CS Jan 2022 | Page 9

A View Point :

Deepening Crisis of Chinese Economy

China , the biggest industrial and trading country of the world and the second biggest capitalist-imperialist country is now running into deep economic crisis . According to the National Bureau of Statistics ( NBS ) of China the current situation of China is ‘ unstable and uneven ’. The main reason for this situation is domestic . Recently , on 18 th October 2021 , the data on the GDP of China in the third quarter ( July to September of 2021 ) has been released . It is troublesome for the rulers of China . The data reveals that China ’ s GDP growth rate has increased by 4.8 % in the above mentioned quarter . It is to note that rate of the growth of the China GDP was 18.3 % in the first quarter of the Year ( January to March 2021 ). This record growth of the GDP was due to the base-effect of Chinese economy . This growth rate created an impression that Chinese economy has recovered after Corona impact . But very soon the balloon of the economic growth of China busted the rate of the increase of China ’ s GDP which came down to 7.9 % in the second quarter of 2021 ( April - June 2021 ).
The fact is that economic growth rate of the China has decreased continuously during recent years . The available data shows that the average annual growth rate of Chinese economy was 15.8 % during 1988- 2020 ( in 32 years ) and in 1994 it was at a record level of 36.41 %. According to another data the average annual rate of the economic growth of China during 1978 to 2018 was 9.4 %. The date of International Monetary Fund shows that the rate of the growth of the Chinese economy is continuously decreasing after 2010 . See the table-I , given below .
The IMF has also forecasted that there will be further decrease in the rate of economic growth of China as shown in Table-II .
January - 2022
We know that the rate of the growth of the GDP is regarded as the main scale of the development of any capitalist economy . The downfall in growth rate of a country like China with a huge economy became a cause of concern , not only for the rulers of China , but also for the rulers and theoreticians of all the capitalist countries .
In 2014 the GDP of China was 10.524 trillion dollars , which increased to 14.340 trillion dollars and 16.862 trillion dollars in 2019 and 2021 respectively . But another fact is that Chinese economy is the largest in the world which is sunk in debts . The public-private-corporate debt in China was about 120 % of its GDP , which increased to about 245 % in 2019 . It is to note that the GDP of China has increased much during this period . Due to the increase in debts , the number of Chinese billionaires has also increased and its position in this respect became second after USA .
China was gaining much from its international trade . Even during its ‘ trade war ’ with USA , the balance of payment remains in favour of China . The trade surplus of China was about
Year
Table-I
% of the Rate of Economic Growth
2010
10.61
2011
9.55
2012
7.85
2013
7.77
2014
7.39
2015
7.02
2016
6.85
2017
6.95
2018
6.75
2019
5.95
2020
2.34
- Arjun Prasad Singh
535 billion Dollars in 2020 , which has certainly increased in 2021 . The data of 9 months ( January to September 2021 ) shows that the trade surplus of China has been 429.2 billion Dollars .
Another reason for the strong economic base of China is that its foreign exchange reserve is the biggest in the world . In the last 2 months i . e . August and September 2021 , its Foreign Exchange reserves were 3232 trillion Dollars and 3201 trillion dollars respectively . Although the biggest amount of foreign exchange reserve of China was 3.84 trillion Dollars in 2014 . The recent data on foreign exchange reserve of China shows the trend of depreciation .
The main reason for this downfall is that the Government of China implemented many restrictions on foreign investment in order to promote domestic investment . XiJinping , the president of China said clearly in his speech that , there is no alternative to the trend of more and more government control in the economy facing limited consumers demand and over production . This speech has been published in the theoretical journal ‘ Quishi ’ of the central committee of China on 8 th July 2021 .
Besides this , there has been a downward trend in the rate of profits in the government and corporate sectors of China since 2013 . The rate of profit on the total assets of China was 14.5 % in 2013 , which came down
Year
Table-II % of the Rate of Economic Growth
2022
5.6
2023
5.2
2024
5.25
2025
5.11
2026
4.99
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