Page 1 of 14 ECX2630-5630 The Chinese Economy and Global Business ***Practice Exam*** As the title states, this is only a practice exam. In addition to this practice exam, it is HIGHLY RECOMMENDED that you also cover all weekly problem sets, associated video lectures and lecture notes. This practice exam consists of THREE (3) Sections: Section A: 20 Multiple choice questions (20 marks) Section B: Short-answer questions (25 marks) Section C: Essay/Long-answer question (15 marks) Remember, your actual exam is an e-exam and done via e-Assessment platform. The links to the e-exam on the day of the exam (i.e., Monday 15th February) are: For EXC2630 students: • https://eassessment.monash.edu/mod/quiz/view.php?id=6812 For EXC5630 students: • https://eassessment.monash.edu/mod/quiz/view.php?id=7014 Page 2 of 14 Section A: 30 Multiple choice questions Q1. Which of the following statements about the relationship between the US and Taiwan is INCORRECT? A. The US has always permitted an official political relationship with Taiwan. B. The US has always been the largest supplier of defensive arms to Taiwan. C. Former President Trump became the first sitting US president since Jimmy Carter in 1979 to have any formal political or diplomatic contacts with Taiwan when he decided to receive a phone call from President Tsai Ing-Wen. D. Former President Trump has expanded the duties of the US' de facto embassy in Taipei-American Institute in Taiwan. Q2. Which of the following events DID NOT happen during Bush Administration (2000 – 2008)? A. China and US became allies to support anti-terrorism and apply pressure on North Korea’s nuclear program. B. In 2001, President Bush publicly declared his support for China’s entry into the World Trade Organization. C. Although Chinese government was fiercely criticized for its handling of the SARS outbreak in 2003, President Bush praised his Chinese counterpart for being open about this transnational epidemic. D. In his 2nd term, Bush became increasingly concerned about China's growing economic and political influence in the world, often stressed China’s rise as a major threat to US primacy and interests. Q3. During the Obama Administration (2008 to 2016), which of the following events DID NOT occur? A. Obama expanded the duties of the US' de facto embassy in Taipei-American Institute in Taiwan in the 2nd term of the Administration. B. On 1 April 2009, Obama and Hu Jintao announced the establishment of the high- level U.S - China Strategic and Economic Dialogue. C. Territorial disputes in the South China Sea. D. The relationship between two countries witnessed mostly positive development in Obama's first term Page 3 of 14 Q4. Which of the following negotiations is achieved in US-China Phase 1 trade deal (15 Jan 2020)? i. The United States introduced a 50% tariff on all imported products from China. ii. The currency agreement contains pledges by China to refrain from competitive currency devaluations and to not target its exchange rate for a trade advantage. iii. The United States will cut by half the tariff rate it imposed on Sept 1. on a $120 billion list of Chinese goods, to 7.5%. iv. China agreed to increase purchases of American products and services by at least $200 billion over the next two years. v. None of the above. A. i, ii, iii B. ii, iii, iv C. ii, iii D. i, v Q5. Which of the following statements about Australia-China diplomatic relations over the last century are CORRECT? i. The first Chinese consulate in Australia was established in 1909, and diplomatic relations were established in 1941. ii. Australia continued to recognise the Republic of China (ROC) government after it lost the Chinese Civil War and retreated to Taiwan in 1949 but switched recognition to the People's Republic of China (PRC) on 21 December 1972. iii. After millennium, Australia and China have been actively engaged economically, culturally and politically which spans numerous organizations such as APEC, East Asia Summit and the G20. A. i, ii B. i, iii C. ii, iii D. i, ii, iii Page 4 of 14 Q6. Which of the following statements about the two-way trade facts between Australia and China is CORRECT? i. China does not trade with Australia. ii. Australia is China's seventh largest trading partner. iii. China remained Australia’s biggest services export market, particularly in education (over 205,000 students in 2018, an 11 per cent increase year on year) and tourism (over 1.4 million Chinese visitors in 2018–19). iv. In 2018-19, Australia’s two-way trading with China accounted for 26 per cent of our trade with the world. Two-way trade reached a record $235 billion in 2018–19 (up 20.5 per cent year on year). A. i, ii, iii B. i, iii, iv C. ii, iii, iv D. None of the above Q7. In given table below, which of the following statements about Chinese Overseas Direct Investment (ODI) by industries in Australia is INCORRECT? A. In 2018, Healthcare, Commercial Real Estate and Energy (oil and gas) totally count more than 85% of Chinese ODI in Australia. B. Though energy-related industries (both traditional and renewable energy) only count 14% of Chinese ODI, it is noteworthy that China more than doubled their investments on this sector from 2017 to 2018. C. Chinese investments in Australian mining industry decreased significantly by 90%, since China has found close substitutes from other trading partners. D. Chinese investments in Australian commercial real estate dropped by 31%, due to strict capital control policies enforced by Chinese government. Page 5 of 14 Q8. According to the survey results shown in figures below, which of the following statements about Chinese Overseas Direct Investment (ODI) by climate in Australia is CORRECT? Page 6 of 14 A. The minority of Chinese investors found Australia a safer ODI destination than other countries. B. The minority of Chinese investors found themselves welcome in Australia. C. The majority of Chinese investors are concerned with the political debate in Australia in 2018. D. The majority of Chinese investors found it more convenient to get capital out of China since 2018. Q9. Which of the following comparisons between BRI and Marshall Plan is CORRECT? A. Both aim to help Telecommunications in Asia, Africa and Europe. B. One aims to boost exports and the aims to implement renewable energy. C. Both aim to devalue their own currencies and gain unfair advantages in international trades. D. Both aim to hedge the growing influences from their largest rival. Q10. Which of the following statements about economic objective of Belt & Road Initiative (BRI) is CORRECT? i. Promote the renminbi’s (RMB) internationalization through billions of RMB- denominated transactions related to project payments and loans ii. Accelerate economic growth and state-owned enterprise (SOE) profits through new infrastructure contracts iii. Prepare domestic Chinese companies for global competition through exposure to international projects and management practices. iv. Find new avenues for credit expansion and economic growth outside of China. A. i, ii, iii B. ii, iii, iv C. i, iii, iv D. All of them are correct Page 7 of 14 Q11. Which of the following topics are included when calculating the Ease of Doing Business score? i. Dealing with construction permits. ii. Getting electricity. iii. Protecting majority investors. iv. Paying taxes. v. Trading across borders. vi. Resolving insolvency. vii. Relationship with local government officials. A. i, ii, iii, iv, v B. i, ii, iv, v, vi C. i, ii, iii, iv, vi D. ii, iv, v, vi, vii Q12. From World Bank’s view, which of the following statements is NOT considered as an opportunity caused by BRI? A. Infrastructure and policy gaps in BRI corridor economies hinder trade and foreign investment. B. Members of BRI are all well protected by Chinese Military Force. C. BRI transport projects can expand trade, increase foreign investment, and reduce poverty—by lowering trade costs. D. Complementary policy reforms can maximize the positive effects of BRI transport projects and ensure that the gains are widely shared. Q13. Which of the following statements about stock exchanges in China is CORRECT? A. There are 3 major stock exchanges centres in China: Beijing, Shanghai and Shenzhen. B. All Chinese stock exchanges centres are under the supervision of China Security Regulatory Commission (CSRC). C. A Shares represent the shares listed on the two main stock exchanges that are denominated in foreign currencies. D. B Shares represent the shares listed on the two main stock exchanges that are denominated in Renminbi (RMB). Page 8 of 14 Q14. Which of the following type of investors DOESN’T belong to ‘four major classes’? A. Domestic individual investors. B. Financial intermediaries and financial service providers. C. Commercial banks, e.g. Industrial and Commercial Bank of China. D. Qualified foreign institutional investors (QFII). Q15. Which of the following Corporate Credit Bonds matches its corresponding regulator in China? A. Enterprise Bonds- People’s Bank of China (PBOC). B. Corporate Bonds- National Development and Reform Commission (NDRC). C. Short-term Commercial Papers- People’s Bank of China (PBOC). D. Medium-term Notes- China Security Regulatory Commission (CSRC). Q16. Which of the following factors are included when calculating the Corruption Perception Index? i. Control Political Financing. ii. Freedom of the press. iii. Regulate Lobbying Activities. iv. Empower Citizens. A. i, ii, iii B. ii, iii, iv C. i, iii, iv D. i, ii, iv Q17. Which of the following statements are true facts about online-retail market in China in 2019? i. Online retail sales were $1.5 trillion, representing a quarter of China’s total retail sales volume. ii. Online retail sales in China alone were more than the retail sales of the ten next largest markets in the world combined. iii. Digital customers are estimated to be over 1 billion in China. iv. Online retail market size in China more than doubles the size of the US. A. i, ii, iii B. ii, iii, iv C. i, iii, iv D. i, ii, iv Page 9 of 14 Q18. Which of the following statements about ‘Double 11’ online shopping festival in China is INCORRECT? i. Originally, it is a Chinese unofficial holiday and shopping season that celebrates people who are not in relationships on 11th November every year. ii. The holiday now has become the largest physical retail and online shopping day in the world. iii. Total online retail sales made on ‘Double 11’ in China was 7 times greater than total sales made on ‘Black Friday’ in the US in 2018. iv. Total online retail sales made on ‘Double 11’ in China was equal to 3 times of annual online sales in Australia in 2018. A. i, ii, iii B. i, ii, iv C. i, iii, iv D. ii, iii, iv Q19. Which of the following is NOT a key factor of growth of e-commerce in Asia-Pacific region? A. Emergence of the middle class. B. Mobile and internet penetration. C. Increasing logistic options for e-commerce players. D. Growth in demand of new e-commerce players. Page 10 of 14 Q20. According to the survey results shown in the figure below, which of the following statements about brand awareness and loyalty among Chinese consumers is INCORRECT? A. Despite the type of commercial goods, more respondents became more brand loyal in 2015. B. Despite the type of commercial goods, less respondents bought the best deal in 2015. C. For facial care products, more respondents are open to other brands if on sale in 2015. D. For electronic products, more respondents only consider a few brands and choose one to buy in 2015. Page 11 of 14 Section B: Short-answer questions (25 marks) Note: YOUR solutions should be more elaborated on contain more information related to the question. The ‘suggested solutions’, are just that – suggested, are there as an overall guide. Please also refer your tutorial solutions as an excellent example of a well structed answer to the short-answer questions. You should also refer to your lectures slides and attend the consultations for additional knowledge/feedback. Question 1 Answer the following questions about economic disparity in China: (a) In 1970, average income of urban Chinese workers was 8 times greater than those living in rural area. What were the main causes of this inequality? (2.5 marks) Suggested solution: Heavy-industry-prioritised development strategy; resource allocation; price distortions; subsidies to urban residents. (b) In 2018, the GDP per capita in Shenzhen was $USD 27,184, more than doubled than the GDP per capita in Yinchuan ($USD12,094). What were the main causes of this inequality? (2.5 marks) Suggested solution: Opening-up policies; FDI; special economic zones; loss of human capitals in inland area, etc. Question 2 Compare labour incentives, business profits and productive efficiencies in the following sets of economic systems: (a) Collective Agriculture vs. Household Responsibility System (2.5 marks). Suggested solution: Compared with collective agricultural system, labour incentives, business profits and productive efficiencies should all increase under household responsibility system. (b) State-Owned Enterprise vs. Private Firms (2.5 marks). Suggested solution: Compared with state-owned enterprises, labour incentives, business profits and productive efficiencies should all increase in private firms. Page 12 of 14 Question 3 According to World Bank report- ‘Belt and Road Economics, Opportunities and Risks of Transport Corridors’, (a) What opportunities do BRI bring to the global economy? (2.5 marks). Suggested solution: Infrastructure and policy gaps; expand trade, increase foreign investment, and reduce poverty; Complementary policy reforms. (b) What risks do BRI bring to the global economy? (2.5 marks). Suggested solution: Debt Sustainability; Governance; Environmental; Social. Question 4 The ease of doing business (EDB) score measures an economy’s performance with respect to a measure of regulatory best practice across 11 Doing Business topics, including ‘Getting electricity’, ‘Starting a business’, ‘Paying Taxes’, ‘Trading across borders’, ‘Registering property’, ‘Enforcing contracts’, ‘Dealing with construction permits’, ‘Protecting minority investors’, ‘Resolving insolvency’, ‘Contracting with governments’, ‘Getting credit’. (a) Which topics does China do excellently well? (2.5 marks). Suggested solution: ‘Starting a business’; ‘Getting electricity’; ‘Trading across borders’. (b) Which topics does China need significant improvements? (2.5 marks). Suggested solution: ‘Protecting minority investors’, ‘Resolving insolvency’, ‘Contracting with governments’ Page 13 of 14 Question 5 Discuss the following questions about the opportunities of doing business in China over the last two decades: (a) The owner of Alibaba Group (largest online shopping platform in China), Jack Ma, was ranked as the 9th wealthiest businessman by Forbes in 2019. List and describe some key drivers of rapid growth in eCommerce in China (2.5 marks). Suggested solution: Rise of middle-class; mobile and internet penetration; Increasing logistic options for eCommerce players; Growth in supply of eCommerce players. (b) From 2000 to 2020, the proportion of middle-class in Chinese population increased from 5% to 54%. List and describe some new emerging consumption patterns in China over the last two decades (2.5 marks). Suggested solution: Evolving geographic differences; Growing discretionary spending; Aspirational trading up; Emerging senior market. Page 14 of 14 Section C: 30 Essay/Long-answer question (15 marks) Note: Again, refer to your tutorial solutions as an excellent example of a well structed answer to the long-answer question. Refer to your lectures slides and attend the consultations for additional knowledge/feedback. Justify why: i) The 13th Five Year Plan (2016-2020) is also called as a plan of ‘realising the China dream’, and ii) The 14th Five Year Plan (2021-2025) is also called as a plan of ‘Made in China 2025’. Suggested solution: 13th FYP: main objectives; main achievements; main issues; ‘two centenaries’; four components of China’s dream. 14th FYP: objectives of ‘made in China 2025’; targeted sectors; controversial. [End of practice exam]
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