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In 2015, after its annual economic growth rate fell to 7%, the Chinese government decided to reduce import tariffs on some consumer goods - Edexcel - GCSE Business - Question 5 - 2017 - Paper 1
Question 5
In 2015, after its annual economic growth rate fell to 7%, the Chinese government decided to reduce import tariffs on some consumer goods. The slowdown in Chinese ec... show full transcript
Worked Solution & Example Answer:In 2015, after its annual economic growth rate fell to 7%, the Chinese government decided to reduce import tariffs on some consumer goods - Edexcel - GCSE Business - Question 5 - 2017 - Paper 1
Step 1
Define 'Economic growth'
Answer
'Economic growth' refers to the percentage increase in gross domestic product (GDP) over a specified time period, usually calculated on an annual basis. GDP is a measure of the total economic output of a country, reflecting the overall health of its economy.
Step 2
Identify a relevant factor that may have caused a fall in demand for housing in China
Answer
One relevant factor that may have caused the decline in demand for housing in China is a rise in interest rates. Higher interest rates increase the cost of borrowing, making mortgages more expensive for potential homebuyers, thus decreasing demand.
Step 3
Explain how a Chinese business could encourage Chinese consumers to purchase home-produced goods instead of foreign goods
Answer
Chinese businesses could encourage consumers to choose their products by improving the quality of their goods. By ensuring that their products meet or exceed international quality standards, they can create a perception of value that rivals foreign goods. Additionally, offering promotional pricing or enhancing advertising efforts to highlight superior quality can further attract consumers' attention and encourage purchases.
Step 4
Identify an advantage and a disadvantage of China reducing import tariffs on consumer goods
Answer
One advantage of reducing import tariffs is that it can lead to better trade relations with foreign countries, as lower tariffs often encourage increased imports and exports. Conversely, a disadvantage could be that lowering tariffs might harm domestic businesses by increasing competition from foreign goods, which could potentially lead to a loss of market share for local producers.