INFLATION IN CHINA

Inflation in China

Inflation in China

Introduction

In recent years China's economic growth has been characterized as high, showing a steady increase in GDP by around 8% of annual average since 1997, with rates that have exceeded 9% since 2003. All this has been driven mainly by industrial expansion and substantial exports. Among the products that China has developed strongly and have driven economic growth and trade are the high technology and global market demand, such as semiconductors, automobiles and personal computers. It has also developed other types of products with a high share in the international market, becoming the first global manufacturer of textiles (including clothing), footwear, consumer electronics (cell phones, DVD players, televisions, etc.), furniture and toys.

In addition, there have been large productions of coal, copper, aluminum, steel and cement, making this Asian nation in the world's leading producer in those lines. China has a major weight in the global economy and almost decisive for the development of other economies, not only as producer but also as large-scale consumer, accounting for 30% of global consumption of coal, cotton, rice and steel and between 15 and 20% of world copper, soybeans, wheat, aluminum and platinum. It should be noted that one of the external factors that influenced the Japanese economic recovery is the expansionary cycle that is China's economy. Driven by industrial production, export demand and investment, China's economy grew at a strong pace of 9.1% in 2003, the highest rate since 1997. Japanese exporters responded to the challenge by increasing their shipments to China by 33.2%, representing a total of 62 900 million between 2002 and 2003. Nipponese exports to China have more than doubled since 2000, but still represent only half the amount of exports to the United States.

In nominal terms, Japan's GDP accounts for about half of U.S. output and three times more than China. However, China's GDP, measured in terms of domestic purchasing power is already higher than Japan. The development of China as an engine of growth in Asia has also accelerated the adaptation of Japan's production to that market. The company Nippon Steel agreed to form a joint venture with China's leading steel company in December 2003. Nippon Steel Corp. is one of the many Japanese companies that take advantage of what has been called "the Chinese boom." China has a great need for steel, construction materials, cell phones, HDTVs and Japanese cars and work overtime to meet demand. "China buys everything," said Takashi Kanka, an officer of this corporation.

Many analysts see China as a threat to the US economy, but this view is changing, because, as US exports grow thanks to growing demand from China. US economy is encouraged and created interdependence between these economies the benefits. At present, China overtook the United States in the consumption of a number of foodstuffs, consumer goods and raw materials. The per capita income in China has increased rapidly, providing a growth of consumption of food, energy, raw materials and consumer ...