China’s Economic Growth & Its Impact on the World

“ The Chinese economy is booming at such a great rate that, a bad year in China is going to be a great year in any other country”

Before all the economic reforms, China pursued policies that kept the economy weak and stagnant. Since the economic reforms of 1979, it has been one of the world’s fastest-growing economies. In today’s global era, it’s the world’s 2nd largest economy, rendering the world’s GDP by producing 9.3% of it. Numerous citizens of China have been lifted out of poverty and have access to education, health, and many more necessities.

The world bank published the Global Economic Prospects report lately, predicting a GDP growth of 8.5 percent in 2021 for China, heading to the world’s economic recovery. The World Bank indicated China’s expected growth to the increase in consumer demand.

Factors responsible for China’s economic growth

1.  Labour Supply: – There is an abundant number of laborers in China with a smooth stream of rural-urban settlers in search of work. It is estimated that 500,000 million people will evacuate the Chinese countryside in search of work in the successive two decades.

2.  Wages and Unemployment: – The unemployment ratio has declined in recent years to just over 4%, but the increased ratios in the past; drove down salaries.

3. Confucian Values: – The level of control and autocratic structures are predominant in China than in most western cultures with their focus on individualism.

4.  Population Growth: – Rapid population expansion in China, despite the One Child Policy, has occurred in very large numbers in the economically involved population, ushering to abrupt urbanization. This has fuelled further industrialization, enabling further people’s advancement.

5.  Strong Leadership: – Strong administration from the head of state has prevailed as a crucial element contributing to economic success.

6.  Free Market Economies: – China started walking away from a centrally planned economy towards a market-oriented system in 1978.

7.  Private Enterprise: – Presently, up to 50% of industries are privately owned.

8.  Investment in Infrastructure: -The government has constructed several new roads, modified the rail system, and formulated its major rivers navigable all year round.

9.  Education: – Literacy levels of China have surged dramatically over the past 20 years and now stand at 95%. This has led to the economic evolution of the country.

10.  Going Global: – China has turned on to globalize economically by buying up foreign firms in North America and Europe particularly.

11.  Geographical Features: – It has geopolitical prestige because of its nearness to consumer markets and trading members. South Korea, Taiwan, Japan, and Hong Kong are on crucial trade routes.

12.  Raw Materials: It has a tremendous wealth of raw materials, giving birth to vast reserves of coal, oil, and natural gas. These are being utilized to fuel the industrial growth of the country. China has substantial stakes in coal, oil, and natural gas. Moreover, China is a leading creator of aluminum, magnesium, antimony, salt, talc, barite, cement, coal, fluorspar, gold, graphite, iron, steel, lead, mercury, molybdenum, phosphate rock, rare earth, tin, tungsten, bismuth, and zinc.

13. Political System:- The non-democratic and authoritarian government in China has indicated that it has been possible to adopt western-style free market economics while strengthening control over the political system. The advancement of modern China is primarily associated with its sincere leadership. In the end, China is very advantageous to have great leaders. Among those leaders, recent Chinese President Xi Jinping is one of the creative leaders. Xi not only comprehends the real dynamics of a changing world, but he is also completely conscious of the political and financial challenges that the world today is confronted with. Since the launch of monetary reforms in 1978, China has evolved into one of the world’s fastest-growing economies. Deng Xiaoping was the mastermind behind the monetary reforms. He launched economic reforms, created special economic zones (SEZs), free trade zones, (FTZs), etc.

14. Female Participation:– Its workforce is defined by a larger than typical female participation in the manufacturing business. On the whole, women now provide some 41% to China’s GDP, a higher amount than in most other regions, including North America. On the production side, they represent the best of China’s brainpower and are encouraging their country to new growth. On the consumption side, they buy millions of articles on Taobao and turned Alibaba’s Singles’ Day into the world’s most valuable day for retailers.

Impact on the global economy

China’s export expansion has both active and interrelated effects. Lower labor costs afford China’s labor-intensive exports competitive goals in the world’s important export markets and put competitive pressure on countries that ship similar products. Moreover, the tremendous domestic import pressure due to China’s rapid economic advancement and its appetite for energy and raw materials also provide an incredible stimulus for exports from other countries. China’s trade production has dominant network effects as an outcome of the advancement of an increasingly significant integrated regional production system in Asia. Such an integrated system has facilitated the exports from these nations to China and the export of them as a total of the third markets. As for Latin America and Africa, China’s economy does not give birth to any considerable impact on trade except on some countries like Mexico. States whose export system is identical to China’s have encountered strong pressure from China. There are some practical analyses in the literature in these respects.

The expectation of transfer or creation effects of China’s FDI on the FDI of other countries and regions is a problem most thoroughly studied in respect to FDI. Outcomes hold that China’s FDI improvement normally does not have powerful transfer effects on other states and regions. Appreciation of an integrated regional production system developed in Asia, however, China’s FDI growth has stimulated foreign investment in the surrounding countries to produce moderate products and raw materials as required for China’s processing and production. As a result, a powerful positive correlation exists between China’s FDI and the region’s FDI. As for Africa and Latin America, China’s FDI expansion has minor impacts on these regions. As the FDI of these regions is primarily resource-oriented, it does not have any obvious alteration outcomes with China’s FDI. When evaluating China’s FDI issue, however, some investigations have lagged to give reasonable consideration to important traits of China’s FDI. On the one hand, FDI from such regions as Hong Kong accounts for a crucial proportion; on the other hand, China’s FDI inflows, particularly those from Hong Kong, contain capital backflow. In extension, China not only imports FDI but also vigorously exports capital overseas. Although China’s overseas direct investment funds for a very minor amount of global FDI, it has been evolving hastily and is focused on energy and raw materials that promote China’s economic development.

REFERENCES

  •  Factors Explaining the Rapid Economic Growth of China In Recent Decades, tutor2u

https://www.tutor2u.net/geography/reference/factors-explaining-the-rapid-economic-growth-of-china-in-recent-decades

  • Women in China contribute more to GDP than in the US- Viewing them as “leftover” is problematic, World Economic Forum, 2021

https://www.weforum.org/agenda/2018/04/women-in-china-contribute-more-to-gdp-than-in-the-us-viewing-them-as-leftover-is-problematic/

  • China: 70 years of strong leadership, Opinion- Chinadaily.com

https://www.chinadaily.com.cn/a/201910/09/WS5d9d3568a310cf3e3556f4ef.html

  • GUI Lin & Zhang Junk, The impact of China’s economic development in the global economy- A review of past economic literature.

Garima is currently pursuing graduation (Pol. Science Honours) from Lady Shri Ram College For Women. She is an ardent reader and researcher. She is skilled in Political Science, Educational Materials, Journalism, Research, and Management. Her interests lie in international relations, foreign policy, human rights, and East Asian studies.

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