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Critical Analysis of China’s Economy
Abstract
The economy of China has been on the rise at a rapid rate for more than three decades. Most of this growth higher productivity of labor highly contributed to this economic growth. On the contrary, as the economy widens, rate of employment diminishes along with a steady increase of the youth population. This paper focuses on understanding the efforts that led to the growth as well as the setbacks that China might encounter over the coming years. The challenge would be to maintain its rapid leap of economic growth. Key questions consist ofhow China will sustain its investments; whether these investments will lose productivity as the labor - capital ratio keeps on rising, whether employment rates will sustain urban migration.In the bottom line scenario, growth of the economy falls steadilyat a rate of six and a half percent by the year 2030 from the current ten percent (Chowand Kui-Wai 146).
History of China’s Economic Presentation
China led the global technological and fields in the “industrialization era”. It is believed that China’s economy made its peak in the Song Dynasty. In this era, China had the supreme technologies (Needham and Ronan 143), the utmost rate of urbanization, the largest iron production and ultimately the leadingstate economy globally (Carsten 146). However, between 1500 and 1800, Western Europe took the lead from China. Some economists and historians attach China’s downfall
It is this that has sparked China’s vulnerability to external shocks. In 2011, China’s exports amassed almost $2 trillion, however in Feb 2012, China recorded a $31.5 billion trade deficit as a result of the European sovereign debt crisis in which China’s main trading partners plunged into recession. China’s severe BOGS decrease is an attempt to control growth and a sustained level of 7.5%. Investment policies are also critical for China to achieve economic growth and development. Foreign Direct Investment (FDI) in China is being sought primarily in the redesign of State Owned Enterprises (SOE’s) and in the development of interior provinces. Between 75-80% of World Bank loans to China in 2008 were directed to the central and western regions, the most economically disadvantaged. This promotes increased wealth within China, leading to higher levels of development due to a more positive Human Development Index (HDI), which currently sits at 0.687, up from 0.677 in 2010. Thus, trade and investment are critical factors in ensuring that China’s growth remains sustained at 7.5% whilst still encouraging increases in development.
Part of China’s failure to have an Industrial Revolution caused by its labor-intensive system along with its attitude toward globalization. Because of the labor-intensive industries, China lacked the experience of institutional innovation and was unfitted for intensive technology development (Cohen, pg. 1534). During that time, China and England were the two strongest contenders in the competition toward becoming a global power. For many centuries, China’s massive market and capacity for manufacturing were exceptional. The continuous population increase urged its rulers to put an emphasis on developing efficient agricultural techniques and domestic trades. China’s ability to prosper was a phenomenon of that period. Its labor-intensive agricultural
Since the reform and opening up, the economy of China grows significantly, as an emerging economy, China's economy has made tremendous contributions to the global economy, and Renminbi has become one of the most important currency in the world. According to the survey conducted by China National Bureau of Statistics found that from 1979 to 2012, China has attained an annual average growth rate of 9.8% for its national economy, while the annual average growth of the world economy is only 2.8 % during the same period. In past 30 years, China's GDP surpassed Japan’s, China became the world 's second largest economy, in addition, the huge total volume of trade makes China become the world 's largest trading nation. The contribution of China’s
351). Henceforth, life expectancy in China exceeded most of its European counterparts, whilst being on par with southeast England (Pomeranz, 2000, p. 37). Improvements occurred slowly in industrialising western Europe, with limited increases elsewhere until 1870 (Pamuk and van Zanden, 2010, p. 228). As well as being comparable in living standards, north-west Europe and Asia both were similar in terms of trade, literatures and centralisation (Goldstone, 2002, p. 338). In fact, India and China can be seen as more technically advanced; India’s cotton was unrivalled by England (Chaudhuri, 1990; cited by Goldstone, 2002, p. 366), and China was productive agriculturally, had a well-developed bureaucracy, and was not bettered in terms its manufactures (Marks 1997; cited by Goldstone, 2002, p. 366).
The goals of Deng Xiaoping’s economic reform were the ‘Four Modernizations’. This Four Modernization refers to the reform of agriculture, industry, national defense, and science technology. These reforms were to solve the problems of motivating workers and farmers to produce a larger surplus and to eliminate economic imbalances that were common in command economies.
Before the 19th Century it would have been difficult to imagine that one day, majority of Western Europe and North America would come to dominate the world in global economy. So why did income per capita decline in countries such as India and China relative to the advanced economies such as the US and Europe since 1800? Some argue that the overwhelmingly cause was the lack of relative efficiency of utilization of technology in these countries relative to the more successful economies such as Britain and the USA (Landes 19). The inventions of gunpowder and the compass contributed to the West initially being considered subpar compared to China. Up until the 19th century, China held a position as a great world power, but, for the last two hundred
Globalization has, for better or worse, altered the economic arena for every country in the world. For many less developed countries, globalization has leveled the playing field so that their economies can compete with the larger, more developed ones such as the United States and other large western economies. For instance, technical engineers in India and China are now just as qualified as engineers in America, but at half the cost. The once large and prosperous service sector in the United States as well as telemarketing services have largely been sourced to India as a large exodus of American multinational corporations find cheaper workers who deliver comparable quality. This then seems to be the essence of globalization - businesses
Why was China not able to achieve sustained economic growth, despite the worldly inventions such as paper press and gunpowder and having been relatively rich during the Song dynasty? The Great Divergence is known as the disparity of economic growth between Europe and China. The occurrence of the Great Divergence has been a topic of debate between different schools of thought. The California School of thought suggests that the Great Divergence occurred as result of an incident in the late 18th and 19th century.
Though the Chinese were not the first culture to have an industrial revolution, China did develop a large array of the technology that is was used at that time (Volti, 2014). Their many inventions had caused them to be named as the world’s leader of technology. Unfortunately, the Chinese ended up losing that title to the Europeans after two centuries of holding it. The Europeans were able to do this because they decided to adopt the technology of the Chinese, improve it, and use if for their own gain (Volti, 2014). The Chinese had refused to use any foreign inventions even when the Chinese joined forces with the Soviet Union to become a Communist country (Volti, 2014).
As Western Europe, gripped by religious and cultural revolution, became an industrialized powerhouse region during the 19th century, China went in the opposite direction, withdrawing into itself and "de-industrializing." Known as the Great Divergence, the deviating nature of these two subsequently comparable nations (regarding advanced economies and thriving urban culture) is questionable. Why did China step away from modernization and enable the West to dominate the world technologically, economically and politically? In this research paper, I will show that culture and religion acted as barriers to China’s modernization.
In the past, manufacturing has accounted for the bulk of economic growth in China, but this is slowing down so China needs another area of the economy to pick up the slack. This is occurring because labor costs are increasing. In the long term, China lifting the One-Child Policy will help the economy, but many of the kids entering the workforce that is due to this new policy will not enter the workforce until 2030 and 2040 (Clarke). Many Chinese officials are hoping that lifting the One-Child Policy will help keep up the trend of astonishing economic growth China has seen in the last couple of years to give them the second biggest economy in the world. Thus, as the Communist Party is all about their ranking in the Global Village, all they care about is how big the economy is and how much their GDP has
The People’s Republic of China is a Communist state; although, it has a constitution. The constitution has five sections: the preamble, general principles, fundamental rights and duties of citizens, structure of the state, the national flag, and the emblems of the state.
The Industrial Revolution actually began in Britain during the 18th century which was said to be unplanned. However, China was believed to be on the edge of the Industrial Revolution as early as the 1200’s but by the time of the early modern era, China’s progress began to slow down more and more while Europe’s progress was picking up the pace. In the text it states that, “German philosopher Gottfried Wilhelm Leibniz encouraged Jesuit missionaries in China “not to worry so much about getting things European to the Chinese but rather about getting remarkable Chinese inventions to us” (Strayer, 2015, p. 743). So, even though China was leading in technological inventions, Europe was bringing the inventions from China all to the West where it spread dramatically giving Europe leverage. Strayer states that Britain’s Industrial Revolution was also due to fortunate geographic circumstances such as the availability of coal and iron which was relatively in easy reach (Strayer, 2015, p. 745). Britain was also one of the more commercialized countries because they welcomed people who were advanced in technology regardless of their religion or beliefs. Western Europe had the upperhand during the early modern era because they had many connections with people of different cultures which greatly contributed to the great changes. The
China is currently the 2nd largest economy in the world, trailing the us and set to overtake the us economy by 2024 according to the IMF. GDP of china has grown extensively over the past three decades and have contributed to large scale growth in exports and imports, technological advancements, health, and more. The acceleration of globalisation was due to two major advancements, the first was the economic reforms of 1978 when china ‘opened the country’ and the joining of the WTO in 2001. China is classified as a socialist economy currently being ruled by a communist government. China’s current growth rate for GDP is recorded as being 7.7% in 2013 and has continued to slowdown over recent years due to a global economic slowdown.
The ongoing economic rise in China effects the US in many ways, including things that some people wouldn’t even consider. It can be seen that the Chinese are beginning to need more jobs, but can that be because some of theirs are being given to us? And, that’s not the only thing they’re giving us. China has the proven to be worst pollution in the world, and it has gotten to the point where the polluted air has travelled overseas to the US, and has begun to take a toll on us. But, they’re not only giving to us. Because of it becoming harder to find jobs, the students push themselves to the limit to become perfect, which could create competition with graduates here in America.