Xi Jinping's Anti-Corruption Campaign

Xi Jinping, the general secretary of the Community Party of China, has recently announced an anti-corruption campaign aiming to “spend money on the projects it was supposed to fund initially, thus leading to improved infrastructure, public services and employment rates” (Xi, “习近

平强调:以锲⽽而不舍、驰⽽而不息的决⼼心把作风建设和反腐败⽃斗争引向深⼊入”). Nevertheless,

China’s GDP growth in 2014 has been revised by the International Monetary Fund down to 7.4%, while the economy experienced a downturn in foreign direct investments and luxury industries (Schiavenza, “Xi Jinping’s Anti-Corruption Campaign May Slow Down China’s Economy”). The fast rising debt load of the Chinese economy is outrunning the GDP growth. In other words, China will encounter a tremendous decrease in its

In previous years, the development trend of the Chinese economy provided immense development space for foreign investments. Labor force was at a low cost and the government encouraged foreign investments through the developments of Economic zones. Such framework authorized foreigners to take advantage of Chinese labor, while the income is sufficient. Foreign investors also saw a broad potential as economic growth was escalating. However, the economic growth has grew at a slower pace of 7.3% since 2014 compared to 9.91% in 2008 (Shao, Spring, “China’s Growth Slowest Since Global Crisis, Annual Target at Risk”). Therefore, the Chinese government has intensified the control in governmental growth to satisfy the annual target as well as to strengthen economic interdependence. Foreign capitals are necessitated to a minimum of 25% CIT of all profits, in addition to custom tariffs, VAT and consumption taxes (Shih, “Why are

Therefore, the entrepreneurs receives a minute sector of the net profit. Additionally, there has been price wars and patent infringements between domestic private enterprises and foreign investment industries. The domestic competitors has lowered their prices to gain market share over foreign competitors with the advantage of paying lower taxes. Reflecting on the 2001 price war in the TV industry, the force to gain market share has reduced average profit level from 2.26% in 1999 to 2.05% in the TV industry dragging the overall GDP growth in China (Cao, “Challenges for Technological Development in China’s Industry”). The high number of fixed- asset investment has triggered the supply and demand pattern labor force. Due to low fertility rate and rising life expectancy, the ratio of elderly Chinese relative to those aged 15-64 is one to two, meaning approximately a third of the population is not capable of working (Banister, Bloom, Rosenberg, “Population Aging and Economic Growth in China”). The limited number of working age population prompted the end of cheap labor in China. In the January-August period of 2014, the amount of money foreign business plow into the Chinese market has fallen almost 2% from 78 billion USD in 2013 (Cendrowski, “Foreign Investments Fall in China). As foreign direct investment is a main driving force in the economy, China’s financial state will debilitate from the withdrawal of foreign direct