Describe the problems the Chinese economy has faced from 2005 to 2007.

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Introduction

The economy of the people 's republic of China is ranked the fourth largest globally in terms of its gross domestic product . The gross domestic product in 2005 was mainly contributed by the private sector The private sectors contributed to almost 70 of the Chinese economy . In 2006 Chinese economy had a GDP of close to US 2 ,500 . This Chinese economic success was mainly contributed by the increase in factories This was mainly a government directive where they took charge of

the transition by using the government 's resources to build more factories Entirely new breed of factories and manufacturing firms were created This resulted to the rise in its economic growth registering up to 16 .9 in the sixties then , 68 .8 in the seventies and 63 in the eighties and there after registering a significant growth of 174 in the nineties . In 2005 Chinese nominal GDP rose by almost 17 making China the 6th economy in the whole world a position which was previously held by Italy . At the start of 2006 china was mentioned as the fourth largest economy in the world after overtaking Britain and France . China is predicted to overtake Germany within the next one year and also to overtake the country of Japan in the next coming two years (Alon , 2003

Though China 's economy has been growing tremendously within the last 10 years its GDP has been low compared to other countries in the Middle East and many countries that are the main exporters of oil . This low pace growth in GDP has been traced as being affected by the China 's large labor force . This has kept down the value of the Chinese Yen due to low rate of inflation . Also there is low rise in per capita income as compared to other countries in the world . This reason has been traced to having been influenced by the slow income rate . If this goes on the development of China 's economy is predicted to take much longer before reaching its peak . China can still increase the pace of their economic development by ensuring that all corruption cases are dealt with accordingly in to discourage anybody who is eyeing to loot from the government . The ways and methods of ensuring that everybody pays taxes should be introduced . All those firms which are not contributing in terms of economic growth should be shut down (Chen , 2002

Though China 's economy has been growing tremendously , there are many short comings and challenges which they have faced along the way . These challenges have contributed to slowing the rate of growth in this economy . These challenges mainly occurred when China was in its full rate of development

Labor shortage

In the begging of 2005 , there was stronger demand of workers due to the increase in the number of factories . People could choose whatever job they wanted in terms of the working conditions and the amount of wages they pay...