China’s Economy in the Post-WTO Environment
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China’s Economy in the Post-WTO Environment

Stock Markets, FDI and Challenges of Sustainability

Edited by Lilai Xu

The book explores the implications of both the extension of the market into key parts of the Chinese economy and the integration of China into the global economy. The main focus of the book is on the role and nature of China’s financial system and its ability to transform enterprise and household behaviour and the performance of investment finance, notably in the context of a two-way flow of foreign direct investment. All the extensive chapters highlight the issue of sustainability – some see the incompleteness of market reform as a problem; others are more willing to accept a pragmatic blending of the operation of the free market and government intervention.
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Chapter 3: China’s Changing Demographics and their Influence on Financial Markets

K.B. Oh, Xuebin Chen, Jianmei Wang, Geoffrey R. Durden and Nicole El-Haber


K.B. Oh, Xuebin Chen, Jianmei Wang, Geoffrey R. Durden and Nicole El-Haber INTRODUCTION This chapter reports the findings of a study into the recent growth and development of the Chinese financial services market. More specifically, it explores and analyses the relationship between recent demographic changes, pertaining to household income, savings patterns, economic growth and wealth creation, and demand for personal and household financial services. The Chinese economy has experienced a remarkable transformation since the implementation of its ‘open door’ policy in 1978. Since 2003, China’s economy has grown at an average annual growth of 10.3 percent per annum. The nominal gross domestic product (GDP) was US$4.8 trillion in 2009, making it the world’s second largest economy after the USA. However, China’s per capita nominal GDP in 2009 ranked number 98 in the world at US$3678. China is currently experiencing a high level of inflation driven by high economic growth fueled mainly by the higher prices of food. The consumer price index (CPI), a main gauge of inflation, rose to 3.1 percent year on year in May 2010, exceeding the government target of 3 percent. CPI rise is becoming demand and cost driven rather than demand driven as earlier. The price pressures stem from excess liquidity because of the lag impact of 6–12 months from the four trillion yuan (US$585 billion) stimulus package in 2009 in response to the global economic slowdown, which prompted a record surge in loans of 9.5 trillion yuan (US$1.5 trillion). In...

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