Ailin Winoto

20168035
China Helps Prop Up the Global Economy
Based on the article, it was stated that China could help prop up the global system
by the fastest growing in Chinas GDP growth, which was 8.9% in 2011. In addition,
what makes Chinas growth rise rapidly are:
1. China as a WTO member could be attractive for investors of many industries
to do foreign investment in China. By having a competitive advantage in
terms of free-market, investors were easily got attracted by entering China
market
2. China tried to shift away from export toward domestic consumption, which
contained of government consumption as well as household consumption.
Due to the slowing down in Chinas export impacted of the global financial
crisis, increasing domestic consumption is a good way in order to maintain
stable and rapid economic growth. These government consumptions were
building better infrastructures, going on a major of shopping spree, and
investing in energy and other natural resources. Moreover, government
responded into the recession in 2008 by imposing a stimulus plan totalled of
$586 billion in order to support manufacturing base and social security
provision. Meanwhile, the increasing in household consumption was done by
giving subsidies to consumers to buy appliances and cars. The government
introduced subsidies of up to $62 to help push consumer sales of energyefficient air conditioners, flat-panel televisions and other appliances. Other
than that, Chinas central bank cut the reserve ratio requirement in the hope
that increased lending will result in higher spending and boost domestic
demand.
3. China consisted of a big population of low-wage workers, which was very
attracted for offshoring from many companies around the world. Thus, many
companies operated in China due to low cost manufacturing base that could
make the export prices cheaper than other countries. Because of these
reasons, China could have a competitive advantage in order to grow rapidly.
Then the question is how China could help prop up the global economy. China
became the worlds second largest economy next to United States, thus
everythings happened in China does matter a lot around the world. In addition, by
increasing domestic consumption and being a WTO member, it implies that China
would like to import some goods from other countries in which would help those
countries get foreign reserves from exporting. Moreover, Chinas growth could help
prop up the global economy by creating demand for commodities from many
developing countries. Since China has entered into mid-phase of industrialization,
thus, steel, machinery, and chemicals industries relied more heavily on energy and
minerals as input of production. This pushed China to rely on the overseas supplies,
Australia, of energy and minerals to meet its growing demand on resources. Thus,
the commodity prices could be slightly increased that brought benefit to the
exporters. Hence, the exporting to China could support hundreds thousands of jobs
across the nation in all sectors which might increase the social welfare.

Ailin Winoto
20168035
The other way is by having low-wage workers as creating low-cost production in
China resulting in cheaper good prices compared to others. Since the price is
cheaper, it implies that many countries would demand more goods from China
compared to its domestic goods in order to enhance consumer welfare by saving
more money for better education and better health.
In conclusion, expanding domestic consumption is the most critical part to play a
greater role in fuelling economic growth and restructuring. In addition, ensuring
peoples wellbeing could help boost domestic demand by having more money to be
spent. Last but not least, China should increase its productivity and quality in order
to compete with.