Case Study 3
Group 3 members
Yao Ju
M99Y0206
James
M99Z0216
Ninh
M997Z211
Melva
M997Z227
Nancy
M997Z228
Allison
M99Y0105
Socialism(China) V.S Capitalism(US)
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)
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-GDP

US
-The world’s largest national economy, with
GDP of $14,3 trillion (a quarter of nominal
global GDP—year 2009)

China
-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 secondlargest economy, but the risk of an asset
bubble remains a serious challenge for
the country.
Background-population
US
-The population of USA over
310,430,000 people with total
area 9.83 million km2.


China
-China's total fertility rate is 1.7
and by the late 2010s, China's
population is expected to reach
1.4 billion.
China
The socialist system’s advantages
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.
Reforms

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
 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’ opinions

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’ 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
USA
Current 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

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 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’ 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’ 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
Reference



http://en.wikipedia.org/wiki/Demographics_of_the_People%2
7s_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