Case Study 3Case Study 3

Group 3 membersGroup 3 members

Yao Ju M99Y0206

Ninh M997Z211

Nancy M997Z228

James

M99Z0216

Melva M997Z227

Allison

M99Y0105

Socialism(China) V.S Capitalism(US) Socialism(China) V.S Capitalism(US)

Socialism(China)Socialism(China) Socialism is a system whereby the ownership of capital, resources

and production capability reside with and are controlled by the citizens.

Citizens have equal access to the products and resources and are compensated based on the amount of work performed.

This form of economic control claims to have the benefit of allocating resources, services and compensation equitably among the population. In other words, the system purports to be fair to everyone and to provide everyone with an equal piece-of-the-pie.

Socialism(China) V.S Capitalism(US) Socialism(China) V.S Capitalism(US)

Capitalism(US) Capitalism(US) The means of production and distribution are

owned by individuals

Structure of social class based on private owners and wage worker, which will expand accumulate profit.

The production of commodities for sale.

Background-GDPBackground-GDP USUS -The world’s largest national economy, with GDP of $14,3 trillion (a quarter of nominal global GDP—year 2009)

ChinaChina -Total GDP estimate will be $5.745 trillion (2nd) in 2010.The Chinese economy will grow by 9.5 percent this year, help in it overtake Japan as the world's second- largest economy, but the risk of an asset bubble remains a serious challenge for the country.

Background-populationBackground-population USUS -The population of USA over 310,430,000 people with total area 9.83 million km2.

ChinaChina -China's total fertility rate is 1.7 and by the late 2010s, China's population is expected to reach 1.4 billion.

ChinaChina

The socialist system’s The socialist system’s advantages advantages to China to China

Prime minister Wen Jiabao said: It enable us to make decisions

efficiently. It enable us to organize effectively. It let us concentrate recourses to

accomplish large undertaking.

ReformsReforms The1980s reforms that unleashed China’s

private sectors.

The 1990s reforms that dismantled great sections of state-run sector are being partly undone.

Problems of the reforms Problems of the reforms From 1978 to the end of the ’90s, the

reforms did not touch the power of the government.

The government is expanding because there is no check and balance on its power

Analysts’ Analysts’ opinionsopinions The beneficiaries are state-owned interests would gradually wither

away in the face of private-sector competition.

China is seeking to enhance government control over some part of the economy.

Government intend to create a vibrant state sector that would tower above the private sector in important industries.

China would surpass Japan to become the world’s second-largest economy this year

China’s leader reassert their faith in their own statist approach to economic management after financial crisis)

Private capitalism plays only a supporting role

Skeptics’ opinionsSkeptics’ opinions Distortions and waste, partly due to government meddling,

will push growth rates down well before 2020.

The growing political and financial influence of China’s state-owned companies-129 conglomerates and thousands of smaller ones.

China pumped out the vast bulk of the $588 billion for new large facilities(like high ways) went to state-owned companies

Some state-owned companies use the money to strengthen their power in their market or to enter new ones

USAUSA

Current situationCurrent situation Internet explosion in 1990s

Exuberance over real estate

Housing price soar

Collapse in American housing price

Real estate declines

Current situation-How do different objects think and do?

Homeowners: cut spending, shrinking sales for businesses and prompting layoff

Evaluation of economist: The American economy can recover itself

Investors: lose faith in real estate and stocks =>Flood into Government Saving bonds; worry about inflation.

The fact The fact Fears of second recession is growing

because proposed curative could risk adding to the national debt.

The fear of economic stagnation called Lost decade like Japan in the 1990s

The Fed reactionThe Fed reaction Inject credits into economy, giving

reluctant consumers the ability to spend.

Relieve American banks of troubled investments, many linked to mortgages, to give the banks room to make new loans.

Economists’ opinionsEconomists’ opinions Praise the Fed for confronting the possibility

of another depression

Believe that austerity is the wrong medicine for the American economy

(Take the medicine and stave off the lethal threat but then deal with the collateral problems)

Economists’ opinionsEconomists’ opinions Alan Blinders: Dismiss the idea that

America’s political system would ever allow the country to sink into a Japan style quagmire

Ben S. Bernanke: offered assurance that he still has powerful therapies to use if conditions worsen

ReferenceReference http://en.wikipedia.org/wiki/Demographics_of_the_People

%27s_Republic_of_China http://www.allshookdown.com/newhistory/CH01.htm http://indexmundi.com/

picture http://en.wikipedia.org/wiki/United_States http://en.wikipedia.org/wiki/People's_Republic_of_China