Govenrment and Business Environment Case Study

China: Importing Commodities and Exporting Inflation?

OR

Abstract:
Even after 25 years of economic reform, China presents an enigmatic picture of political and business environment. Unlike the developed economies, China's economic engine heavily depends on manufacturing and its inexpensive labour resources. Over the years, this reliance led to over-investment and over-capacity in certain sectors such as oil, steel and cement. While this is just one side of the coin, China's socialist banking approach has added more to the already heated economy. As a result, the country's scorching economic growth sent inflationary and deflationary reverberations across the world by rising prices of the globally traded commodities like oil, cement, steel and other metals.

Pedagogical Objectives:

• To understand the impact of China's fast-paced economic growth on other countries
• To discuss the proactive steps that China needs to take to cool its economy.

Keywords : China's overheated economy, Inflation and deflation, Global prices of commodities, Demand for oil, steel and cement, Consumer expenditure and consumption, China's GDP (gross domestic product), China's oil production, Daqing oil field, The great leap forward, Monetary Policy Case Study, The policy of self-reliance, Zhou Enlai and the four modernisations, Flawed banking system