Explain the combined effects of these factors on China’s real GDP and the price level, starting from a position of long-run equilibrium.

The following events were reported in the East Asia and Pacific Economic Update published by the World Bank in April 2015:
■ Global economic recovery supports a moderate increase in China’s exports.
■ China benefits from a fall in the world price of oil.
■ The Chinese government will cut excess capacity in heavy industry.
■ U.S. firms will relocate their labor-intensive manufacturing industries to low-cost countries.