~ China’s Feverish Growth May Demand Cooling ~ - Publication: The New York Times - Author: Keith Bradsher - Date: April 17 th 2006 Ka-Wing Yeung 5-18-2006.

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Presentation transcript:

~ China’s Feverish Growth May Demand Cooling ~ - Publication: The New York Times - Author: Keith Bradsher - Date: April 17 th 2006 Ka-Wing Yeung

Summary - China’s economy grew at 10.2% in the 1 st Q in 2006 (highest record since 2003) - Investment-led growth (easy lending from Chinese banks) - Export-led growth (undervalued Chinese currency), →↑demand for Chinese goods & export →↓demand for US’s goods & export →↑US trade deficit with China

Summary continued - Further alarm the US, worried about job losses commodity prices - Chinese government: -- address its trade surplus by↑imports and domestic demand,↓export tax rebates. -- integrate corporate taxes paid by F and D firms --↑interest rates

Summary continued - Chinese government: -- improve the protection of Intellectual Property - Then the Yuan will be appreciated against the dollar at a faster rate.

Primary Problems: China’s rapid growth & undervalued currency affect US’s economy, job losses and high commodity prices

Methods for Analyzing Economic theory: Law of Demand: ↓P →↑Q Y = C + I + G + X – M

Article Evaluation: - Did not explain why the protection of IP will help the appreciation - Seems credible

My next paper: Focus on the structure (or IO) of the banking industry in China. --How will the banking reform improve “bad quality loan” problem and economic growth in China.