Sentence Elimination -China's GDP Rate

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Sentence Elimination- China's GDP Rate

  1. The political nature of the target modifies the standard economic constraints, encouraging local governments to generate whatever additional economic activity is required so that, along with the economic activity of the private and real-estate sectors, the target is reached.
  2. The fact is that Chinese GDP will be unaffected by a trade war with the U.S., no matter how severe, because the government will do whatever it takes to meet its growth targets. To see the conflict’s true toll, one should look at rising Chinese debt instead.
  3. Thus, while GDP numbers may tell us something about the government’s priorities, they’re a poor measure of the underlying performance of the economy, for, as long as China has debt capacity, and the government is willing to use it, China can achieve any GDP growth target it wants.
  4. In China, the government sets the GDP growth rate early in the year at a level thought adequate to accommodate its social and political objectives, among which is to keep unemployment low.

 

  • Correct Answer
    Choice B

Detailed Solution

Tricky one.

Option A, which talks of the "political nature" of "the target", is a bit vague. So, let's consider the other options. All of these relate to China's GDP.

B explains why Chinese GDP will be "unaffected" by a trade war with the US: the Chinese government will borrow to meet its growth targets.

C states that China's GDP numbers tell us about the "government's priorities" but are a "poor measure" of the performance of the economy as China will use it's debt capacity to achieve GDP growth. This relates to the point made in B.

D states that the Chinese government sets the GDP growth rate with "social and political objectives" in mind. This relates to C, which states that China's GDP numbers reflect the "government's priorities". In a paragraph, C would follow D.

So, does DCB make a cogent paragraph? It doesn't. B talks of the China-US trade war, while C and D do not mention this.

Now, let's have a look at A. In the given context, "the target" that A refers to is, clearly, the Chinese GDP figure, which, according to D is set early in the year, keeping social and political objectives in mind. Option A explains how this target is achieved: local governments are encouraged to generate the economic activity that is necessary to achieve the GDP target. The sum total of this and the economic activity of the private and real-estate sectors is made to add up to the GDP target. So, option A provides the link between D and C.

DAC is a cogent paragraph. B is the option to be eliminated.

Correct Answer: Choice (B)



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