In 2019, China's economic growth rate was 6.1% and Chinese households increased their spending. More Chinese people attended sports events and the earnings of top sportspeople increased. China exported more despite a rise in tariffs on some of its products. For example, the US imposed higher tariffs on the imports of Chinese tea and coffee.

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [1] Opportunity cost of households spending their income: Saving.
2. [1] Opportunity cost of Chinese firms exporting goods and services: Selling the products at home / consuming the products.
3. [1] Reason 1: High demand / inelastic demand for top sportspeople; [1] due to large crowds watching them / events / top sports events can be sold to TV firms for large fees / high merchandise sales / sponsorship deals / high gate receipts / can generate high profits for firms.
4. [1] Reason 2: Low supply / inelastic supply of sportspeople / lack of substitutes; [1] due to high bargaining power / top sports people are skilled / talented / it may take years of training / high level of experience / some sports are dangerous.
5. [1] To improve the current account balance; [1] by making imports more expensive; [1] reducing demand for imports / increasing net exports; [1] increasing total demand.
6. [1] To protect domestic industries / infant industries / sunrise industries / sunset / declining industries / strategic industries; [1] to increase economic growth; [1] reduce unemployment / increase employment; [1] encourage people to switch from buying imports to buying domestically produced products.
7. [1] To raise revenue; [1] which the government can spend on e.g. education / reduce a budget deficit.
8. [1] To discourage the imports of harmful products / demerit goods; [1] example (e.g. tobacco).
9. [1] To prevent dumping / unfair competition; [1] the selling of products at less than cost price / the selling of products produced by child labour.
10. [1] To retaliate; [1] against another country's tariffs.
11. [1] To prevent a fall in the exchange rate; [1] to prevent switch from domestic to foreign currency.
12. [1] Why it might (have a deficit): incomes will rise; [1] and consumers may buy more imports.
13. [1] Why it might (have a deficit): firms may switch products from foreign markets to the growing home market.
14. [1] Why it might (have a deficit): firms may import more raw materials and capital goods.
15. [1] Why it might (have a deficit): the country may experience inflation; [1] which may reduce its international price competitiveness.
16. [1] Why it might not (have a deficit): the economic growth may be export-led.
17. [1] Why it might not (have a deficit): economic growth may encourage more investment; [1] this could raise the quality of domestically produced products and lower their prices.
18. [1] Why it might not (have a deficit): higher tax revenue may result in improvements in education and healthcare; [1] which could increase productivity.
19. [1] Why it might not (have a deficit): the country may impose trade restrictions / reduce exchange rate.