Macroeconomics Case Study

China: Importing Commodities and Exporting Inflation?

OR

Abstract: Even after 25 years of economic reforms, China presents an enigmatic picture of political and business environment.Unlike the developed economies, China’s economic engine heavily depends onmanufacturing and its inexpensive labour resources. Over the years, this reliance has led to over-investment and overcapacity 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 to the alreadyheated economy. As a result, the country’s scorching economic growth has sent inflationary and deflationary reverberations across the world by raising prices of the globally traded commodities like oil, cement, steel and other metals.

Pedagogical Objectives:

• To discuss the concept of globalisation
• To discuss the reasons for inflation and its effect on the global economy
• To debate on the growth rate of China – slowdown or accelerate further.

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