Current economic circumstances and the trend of macroeconomic policy in ChinaMarketing 1010800106 孙浚轩1010800109 李晗Current macroeconomic circumstances of China is not bad . At present ,financial crisis is becoming even more violent. Under such circumstances , it is important to figure out whether our country should keep conducting tight monetary policy and whether the policy of appreciation of the RMB can be carried out ,what function the financial policy should have .So, please follow my step, let us solve these problems.External economyOK, firstly, let us conclude the current circumstance of international economy in three F, namely, FinancialCrisis/Fuel Crisis/Food Crisis.Therefore, the Crisis is hardly to reach “the beginning of the end”but might be “the end of the beginning”.,Internal economy1.Subprime Crisis has direct and indirect ways toinfluence Our Country.Obviously, the cradle of subprime crisis is U.S. Somemortgage and bond which Chinese banks bought haveshrunk. To make it worse, China is the country whichheld most of American’s bond. With the developmentof Subprime Crisis , it may change the direction ofinternational capital flow and might cause hot moneyflow into China. Subprime Crisis and the glide of U.Seconomy will cause dollars devalue constantly. So, theprice of international goods which accounts in dollarswill increase and it will cause China domesticinflation. What is more, the glide of U.S economywill cause trade protectionism in U.S .2.The slow down of U.S economy has a big impact onChina export because U.S is the biggest importcountry for China.3.The inflation which happens in China now is theresult of an overheated economy. On the one hand,the cost increasing and the demand pull influenced it.On the other hand, the international price of oil, foodand other goods increase fiercely which has a bigimpact on China inflation.We have already seen the circumstance which we live in now, then, let us see the specific problems in our economy.Problems in economy1.Relying on overseas market excessively.At present, foreign trade interdependency of our country is nearly 67% while the developed countries is nearly 25%. The motive power of our country’s increasing are investment and export. And the domestic demand is obvious not enough. The focus expression of economic pattern disorder is the imbalance of overseas market demand and domestic demand. What is more important, excess production capacity is too serious. Financial Crisis caused overseas market demand wither , so more andmore products cannot be exported and the unemployment is inevitable .2.Foreign capital has intervene many fields in our economy.According to the survey, in China’s 30 majority industry, 20 has been intervened by foreign capital deeply. Till 2008, U.S has been investing China enterprise about 60 thousands, and the capital is nearly 60000millions. As it can be seen, our initiative is controlled by other countries.cking of core technology and independent innovationMaybe it seems a historical problems in economy, right?Recent years, high and new technology products’export is increasing fast ! In 2010. It occupies nearly 65% in total export.But you gotta know that, 80% products’core technology are controlled by foreign merchant. So some industries are not competitive ,but monopolized by some big corporations Obviously, the externality is too heavy.4.Consumption lacks motive powerPoor countries are better off pursuing outward-oriented policies.But our country depends on foreign markets too much. We have been emphasized”pull domestic consumption”for about ten years but cannot make a breakthrough all the time, and domestic consumption rate is not rising but falling constantly.5.Inflation cannot be stopped in a short timeInflation’s occurrence and development is always lag behind an overheated economy about several quarters. At present , China’s economic growth rate reach up to 10.4%,still exceed potential economic growth speed. The inflation pressure will remain in the next period of time. International oil, food prices’increasing leads to the rising of the cost of production in China, thus cause the ascend of PPI. Also, CPI will rise too due to more and more good prices’ increasing,Aiming at these problems, we can make some foresight of our economy and some reasonable advises although our thoughts are still immature. HoHo~Here are my suggestions and analysis.My Measures and Suggestions(1)T o develop domestic economy.Our domestic economy has faced many obstacles. Domestic economic risks mainly include:1. Inflation is likely changing into deflation. 2.Domestic capital inflow may become capital gushy.ernment policy caused economy instability. Thegovernment is leading the economy now, causing some problems.So we need a competitive market. A real competition should depend on benefits, brand, technology…. Therefore, our innovation is gonna be in this aspect. We have to change the relation of government and market, glowing enterprises’own vigor.(2)Regulate foreign capital’impact. Develop domestic stock market.In view of the hot money inflow, we can change foreign exchange reverse into RMB capital ,making domestic market liquidity, using stock rights in exchange for dollars .In this very period, our enterprises can merger similar foreign enterprises, strengthening ourselves . And we have to go out, trying to buy hightechnology, resources goods, building more and more transaction relations, stretching our industry chain. In some extents, we can reduce foreign capital impact.(3)Enhancing our firms’ innovation ability.Independent innovation has become national strategy, but it is not equal to self dependence. We all know that Japan is a independent country, But in the early estate, Japan also depends on absorbing advanced technology from other developed countries. With constant absorbing and improving, Japan gradually mastered certain ability., then, its’ ability become stronger and stronger. So, our country’s enterprises especially have to learn to take advantage of resources around the world, including economic resources, technology resources, human resources and so on . To corporate and innovate in open type ,our innovation ability can improve little by little.(4)Increasing educational input and strengthen property rights protectionYeah, as you know, our country is always emphasizing the importance of education, but our form of public education is still unsound such as the brain drain and creativity education. So we have to increase educational input and provide high qualityeducation to avoid brain drain and such problems.Property rights? Oh, no , this word seems ridiculous in China But we got to deal with this word in a serious attitude. An important prerequisite for the price system to work is an economy-wide respect for property rights. So we should formulatea complete law to protect property rights.(5) Expand domestic demand.Our country’s finance is surplus last year, government’s liability occupies only 20% in GDP. This makes room for the government to carry out proactive fiscal policy. 1. The government can stimulate enterprise investment and individual consumption by the measures of the transition of value-added tax and enhancing personal income tax exemption. 2. We can increase peasants’disposable income to imitate their consumption and increase investment in village base installation by some effective ways. unch some key and large scale projects as soon as possible to develop related industries, expanding domestic demand.(6) Keeping RMB appreciated slowly to improve economicpatternTo hold exchange rate steadily, central bank has to intervene foreign exchange market in a large scale, buying dollars,releasing RMB.For preventing inflation, we should increase reserve fund rate. But because of the expectation of appreciation of the RMB ,foreign capital will inflow .Capital liquidity increases more. Our country choose to let RMB appreciate slowly to guarantee export. But it caused hot money inflow. So the only measure we can take to prevent hot money inflow is to conduct capital control.That’s all for my homework. Thanks for viewing,.~!。
