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Topic and Statistical Method
The rise of China has been the centre of major economic, social, and political controversies around the world. Whereas China has been performing extemporary well over several decades to become the world factory, the economy may become a major problem to the entire world in case it tumbled down (Altbach & Wang, 2012).
Essentially, there have been concerns that the China’s decision to control its currency against the US dollar is counter-productive and dangerous to the economy of USA (Chellaney, 2012). In the study, both quantitative and qualitative methods of analysis will be applied to identify the dangers of possible fall of the Chinese economy and the control of their currency.
Statement of the Problem
China has been facing critical economic problems over the past few weeks. Essentially, the country is experiencing various structural challenges that may find its economy slowing down, remaining stagnant, or going down all together (Chen, 2012). In particular, the Chinese property market has reached its peak, many apartments remain unoccupied and fully constructed industries lie idle. Besides, the stock market has been crushing for the last few weeks while people losing almost 20 percent of what they have made earlier this year.
While the short term recovery is still seems to be possible, this is a strong indicator that the Chinese economy may face a backlash in the long run. This raises the question of the effects that the backlash would have on other continents such as Africa, America and Europe. Further, the consistent control of Chinese currency against the US Dollar is one of the major concerns. Using this strategy, China has been able to crash the USA’s manufacturing economy.
In addition, they relaxed environmental laws and human rights in favor of investors. As such, the country has succeeded to kill the manufacturing industries of some of the major competitors such as India, USA, and Japan among others. This evokes the issue of the sustainability of these economic structures and their effects on the world economy.
Review of Literature
In the research paper, this section will evaluate the studies that have been done previously, in order to understand their findings. Having understood the research findings from other authors, the literature review will form the basis of identifying the research gap that should be filled. As such, the gap identified will be the basis on structuring the research study.
In essence, the literature review will focus on various issues that have been raised in the problem statement. First, it will focus on the major economic orientations of the Chinese economies that include manufacturing, property industry, and the stock market. The analysis evaluates the sustainability of these industries and investment fields as it stands presently.
Secondly, the review will proceed to evaluate how the Chinese policymakers manage to control their shilling pegging it to 8 Yuan per US Dollar. The review will then analyze what other researchers discovered in regard to the dangers of this tendency of currency control and how it affects other economies.
As far as the world economy is concerned, China plays a significant role in terms of the manufacturing industry, currency demand, and financial investments among others. However, it is facing crucial structural problems that may lead to slowing down of their economy. Besides, currency manipulation is one of tactics that the country has used to crash other big world economies. As such, this research seeks to explore how these structural problems may hurt the world’s economy and recommend strategies to prepare for such a time.
Altbach, P., & Wang, Q. (2012). Can China Keep Rising? Scientific American, 307(4), 46-47.
Chellaney, B. (2012). Rising Powers, Rising Tensions: The Troubled China-India Relationship. SAIS Review, 32(2), 99-108.
Chen, G. (2012). The Art of Governance: Managing Rising Expectations. China Development and Governance, 22(1), 1-5.