Problems with the Chinese Economy

China is Doubling the Size of Its Economy Every Seven Years How is China Doing on Growth, Unemployment, and Inflation? China is Doubling the Size of Its Economy Every Seven Years

2010 10.3%

Using the whole data set we have, China does not appear to have a stable (negatively sloped) Okun relation between growth and the change in unemployment.

If we limit the years to 2002 – 2009 we can get a downward sloping Okun relation, but it is not a very precise estimate. Note that it takes China over 10% real growth just to maintain the unemployment rate.

How is China doing with respect to unemployment?

2010 4.1%

What is the Recent Chinese on Inflation? 2008 5.9% 2009 -0.7% 2010 3.3% Nov 2010 5.1% Dec 4.6%

Biggest Threat to China’s continued expansion is a dramatic rise in the RMB Major Threat to China now is that Inflation will Rise and force the People’s Bank to Raise Interest Rates