Government should carry out the macroeconomic control, do you agree?
--Zhou Yuanyi, LuanBo, YangZhenlei, Zhaokun
A highly controversial issue has been put forward since China introduced the macroeconomic control policy in 1993 about whether government should carry out the macroeconomic control policy or not? In the point of view of our group, we agree that government should carry out the macroeconomic control policy. The reasons are as follows: firstly, structural macroeconomic control aims to effective allocation of industrial resources, which helps to reduce the margin between the poor and the rich; Secondly, government can completely control the economic trend of the whole country and put an effort in the production that their people need most.
one point that we consider is the distribution of resources. This kind of matter may destroy the balance of the resources’ distribution. Just take China for example. The economy in the west part of China is completely different from the east part of China. There are many impoverished areas like Yun Nan in the West. However, the east part of China like Shanghai shows a very flourishing economy. The San Xia power station, which is the largest power station in China, provides more times of electricity for Shanghai than other areas. That may influence other areas’ development and stagnate the economy of the whole country.
Besides, another function of macro-control is to control the development of all the important industries that closely related with people’s lives. Through this policy, the government can not only guarantee the normal operation of some vital and indispensable industries like telecommunication industries and energy industries, but also prevent the excessive growth of some industries and reasonably boost other industries. For example, in 1993, Chinese government used the macro-control policy to strengthen transport and communication infrastructure to speed up the energy and important raw materials industries, with a focus on coal, electricity, iron and steel, building materials and the development of the petrochemical industry. The results were significant. In 2003, the investment in some industries was overheated and Gasoline Shortages and tension electricity supply were appeared. The government gave priority to ensuring the focus of urban and rural residents living, fully tapped the potential of coal, electricity and oil production, and strived to protect the important material transport. Then the problems are basically resolved.
But some people will say, because the market is the foundation of the economy, so economic regulation should be carried on with the help of the market, rather than relying too much on macroeconomic-control by the government. We cannot say it is wrong, what we want to emphasis is that market regulation needs a long time to change the structure of economy gradually. But in some certain time, such as the economic crisis happened recently, the economic crisis burst out and the economy in American suddenly changed. If at this time, American waits for the market regulation to recover the economy, it will take a long time and at the same time people in American will suffer. So it is a must for government to come out and put up with some policy to help the economy recover. As a result, the economy will recover.
Since government carry out the macroeconomic control policy, the economy and resource can be appropriately distributed and allocated. Government can decide where aspect to focus on in order to develop the economy. It is true that decisive decisions will be made when government faced with urgent issues rather than waiting for the principle of market to adjust. Also carrying out the macroeconomic control will play an important part in decreasing the distinction between the rich and the poor, which, as a result promote the stability of society.
Subscribe to:
Post Comments (Atom)
The Chinese Government should maintain state control over its economy, do you agree?
ReplyDeleteA highly controversial issue has been put forward since China introduced the macroeconomic control policies in 1993. This revolved round the issue of whether governments should carry out macroeconomic control policies or not? We agree that government should have policies that control the free market. The reasons are as follows: Firstly, structural macroeconomic control aims to effectively allocation of industrial resources, which helps to reduce the margin between the poor and the rich. Secondly, governments can completely control the economic trends of the whole country and channel efforts in the production of goods and services that their people need most.
The free market is unable to ensure a fair distribution of resources. Often the market distributes resources almost totally on the basis of demand and supply. Take China for example. The economy in the Western part of China is completely different from the Eastern part of China. There are many impoverished areas like Yun Nan in the West. However, the Eastern part of China like Shanghai has a flourishing economy. Yet, the San Xia power station, which is the largest power station in China, provides more electricity for Shanghai than other areas in the West. Unless the government, ensures development in most areas in China and unfair distribution of resources would stagnate the economy of the whole country with the exception of a few major cities.1. (reference?)
With the government in full control, it can maintain some vital and indispensable services like telecommunications and energy, but also prevent the excessive growth of some industries at the expense of other industries. For example, in 1993, the Chinese government strengthened transport and communication infrastructure. Energy and important raw material such as coal, electricity, iron and steel, building materials and the development of the petrochemical industry received government funds. The results were significant and positive. In 2003, the investment in some industries was overheated and gasoline shortages and tension electricity supply had appeared. The government responded quickly giving priority to ensuring that coal, electricity and oil production increase. Then the problems are basically resolved.2. (reference?)
But some people will say, because the market is the foundation of the economy, so economic regulations should be carried out with the help of the market, rather than relying too much on government control measures. However, this is not applicable in all countries. Even in America during the current economic crisis, the policy of allowing the free market a free hand has suddenly changed. If America waits for the market to recover on its own, the economy will take a long time to turn around and all that time the people in American will suffer. The government has proposed policy changes to help the economy recover. Hence, allowing the free market to control the economy is not necessarily the best option. .
In conclusion, the Chinese government should continue with its state control policy so that resources can be appropriately distributed and allocated. The government can decide where to focus on in order to develop the economy. Decisive decisions can made when the country is faced with urgent crisis. Rather than waiting for the market to adjust, efforts can be made to decrease the distinction between the rich and the poor, which promotes the stability of Chinese society.