China Essay Questions

Question 1

what is novel about the chinese currency RMB

Answer 1

onshore and offshore rate

onshore = on mainland China for domestic transactions
rate published each morning based on a basket of currencies with dollar and euro carrying the most weighting

offshore = for trade transactions internationally

managed by the people’s bank of china to promote economic stability

Question 2

what does the difference between the onshore RMB and offshore RMB rates signify

Answer 2

perceptions of the chinese economy

Question 3

why is the RMB seen as manipulative

Answer 3

no other major currency has a dual track system

claimed to keep a low rate to keep chinese exports cheaper and more competitive in an international market

Question 4

what happens to markets when the RMB depreciates

Answer 4

expensive imports

cheap exports

competition decreases

Question 5

what happens to markets when the RMB appreciates

Answer 5

cheap imports

expensive exports

competition increases

inflation reduces

Question 6

what % of chinese trade settled in RMB

Answer 6

30%

Question 7

what was a key milestone in the internationalisation of the RMB

Answer 7

inclusion in the international monetary fund (IMF) in 2016

Question 8

what were the requirements that were met to allow the RMB into the IMF

Answer 8

china is a major trading nation

the currency is freely usable

Question 9

what current initiative will see more transactions taken out in RMB

Answer 9

belt and road initiative

Question 10

what is the name of China’s SWIFT alternative

Answer 10

CIPS

china are desrisking from US dominance in finance

Question 11

China’s growth began under whose rule?

Answer 11

Deng Xiaoping

Question 12

what is an example of a megacity in china that was built from practically nothing

Answer 12

Shenzhen

Question 13

chinese FDI are leaders in what areas

Answer 13

telecommunications

renewable energy

e commerce

Question 14

what are the three aspects attributing to slowing growth in china

Answer 14

Debt/overcapacity

deflation

demography

Question 15

what is overcapacity

Answer 15

imbalance between supply and demand

Question 16

in what industries is there overcapacity in china

Answer 16

heavu eg coal

Question 17

what are zombie enterprises

Answer 17

not economically viable but kept afloat by the government because they employ lots of people

unemployment would put more pressure on the gvmt and would affect the stability of the country

Question 18

why is deflation in china negative for growth

Answer 18

already low consumption

deflation leads consumers to defer spending as they believe things will continue to get cheaper

Question 19

how is demography causing slows in growth

Answer 19

declining population

increased dependency rate

elderly people contribute less to consumption

challenges to healhcare, pensions and shrinking workforce

Question 20

what is the belt and road initiative

Answer 20

infrastrcuture to link europe, africa and asia

promotes connectivity

not just for transport, for gas pipelines too

Question 21

what are some Chinese industries that give hope for potential growth

Answer 21

electric vehicles

renewable energy

lithium batteries

Question 22

what geopolitical factors make growth in china hard

Answer 22

tight regulations around FDI and data privacy and security

trade wars, quotas, bans and tariffs

Question 23

why does china continue to invest into zombie economies

Answer 23

does not have many other industries to rely on

for employment

Question 24

why does imposing tariffs and quotas on chinese imports imply reversal of globalisation

Answer 24

no more free trade (original aim of globalisation)