Answer To: The topic of the term paper must fall in the field of investment. Make sure your term paper has a...
David answered on Dec 20 2021
CHINA
CHINA
H e w l e t t - P a c k a r d
User
This particular assignment gives the detail regarding that a
person should invest its funds in China or not.
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Table of Contents
1. Introduction……………………………………………………………….….Page 2
2. Gross Domestic Product (GDP) and Investment…………………………...Page 3
3. Bursting Bubble………………………………………………………………Page 5
4. Gross Domestic Product (GDP) and Growth……………………………….Page 6
5. Workforce and the Demographic Structure of China……………………...Page 8
6. Unemployment………………………………………………………………...Page 9
7. Effects on Sales and Outlets…………………………………………………..Page 10
8. Interest on Investment………………………………………………………...Page 14
9. Manufacturing Units………………………………………………………….Page 16
10. Investing in China…………………………………………………………….Page 18
11. Conclusion……………………………………………………………………..Page 19
12. APEENDICES………………………………………………………………...Page 21
13. References……………………………………………………………………...Page 25
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INTRODUCTION
China in this modern world is being regarded as the most fast an efficient developing country. It
is already a developed economy, but irrespective of that, the country is developing at a very fast
rate. The products as made and launched by the people and the government of china are very
much convenient for the whole world, as it is available at a very cheap price. It has been believed
by the famous economists that whatever is being produced by China has some effect on the
whole world. The most affected countries by these products are the developing country and also
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the underdeveloped countries. This is because of the fact that these countries generally get all the
required machines, for large scale production, from china as those are available at very cheap
price. Hence these under-developed countries generally prefer to import goods and other
important machines from China. Due to this reason, various industrialists from all over the world
are very much interested in making an investment over there. The labors as available for these
industrialists, in china, are relatively cheaper as compare to that in other countries. There are
strong economic growths as well in the country and this very factor boosts the industrialist to
make an investment over there.
Gross Domestic Product (GDP) and Investment
China has been a leading power in the civil factors as well in the recent times. And
as far as the statistical data of china in the year 2010, the GDP of the country has been $10.08
Trillion. The growth rate in the GDP of the country has been very much remarkable as well. The
GDP has increased by 10.46%. This has attracted the industrialist from all over the world to
invest the funds in china. People from Australia, UK, Japan, etc. are now keen to work in the soil
of china. The GDP per capita was $7158. And the unemployment rate has been 4.2% which is
very good as compare to the developing country like India, Korea, etc. Though, the population of
China in the whole world is largest, yet the unemployment rate is very low. Almost all the people
in the country are employed.
GDP has always been one of the most important factors in determining whether a
country is developing or not. The growth of a country greatly depends on the GDP of the country
as to at which rate it is increasing, how effective it is for the society and what benefits does the
people and the society gets from it. GDP has been the most important issue for almost all the
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countries. Generally the status of a country greatly depends upon the GDP of that particular
country. China is very much a developing country and is also giving competition to the various
developed countries like U.S. Russia, and other European countries. The GDP of China has been
increasing at a very moderate rate which is favorable for the country and its people. It has been
shown in the graph in the appendix as to how actually the GDP differs in the recent past in
China.
The major reasons as to why people are interested in investing in China are the Rising
Global Status of the country. China is considered to be the world dominated country as they are
growing at a very fast rate. The country will also be having a sway in the politics of the world.
Many of the countries have a debt with the economy of china. A large amount of debt of china is
owed by U.S. “China holds a significant amount of U.S. debt and is poised to become the largest
economy in the world, giving it growing sway in global politics.”
(http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-
In-China.htm) The Global status has been a very important aspect as to why the people are
interested in investing their money in China. The demographic structure of the company is as
such that it helps and facilitates the country to invest more and establish more and more
companies. Various international project have also been interested in investing their money in
China, because of the facilities as provided by the country and its environmental and political
condition. As the population of the country is a very high, labors in the country are easily
available and also at a very cheap rate. The demographic structure of the economy is the most
important factor for the continuous success of the products as launched by the country. “China's
economic success has been due to a cheap and young workforce”.
(http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-
http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-In-China.htm
http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-In-China.htm
http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-In-China.htm
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In-China.htm) In the appendix 1(A), it discloses as to how there has been an increase in the
supply of labor in the recent past which ultimately helps in increasing the GDP.
This in turn encourages the investors to provide funds to the companies of china because it is
clear that China will be growing at a very fast rate. The technologies as applied by the country on
its product are very much advanced and hence, it is clear that the country will be growing. The
economist, Raoul Wallenberg, has also stated that China will be the most advanced countries in
the world an also the people were advised to invest their money in the country. The international
trade of the country has also been very much advantageous for the people and the investors. The
exports of the country are done all over the world, even in the under-developed economies. They
tend to purchase goods from China as it is available at a very cheap rate.
Considering the rate at which the GDP of the economy is increasing, i.e. 10.46%, it is clear
that in the future, china will rise as the world dominated economy and the investors will also be
having a good amount of dividend from the companies of the country. In fact the large industries
who want to expand their respective business in the whole world, it will be beneficial for him to
of that in china because of its above mentioned advantages. Therefore, investing in china can be
a good and a profitable venture for an individual or a company.
Bursting Bubble
Earlier, about two decades ago, the Japanese people had to face a bursting bubble in the
society and the economy because of the various ups and downs in the economy. There was
collapse in the Japanese real estate market because of the aging population and also because of
its demographic structure. The demand for the rented house has been increasing at a very fast
http://internationalinvest.about.com/od/globalmarkets101/a/The-Ultimate-Guide-To-Investing-In-China.htm
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rate and in contrast of it, the rate at which the home ownership should be had declined by a large
extent. “A surge in demand for rented houses, in contrast to a decrease in the rate of
homeownership, and the demographics of a shrinking, aging population, in particular, show
similar patterns to the Japanese asset price bubble collapse two decades ago, according to
experts.” (http://www.koreatimes.co.kr/www/news/biz/2012/06/335_83457.html) The bubble
bursting could have also had taken place in Korea as it had in Japan. The same can even take
place in the country like China which is rising at a very rapid rate. The Chinese people generally
used to park their savings in purchasing homes and also other properties which are beneficial for
them. They did not have any other option to have savings as to whatever they have earned. It is
from the 1990s that the people are more interested in having their savings in the form of
properties. “They have been pouring money into housing over the past decade since they had few
other investments to park their savings in.”
(http://money.cnn.com/2012/04/24/news/economy/china_real_estate/index.htm) Therefore, it can
be said that as the economy and the country is growing, bubble burst can take place which can be
harmful for the country. The effects of the bubble burst will be almost the same as in the case of
the developed country like Japan.
Gross Domestic Product (GDP) and Growth
Appendix 2, discloses the GDP and the growth rate (keeping in mind the per capita
income) of the economy in the recent years. The GDP has been the most important aspect of
almost all the countries. The performances of every country depend upon the GDP of that
particular country. It can be seen from the above explanation that the GDP of China in the year
2012 was valued in more than $10 Trillion and along with that, the rate of increases has been
more than 10%, which is very much significant for the investors in the companies of china.
http://www.koreatimes.co.kr/www/news/biz/2012/06/335_83457.html
http://money.cnn.com/2012/04/24/news/economy/china_real_estate/index.htm
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Currently, the rise in the GDP rate of china and especially in the second quarter of 2012 of China
has been 1.80%. “During the past 30 years China's economy has changed from a centrally
planned system that was largely closed to international trade to a more market-oriented that has a
rapidly growing private sector.” (http://www.tradingeconomics.com/china/gdp-growth) As it has
been observed that in the last 30 years, China had a centrally planned system which was almost
closed to the international trade for the country. But now in the recent times, the country’s
company has become more in the private sector, and the companies in the private sector are very
much engaged in the international trade of the products of the country which adds to the GDP of...