Sunday, March 27, 2016

CHINA GDP GROWTH CAN BE OF 8% BEYOND IF DEFENSE GOES UP

Defense spending has become a mass importance to every economy keeping in line with the growing threat of terrorism attacks.  But defense import is of massive threat standing under the current scenario of the global economy. Every economy will try to sell his defense equipments but with a limitation where the buying nation don’t get into more strength. Defense spending is of great investments for a stable economic growth.

We all know the story of US economy that spends heavily at the back of defense. Historically UIS have achieved GDP growth at the cost of defense and war finding but it also wiped out its Fiscal surplus over the years.  The current global economic situation needs investments and employment across industries. Chinese economy has been going through one of the tough times and it is aggressively looking forward for reviving the economy form domestic consumption. I find in my research that defense spending is very low in china and hence it’s an opportunity for growth for the country. Coming to US being the No 1 country in defense spending find time has changed that number and position too. This article focuses on the Chinese economic growth which it can achieve based on the current position through increasing its defense budget. But do we know that how much the 2nd largest economy spends at the back of defense. The surprising part is that it spends less than the average % of the global defense spending. This is also boon for the economy since the day it picks up its growth momentum towards defense the whole economy will get a big jump in its growth. 

Being an economic journalist when dig into the facts I find that it still lags behind major countries in terms of weaponry, training and payment to its servicemen. Chinese economy have been investing and developing relation with many economies after the 2008 recession to develop the trade and investments opportunities. But at home the economy is surrounded by many threats which can be created into a opportunity by the Chinese economy to grow its GDP beyond 8% over the next decade. Unless the problems are being identified we will not be able to measure the depth of the problem being faced by china.

·         In the East China Sea, for example, disputes between China and Japan over the Diaoyu Islands are a matter of tension.
·         In the South China Sea U.S. warships and planes have repeatedly intruded on waters and airspace adjacent to China’s Nansha Islands.
·         China is also under mounting pressure from North Korea’s nuclear program, as Beijing works toward detente.
·         Above all China directly borders 14 countries. Defending its people and territory constitutes an important aspect of national security.

Hence china has ample reasons to go ahead for defense spending. Coming to the economic numbers to get a clear idea about the numeric number of growth china that china could achieve are as follows:
·         The share of its military expenditure in GDP is only around 1.5 percent, the lowest among the UN Security Council’s permanent members
·         In 2015 China’s average military spending was equivalent to 1/8th of US and 1/4th of Japan
·         In the past 10 years, China’s defense expenditure averaged 1.33% of its GDP much lower than the 2.6% of the world average level.

When I dig further to find out the level where china stands in terms of defense spending I find some surprising facts for all of you as well as opportunity level for the china to grow in the long term.

 It clearly reflects that china is far behind other countries and it has ample scope of growth in the long term. The current budget level of china has far long way to go and hence GDP growth of 8% can be achieved.

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