China - Country Risk Assessment

China Country Risk Assessment

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TABLE OF CONTENTS

I . Executive Summary .4

II . Cultural Overview .5

i Demographics /Population .5

ii Culture .7

iii Literacy /Education .7

iv Religion .8

III . Government Structure .9

i Infrastructure .9

ii . Voting System .10

IV . Economic Climate .10

i GDP .12

ii . Poverty Rates .13

V . Political Risks .13

i . Government Stability .14

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. Internal Conflicts .14

VI . Economic Risks .15

i . GDP per Capita .15

ii . Real Annual GDP Growth .15

iii . Annual Inflation Rate .15

iv . Budget Balance of GDP .16

v . Current Account of GDP .16

VII . Summary of Risk .16

VIII Recommendations .17

IX Conclusions .18

X Bibliography .20

Executive Summary

China according to the CIA world Fact Book is an Eastern Asia country that lies between North Korea and Vietnam . It is endowed with various natural resources and is in fact has the world 's largest hydropower potential . China 's economy has in the past few years been doing very well . It has emerged as the world 's fastest growing economy . The significant economic growth is attributed to the great structural reforms that saw the market shift from a state controlled one to where the forces of demand and supply were left to take charge . The economic reforms are thought to have led to the effective allocation of resources to more productive uses (CIA world fact book

The countries population is estimated to be more than 13 billion , a factor that precipitates major concerns on the grounds that this could drain the country 's resources . China has become a threat to the major economies like the US as it is thought that it may overthrow them to become a super power . Many countries have shown their interests of enjoying with China the benefits of tremendous economic growth through foreign direct investment (FDI . The foreign direct investment that was almost inexistent prior to the reform rose from 109 million in 1979 to 72 billion in 2005 making it the 3rd largest FDI destination (Claude et al , 6

There are however challenges that hinder the country from realizing her optimal potential . Every country must be cautious before investing in foreign countries . Factors considered here are economic , political as well as social (Trennert J , 230 . An effective country risk management process ensures that appropriate policies are put in place to allow easy and profitable entry in foreign markets (FDIC Office of Inspector General . According to Ribeiro Renato variable that are to be considered quantitatively include population growth , unemployment rates and life expectancy

Environmental concerns especially on air pollution that is aggravated by coal production are raised due to their potential global effects . The issue of corruption and lack of democracy are also raised as they too have a negative effect in as far as economic prosperity is concerned China is also accused of applying unfair trade practices to remain at the top . Policies like dumping , application of subsidies and devaluation of the dollar raises concern . Political unrest...