CHINA VS KOREA- Economic comparison
SOUTH KOREA AND CHINA's FISCAL AND MONETARY POLICY
Central bank decided to decrease the interest rates to encourage the more investment from citizens, and reduce the private debt which is a expansionary monetary policy. For fiscal policy, Government decided to decrease the tax rates, usage of expansionary fiscal policy, in order to lower the public debt which was 1.6 % of GDP to 0.6% of GDP. Then, for Chinese Monetary, central banks are reluctant to land money to citizens because they have bad-loan ratios. They increased the interest rates in order to prevent the further more excessive loaning. However, for fiscal policy, because china rapidly grew with the heavy industrial manufacture process, their care for education, environment and transportation that increase the standard of life was not existed. Therefore, government had spent money for improvement of public-welfare. Also, they had cut 40 billion yuan of individual tax in order to build strong economic structure
Central bank decided to decrease the interest rates to encourage the more investment from citizens, and reduce the private debt which is a expansionary monetary policy. For fiscal policy, Government decided to decrease the tax rates, usage of expansionary fiscal policy, in order to lower the public debt which was 1.6 % of GDP to 0.6% of GDP. Then, for Chinese Monetary, central banks are reluctant to land money to citizens because they have bad-loan ratios. They increased the interest rates in order to prevent the further more excessive loaning. However, for fiscal policy, because china rapidly grew with the heavy industrial manufacture process, their care for education, environment and transportation that increase the standard of life was not existed. Therefore, government had spent money for improvement of public-welfare. Also, they had cut 40 billion yuan of individual tax in order to build strong economic structure
Is government interference necessary?
Both countries’ fiscal policy seems preferable for me because both improved the economic structure and had cut the debt by decreasing the private tax rates. However, the monetary system, South Korea’s one looks better because it actually encouraged the public investment by cutting down the interest rates, but China failed to use a functional monetary policy because of the government’s interference. Government shouldn’t engage into the economy a lot because Bank won’t have freedom to manage the apropos interest rates based on the loaning rates.
Both countries’ fiscal policy seems preferable for me because both improved the economic structure and had cut the debt by decreasing the private tax rates. However, the monetary system, South Korea’s one looks better because it actually encouraged the public investment by cutting down the interest rates, but China failed to use a functional monetary policy because of the government’s interference. Government shouldn’t engage into the economy a lot because Bank won’t have freedom to manage the apropos interest rates based on the loaning rates.
KOREA's DEBT RATE TO GDP
CHINA's DEPT RATE TO GDP
Both Korea's and China's debt decreased by efficient monetary and fiscal plans.