afternoon. Late on Thursday morning, he was driven back to Shenzhen, where he lives, and released, Zhang said. He was again told not to make contact with the striking workers.

They said this would be going against the work of the government, which he was told was trying to facilitate an arrangement to end the strike. But, definitely, if the workers have a need or if they have some questions and come to us we will still give them opinions and suggestions, telling them how they can better protect their interests, Zhang said. The Dongguan office of the Ministry of State Security did not have an immediate response to questions about the case. Calls to the Dongguan police propaganda office went unanswered. Geoff Crothall, at the Hong Kong-based watchdog China Labour Bulletin, said the detentions of Zhang and his colleague were illegal, but not a reflection of a broader crackdown amid a recent wave of labour activism. We do not think it is politically motivated or represents a crackdown on labour rights groups in general. Rather, it is a local action in response to a specific issue, he wrote in emailed comments.Separately, a spokesman for the Ministry of Labour and Social Security told reporters in Beijing on Friday that Yue Yuen had been underpaying its social welfare contributions.The related department has already ordered the factory to rectify the wrongdoings before April 25, Li Zhong said. Our ministry will continue to keep a close watch on the progress of the issue.

THE GROWTH OF CHINA ECONOMYChina's economy grew at its slowest pace in 18 months at the start of 2014, but did a touch better than expected and showed some improvement in March, suggesting Beijing will not rush to follow up recent steps to support activity. Authorities have ruled out major stimulus to fight short-term dips in growth, signaling the slowdown was an expected consequence of their reform drive, even as some analysts think the economy will lose further momentum.

The economy grew 7.4 percent in the January-March quarter from a year earlier, the National Bureau of Statistics said on Wednesday. That was slightly stronger than the median forecast of 7.3 percent in a Reuters poll but still slower than 7.7 percent in the final quarter of 2013. It was China's slowest annual growth since the third quarter of 2012, when the world's second-largest economy also grew 7.4 percent. "The slowdown of China's economy is a reflection of a transformation of the economic mode," said Sheng Laiyun, of the National Bureau of Statistics.

"There is no fundamental change in the improving trend of China's economy. The economy is still moving steadily towards the expected direction."For the quarter, the economy grew 1.4 percent, the slowest rate in two years, which Credit Agricole strategist Dariusz Kowalczyk said equated to annualized growth of 5.8 percent. "This highlights the depth of deceleration at the start of the year," he said.

Beijing has announced some modest measures, such as tax cuts for small firms and speeding up investment in railways, to try to steady growth near its target of 7.5 percent without disrupting plans to restructure the economy or worsening problems of overcapacity and debt. "Policymakers seem pretty comfortable with the current pace of growth," said Julian Evans-Pritchard, an economist at Capital Economics in Singapore. "I don't think they're going to announce any further significant measures to support growth."

Activity data for March, released with the GDP figures, showed that China may be making some headway in its attempt to enhance the role of consumption and cut its reliance on traditional growth engines of exports and investment. Retail sales were a shade ahead of forecasts with an annual increase of 12.2 percent, while factory output came in just below expectations with a rise of 8.8 percent.

"That sector is continuing to moderate and now there is an even bigger gap between industrial production and retail sales. So the rotation from relying on heavy industries towards consumption is certainly coming to fruition," Annette Beacher, head of Asia-Pacific research at TDSecurities in Singapore said. Cumulative fixed-asset investment in the first three months of the year was 17.6 percent higher than a year earlier, again on the low side of forecasts.

SERVICES IMPORTANT

The services sector, which includes retail, made up 49 percent of gross domestic product in the first quarter, 4.1 percentage points more than the industrial sector. Growth in retail bodes well for employment, a top government priority, as services are now the biggest employer in China. "The resilience of the relatively labor-intensive services sector has helped the labor market hold up reasonably well in the first quarter, even though it cooled," Louis Kuijs, RBS economist in Hong Kong, said in a note.

Previously released figures for March had raised concerns that economy was losing more momentum than expected, and even though first-quarter GDP was slightly better than forecast, those worries remained. Exports fell for the second month in a row and imports dropped sharply in March, while money supply grew at its slowest annual pace in more than a decade. Official and private surveys also show the manufacturing sector continuing to struggle. Stephen Green, an economist with Standard Chartered in Hong Kong, expects a 50 basis point cut on the reserve requirement ratio banks in coming months, a move that would free up more funds in the economy. "It's not bad enough to change monetary policy, but forward indicators suggest that in the next few months we will see more aggressive easing," Green said.

UNEMPLOYMENT RATE OF CHINAUnemployment Rate in China increased to 4.10 percent in the fourth quarter of 2013 from 4 percent in the third quarter of 2013. Unemployment Rate in China is reported by the Ministry of Human Resources and Social Security of the PRC. Unemployment Rate in China averaged 4.14 Percent from 2002 until 2013, reaching an all time high of 4.30 Percent in the second quarter of 2011 and a record low of 3.90 Percent in the third quarter of 2002.

ActualPreviousHighestLowestForecastDatesUnitFrequency

4.104.004.303.904.00|2014/03 2002 - 2013PercentQuarterly

laborLastPreviousHighestLowestForecastUnit

Employed Persons 76977.002013/Dec76704.0076977.0020729.0077149.802014/JunTens of Thousands [+]

Job Vacancies 6291956.002014/Mar5125347.006682486.00856007.005211622.512014/Mar[+]

Labor Costs 106.902014/Feb107.50110.40106.90106.692014/JunIndex Points[+]

Retirement Age Men 60.002014/Jan60.0060.0060.0060.002014/Jun[+]

Retirement Age Women 50.002014/Jan50.0050.0050.0050.002014/Jun[+]

Unemployed Persons 926.002013/Dec921.00926.00810.00925.812014/MarThousand [+]

Wages 46769.002012/Dec42452.0046769.00445.0050855.232013/DecCNY[+]

Wages in Manufacturing 41650.002012/Dec36494.0041650.00597.0046633.432013/DecCNY[+]

Population 1360.722013/Dec1354.041360.72551.961361.282014/DecMillion[+]

Unemployment Rate 4.102013/Dec4.004.303.904.002014/MarPercent[+]

INFLATION OF CHINAThe inflation rate in China was recorded at 2.40 percent in March of 2014. Inflation Rate in China averaged 5.76 Percent from 1986 until 2014, reaching an all time high of 28.40 Percent in February of 1989 and a record low of -2.20 Percent in April of 1999.

ActualPreviousHighestLowestForecastDatesUnitFrequency

2.402.0028.40-2.202.48|2014/04 1986 - 2014PercentMonthly

China Inflation Rate Accelerates in March

Higher fresh food prices boosted Chinese annual consumer prices up to 2.4 percent in March of 2014, after slowing to 2 percent in the previous month. On a monthly basis, prices fell 0.5 percent. The highest upward pressure came from food cost, which accelerated to an annual 4.1 percent from 2.7 percent in February. Fruit prices rose 17.3 percent and vegetables went up 12.9 percent, while prices of pork fell for the third straight month by 6.7 percent. Prices of consumer goods increased at a faster 2.2 percent, clothing cost accelerated slightly to 2.3 percent and healthcare prices edged up 1.2 percent. Downward pressures came from transport, communication and tobacco (prices fell 0.4 percent and 0.7 percent year-on-year, respectively). On a monthly basis, food prices dropped 1.6 percent and non-food cost increased 0.1 percent. The CPI rose 2.3 percent in the first quarter of 2014 compared with the same period a year earlier, down from 2.9 percent in the previous quarter and below the governments target of 3.5 percent inflation in 2014.In China, the most important components of the CPI basket are Food (31.8 percent of total weight) and Residence (17.2 percent). Recreation, Education and Culture Articles account for 13.8 percent; Transportation and Communication for 10 percent, Healthcare and Personal Articles for 9.6 percent, Clothing for 8.5 percent; Households Facilities, Articles and Services for 5.6 percent; Tobacco, Liquor and Articles for the remaining 3.5 percent. The CPI basket is reviewed every five years on the basis of household surveys. Revisions reflect new spending patterns and economic development, according to the National Bureau of Statistics.CalendarGMTCountryEventReferenceActualPreviousConsensusForecast

2014-01-0901:30 AMChina Inflation Rate YoY Dec 2013 2.5% 3% 2.7% 3.25%

2014-02-1401:30 AMChina Inflation Rate YoY Jan 2014 2.5% 2.5% 2.4% 3.27%

2014-03-0901:30 AMChina Inflation Rate YoY Feb 2014 2.0% 2.5% 2.0% 2.4%

2014-04-1102:30 AMChina Inflation Rate YoY Mar 2014 2.4% 2.0% 2.5% 2.25%

2014-05-0902:30 AMChina Inflation Rate YoY Apr 2014 2.4% 2.1% 2.48%

2014-06-1001:30 AMChina Inflation Rate YoY May 2014 2.33%

PricesLastPreviousHighestLowestForecastUnit

Consumer Price Index (CPI) 102.402014/Mar102.00128.4097.80102.252014/AprIndex Points[+]

Core Consumer Prices 101.702014/Mar101.70102.5098.40101.852014/AprIndex Points[+]

Core Inflation Rate 1.702014/Mar1.702.50-1.601.832014/AprPercent[+]

Export Prices 99.202014/Feb98.70111.9090.7099.212014/MarIndex Points[+]

GDP Deflator 588.212012/Jun576.71588.21100.00589.522012/DecIndex Points[+]

Import Prices 93.202014/Feb97.40122.7079.6092.552014/MarIndex Points[+]

Inflation Rate Mom -0.502014/Mar0.502.60-1.80-0.422014/AprPercent[+]

Producer Prices 97.702014/Mar98.00113.4791.8097.692014/AprIndex Points[+]

Producer Prices Change -2.302014/Mar-2.0013.47-8.20-1.372014/AprPercent[+]

Inflation Rate 2.402014/Mar2.0028.40-2.202.482014/AprPercent[+]

Current inflation China - this page features an overview of current inflation in China. Following inflation rates are available for China: Current inflation China (CPI China) the inflation is based upon the Chinese consumer price index. The index is a measure of the average price which consumers spend on a market-based "basket" of goods and services. Inflation based upon the consumer price index (CPI) is the main inflation indicator in most countries. We suggest to use the links underneath the current inflation rate, in case you are interested in more extensive information on the development of the current or historic inflation in China.

INTEREST OF CHINAThe benchmark interest rate in China was last recorded at 6 percent. Interest Rate in China averaged 6.42 Percent from 1996 until 2014, reaching an all time high of 10.98 Percent in June of 1996 and a record low of 5.31 Percent in February of 2002.

China Cuts Reserve Ratio for Rural Banks

The People's Bank of China decided to cut the reserve requirement ratio by 2 percentage points for rural commercial banks and by 0.5 percentage point for rural credit cooperatives, aiming to stimulate growth in some parts of the country. The cut will be effective from April 25th, 2014. The move intends to promote greater support for agriculture, as rural banks will have more cash available for lending. However, the central bank said the reserve cut will not affect the overall liquidity of the banking system. The Government had first announced the cut last week but no details were given. The last time the central bank cut the reserve requirement ratio for the banking sector as a whole was in May of 2012, when it trimmed the ratio by 50 bps to 20 percent for most large banks.In China, interest rates decisions are taken by The Peoples' Bank of China Monetary Policy Committee. The PBC administers two different benchmark interest rates: one year lending and one year deposit rate.MoneyLastPreviousHighestLowestForecastUnit

Banks Balance Sheet 1050.002014/Mar644.501890.00-32.10808.212014/AprCNY Billion[+]

Central Bank Balance Sheet 325019.772014/Feb331181.51331181.5134443.90324256.522014/FebCNY Hundred Millions[+]

Foreign Exchange Reserves 3950000.002014/Mar3820000.003950000.002262.004001951.212014/AprUSD Million[+]

Interbank Rate 4.302014/May4.309.890.005.252014/MayPercent[+]

Loan Growth 13.702014/Mar13.9034.7410.6013.382014/AprPercent[+]

Loans To Private Sector 135479.192014/Mar133038.25135479.1959105.90137215.202014/AprHundreds CNY Million[+]

Money Supply M0 5830.002014/Mar6230.007650.0017.855973.302014/AprCNY Billion[+]

Money Supply M1 32770.002014/Mar31660.0033726.0674.5132504.702014/AprCNY Billion[+]

Money Supply M2 116070.002014/Mar113180.00116070.005840.10116413.402014/AprCNY Billion[+]

Interest Rate 6.002014/Apr6.0010.985.316.002014/MayPercent[+]

MONETARY POLICY OF CHINAChinas monetary policy in 2013 can be described as a moderate tightening. The Peoples Bank of China (PBOC), Chinas central bank, provided enough credit and money to support steady growth of the real economy while alert against liquidity expansion. There was no adjustment to the required reserve ratio or benchmark interest rate, and open market operations were pursued with caution. The mismatch between money crunch at the micro level and adequate liquidity at the macro level, a major challenge facing the PBOC in 2013, is likely to persist in the year ahead. The Central Economic Work Conference set a prudent tone for monetary policy in 2014. Credit and money supply is expected to return to normal, liquidity will be kept at an appropriate level, and systemic or regional risks will be watched closely. Thus, the major tasks of the PBOC in 2014 include pressing ahead with deleveraging, curbing the excessive expansion of local government financing vehicles (LGFVs), guarding against real estate bubbles and rolling out financial sector reform. Although the policy outlook is stable and manageable, there is an undercurrent of local government overinvestment just beneath the surface. Despite central government efforts to downplay GDP growth and remove it from the assessment criteria of local officials, it is quite unlikely for them to get promotion in the absence of robust economic performance. What is more, local government investment is often fuelled by greed for lucrative personal gains. The surge in revenue from land sales in 2013, totalling three trillion yuan, reflected how powerful such incentives could be.

As for credit and money markets, last years capital squeeze is unlikely to be thoroughly prevented due to the dual-track market under credit regulation and excessive financing thirst on the part of local governments, hence the probability of recurring liquidity shortages in the months ahead. It is reported that the China Banking Regulatory Commission will soon unveil rules for regulating inter-bank financing. The market is watching this very closely. If the report is true, the rules will be a further blow to non-standard banking assets. On the other hand, despite the fact that the new rules will reduce the chances of future money crunches, they will most certainly aggravate capital shortages experienced by small and med-sized banks. They will also mean that banks will have less profit to make.

On the supply side of the market, the soundness of the monetary policy arises partly from the fact that the market is under regulation. So long as the lending rates are not liberalized and benchmark rates not transformed, tension will remain high in the dual-track credit market. On the demand side, the two main destinations for capital flow continue to be hollow holes. Although LGFVs are singled out for rectification, it will only improve their legality rather than dampen obsession with them. In fact, the rectification may on the contrary heighten local thirst for money. Meanwhile, recent policies have, if anything, increased profit margins in the real estate sector. There is a greater expectation for speculative investment, driving up credit demand that relies on bank borrowing. So long as home prices continue to surge, credit demand in the housing sector will grow rather than weaken. If the abovementioned two hollow holes (local financing & home loans) are not plugged, a credit squeeze can be expected in 2014 and overall financing costs will go up. To stave off such risks, monetary policy needs to be prudent bordering on tight.

The PBOC will also focus on a stable RMB in 2014. The recent market-oriented reform of the exchange rate regime seems to herald a new round of appreciation. Both the central parity rate and spot rate of the RMB against the US dollar reached all-time highs in 2013: the yuan appreciated almost 3% against the dollar, much faster than in previous years, leading to a substantial increase in arbitrage transactions. However, the rapid strengthening of the yuan is more likely to reverse than continue in 2014.

Still, two major developments may be expected. As reform deepens, one-way appreciation may come to an end and the RMB will enter the new territory of two-way floating, though within a band of no more than 3%. The other development to watch is how US tapering of its unconventional monetary policy will impact China, especially its exchange rate. Should there be a massive capital outflow as a result of the taper, China will see a slump in the RMB equivalent of foreign exchange holdings, which will have a significant impact on the base currency. Domestic liquidity will be seriously affected and the value of RMB may be weakened. How the PBOC will respond to this scenario and adjust its monetary policy remains to be seen.

In sum, despite the general tone of a prudent monetary policy in 2014, the PBOC will face considerable uncertainty and many dilemmas. It will be a delicate balancing act for it to pursue multiple policy goals in the unpredictable economic environment.

REFERENCES1. http://www.inflation.eu/inflation-rates/china/inflation-china.aspx#sthash.amqtIkR2.dpuf2. www.tradingeconomics.com/china/gdp3. https://www.princeton.edu/~gchow/Chow-Shen%20macropape1104.pdf4. chinalabourmarket.com/5. en.wikipedia.org/wiki/Economy_of_China6. www.tradingeconomics.com/china/inflation-cpi

TABLE CONTENTS

TITLE CONTENTPAGE CONTENT

Acknowledgement

GDP of China

Price level of China

Labor market of China

Growth of the economy China

Unemployement Rate China

Inflation China

Interest Rate of China

Monetary Policy in China

References