Question

1) a. Southeast Asia also had high rates of investment and saving during 1980s1990s. Why aren’t they as successful as in Northeast Asia?

b. We know that since 2001 after China joined the WTO, there has been a mismatch between Chinese saving and investment. Please use the domestic/external balance equation to explain China's persistent surplus since 2001.

c. According to Yang (2012), why saving has been too high in China since 2001? Discuss age composition, demographic, lack of social safety nets, and backward financial institutions as possible causes of high saving rates.

Answer 1

Answer:1(A) The Northeast Asia includes Taiwan,North Korea,South Korea,Japan and China..These are mainly comes out of Northeast regions but their economic progrees is different wih each other.China is become manufacture hub of world having continous GDP growth for over two decades.Japan considered as second biggest economy after America.

Southeast Asian countries are not sucessful as Northeast countries because Northeast Asian countries acknwledge this fact they only developed economically when the associate with each other in form of free trade agreement etc and according to their comparative advantage.Japan and South Korea have advanced industies which they successfully realign with China who has a large labour force.Southeast Asian countries not able to do so.

(B)Current Account show surplus for a very long time,almost two decades.China economic relationship has hardly in balance.For years,China current account had showed it to be a big net lender to the world running a surplus as high as 10 percent.

China countinued its own development from its collaboration from global economy.Their leadership has made on globaly on China's confederation into the global community..China's make their economic policies as well leadership narrative more business driven economy.Thus,China is accepting partner around the globe.

(C)China's communist government don't believe in large surplus or deficit.So, people tend to be tilt more towards saving.This is one of the reason of China high saving rate.Saving from business enterpriese is on upward from 2000 and since China join World Trade Organizaton.Their manufacture got access to penetrate literally every country of the world, thus their income rise meteorically from past 2 decades and it is still going on.

And even with high domestic investment on infrastructure going on in China,They are getting from outside world demand at full capacity.And basically this is the reason that stand China on another atleast currently.