Growth slows but China is not collapsing

Is the Chinese economy going to face the same problems as many western ones?

Read this BBC article and answer the following questions:



Level 1: Knowledge
1a) Define the term “Gross Domestic Product”
1b) Identify the fiscal policy and monetary policy measures taken by the Chinese Government that are mentioned in the “Limited effect” paragraph

Level 2: Application
2) Explain the difference between Chinas calculation of its GDP and that of most other economies, and why this makes the job of an economist harder

Level 3: Analysis
3) Based on your knowledge of Western economies such as the USA, examine the comment president of Shanghai Current Economics Research Institute (Wang Liang) when he said that "I don't think the stimulus package will have much effect,"

Level 4: Evaluation
4) Discuss the argument put forward by Professor Sun Lijian, from Shanghai's Fudan University in this article.

Note Level 1 – Level 4 are questions based on IB standards where
Level 1: Knowledge
Level 2: Application
Level 3: Analysis
Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website

Chinese trade surplus hits record

This article describes Chinas record trade surplus, but explains why there may be harder times ahead for the Chinese economy.

Read it and answer the questions below. Read it and answer the questions below. Level 1 – Level 4 are questions based on IB standards where

• Level 1: Knowledge
• Level 2: Application
• Level 3: Analysis
• Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). Thees meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website

Level 1: Knowledge
Q1: Based on the article, define the term ‘Trade Surplus”, and write down how to calculate it

Level 2: Application
Q2a: Explain why Chinas Trade surplus may fall in the near future.
Q2b: Explain why China’s Government might choose to cut interest rates because inflation has fallen.

Level 3: Analysis
Q3: Analyse how conditions in other world economies have impacted Chinese fiscal policy measures

Level 4: Evaluation
Q4: To what extent does this article support the argument for China being part of the global economy?

China manufacturing downturn

This short video from the BBC mentions

a) What was the growth rate of the Chinese economy in the year to October 2008?

b) What percentage of Chinese toy manufacturers have closed in the last year?

c) What 2 reasons does the video mention for declining overseas orders for Chinese products?

d) What 2 steps has the Chinese Government taken to fix this decline in overseas demand for Chinese products

e) What has happened to Chinese inflation? What type of inflation do you think the presenter is talking about?

Oct 2008 - Is the UK in recession?

This is a nice short article from bized.co.uk on the threat of recession in the UK. People use the term loosely, but based on the generally accepted economist’s definition of recession, the UK right now (Oct 2008) is NOT in recession. However, the article states that the UK is almost certainly going to be in recession in very soon.

Read the article and answer the following questions

Q1) By how much did GDP increase or decrease by
a) In the 2nd quarter 2008
b) In the 3rd quarter 2008

Q2) What is expected to happen to UK GDP in the 4th quarter 2008

Q3) What is the generally accepted definition of the word ‘recession’

Q4) What does a ‘negative period of economic growth’ actually mean for an economy?

Q5) What does the article tell us about economic activity in the primary, secondary, and tertiary sectors?

Q6) What does the information in the article about GDP have to do with this statement in the article?
The news had a bad effect on share prices and on the value of the pound, which fell to $1.53 having been at around $2 in the summer.
(Hint – it will be best to answer by describing a) the effect on share prices and b) the effect on the value of the pound separately using suitable diagrams