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 economic growth was caused by a decline in manufacturing and a fall in demand for housing. Due to high import tariffs, Chinese consumers typically pay 20% more for luxury goods than European consumers. Some wealthy Chinese consumers also perceive foreign goods to be more desirable and of higher quality.

GCSE Edexcel Business The economic climate: In 2015, after its annual econom

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-Edexcel-GCSE Business-Question 5-2017-Paper 1.png

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'

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Answer

'Economic growth' refers to the percentage increase in gross domestic product (GDP) per year. This measure indicates how much more the economy is producing over a designated year compared to the previous year.

Step 2

Identify a relevant factor that may have caused a fall in demand for housing in China

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Answer

One possible factor is the rise in interest rates. Higher interest rates can lead to increased mortgage costs, discouraging potential buyers and reducing demand for housing.

Step 3

Explain how Chinese businesses could encourage Chinese consumers to purchase domestic goods instead of foreign goods.

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Chinese businesses could improve the quality of their products to compete better with foreign goods. By enhancing product standards, they can increase consumer confidence in domestic items. Additionally, they might lower prices and engage in targeted promotions to stimulate demand. This would not only help domestic products gain market share but also enhance their perceived value among consumers.

Step 4

Identify an advantage and a disadvantage of China reducing import tariffs on consumer goods.

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An advantage of reducing import tariffs is that it can lead to better trade relations with foreign countries, promoting international cooperation. This, in turn, can boost spending and economic growth in China as foreign goods become more accessible.

A possible disadvantage is that the import of foreign goods may hinder domestic businesses, as cheaper imports could attract consumers away from locally produced goods. This might lead to lower revenue for domestic companies and impact the overall health of the domestic economy.

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

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

Define 'Economic growth'

Identify a relevant factor that may have caused a fall in demand for housing in China

Explain how Chinese businesses could encourage Chinese consumers to purchase domestic goods instead of foreign goods.

Identify an advantage and a disadvantage of China reducing import tariffs on consumer goods.

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