Case Activity: China's Growth in 2022

China has the second largest economy in the world behind the United States. Despite the impacts of the COVID-19 pandemic, China's gross domestic product (GDP) was about $15.6 trillion USD in 2021. Experts estimate that China's GDP will grow by 5 percent in 2022.

China's top exports include computers, telephones, video displays, and vehicle parts. China continues to employ strict COVID-19 protocols including mass lockdowns, robust quarantine mandates, and extensive testing. These precautions have prevented disruptions to China's factory production and allowed for growth.

Much of China's economy is still government-controlled. Sixty percent of the country's enterprises are state-owned, and generating 40 percent of the country's GDP in 2021. Entrepreneurs and investors may take profits from their businesses, but within limits dictated by government policy. More recently, China has recognized the importance of international trade and the development of special economic zones to attract foreign investors and to allow for economic growth. China still releases Five-Year Plans, which map out strategies for economic development, set growth targets, and launch reforms. In addition, China provides universal health coverage to 95 percent of its population.

Another contributing factor to China's economic growth has been the government's use of both monetary and fiscal policy. China's central bank, the People's Bank of China (PBOC), acts much like the Federal Reserve System in the United States as it controls the money supply in China. Recently, the PBOC reduced the level of the country's debt through deleveraging efforts, but it has put a pause on these efforts due to mixed results. However, the reserve requirement ratio cuts will encourage more loans to small- and medium-sized businesses and developers.

Based on this information China leans toward a ______ economic system.

capitalist

communist

market

socialist

Assessment question

China's gross domestic product (GDP) was approximately $15.6 trillion USD in 2021. This number was found by _____.

determining the dollar amount of all goods exported out of a country during a one-year period

calculating the difference between a nation's exports and imports during a specific period of time

totaling the dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period

calculating the sum of the total amount of money earned by a nation's population in a year

Assessment question

The People's Bank of China's (PBOC's) reduction of reserve rate requirements is an example of ______.

fiscal policy

an action taken during a recessionary period of the business cycle

monetary policy

an action taken during a peak period of the business cycle