China 's Economic Growth Essay

As the modern day economy continues to grow, more and more discussion are emerging revolving around what are the factors that led to the successful economic growth in some countries and one country that has been gaining researcher’s interest is China and the development of Beijing from a third world country in the to a developed and Newly industrialized country today.

The extraordinary economic growth of China in the past 30 years is a miracle in many aspects. China has the second highest GDP in the world after the United States, and it is expecting that to surpass the American economy by 2025 (Zhao, 2014). Comparing the GDP of 2012 and 1978, there was a 142 times increase. The GDP per capita has increase 101 times as well. It has lifted more than 500 million people out of poverty (Zhao, 2014). This economic miracle is credited to the economic reforms that started in 1978, which in many ways, learned from the experiences of the model of developmental state in Korea and Japan. These series of reforms put China’s economy back to track after the Great Leap Forward, a failed and catastrophic social and economic campaign between 1958 and 1961, and the Great Proletarian Cultural Revolution, a devastating turmoil between 1966 and 1976. The extraordinary economic growth of China in the past 30 years is a miracle in many aspects. China has the second highest GDP in the world after the United States, and it is expecting that to surpass the American economy by 2025 (Zhao, 2014). Comparing the GDP of 2012 and 1978, there was a 142 times increase. The GDP per capita has increase 101 times as well. It has lifted more than 500 million people out of poverty (Zhao, 2014). This economic miracle is credited to Deng Xiaoping, one of the greatest leaders and reformists in China. He initiated a series of neoliberal economic

Krugman (1994) summarizes two sources of growth that help to expand the national economy. They are increasing input and increasing output per unit of input. Because of the diminishing return to capital, increasing input can only increase the output level in the long run. Therefore, increasing input, such as increasing employment opportunities, increasing the education level of workers, and increasing the stocks of physical capitals, is not sustainable in the long run. On the other hand, increasing the knowledge, which belongs to the increasing output per unit of input, increases the output growth rate in the long run. Krugman concludes that only technological progress can affect the growth rate of steady state in the long run.

China has emerged in the last fifteen years due largely to free market reforms and expanded international trade. China is now the top exporter in the world. China 's economy has grown from $3 trillion in 2000 to $8.7 trillion in 2009. In 2009, China 's economy grew 8.7% while the U.S. economy shrunk 2.4%. China will soon become the largest economy in the world, surpassing the United States.

Coming out of a lackluster 2015, GDP growth slowed to 1.5%. Confidence of investors and consumers was unable to make significant gains as a result of the Presidential election and global uncertainty. The outcome of the 2016 election had a great affect on the US economy and the fiscal and monetary policies that could be put in place. Uncertainty over taxes, regulations, and trade following the election have led to a slowdown of growth.

On the year of 1978, China was one of the poorest states at the global stage. During that time, China’s true per capita GDP was just one-tenth of the Brazilian grade and one-fourtieth tha United State of America grade. The following time, the true per capita GDP in China has grown to more than eight percent (8%) as an everage level in every year. The result from that increasing, has made China today holding the true per capita GDP at the same grade as Brazil and merely one-fifth of the United State of America grade. Nowadays, China become the second-largest economy at the global stage because of the fastest and perpetuated development in standard of living has made in a state with exceeding twenty percent (20%) of the globe’s population. However, China’s economic transformation is said has no historical law in the angle of steps and scale (Xiaodong, 2012, p. 103).

top 5 and 10% of earners in China accounted for 19.8% and 31.9% of the

Zhiwu Chen, a professor of Finance at Yale School of Management, had once addressed two pivotal questions to the world: “Why has China’s economy grown at such a fast rate during the last 30 years, and is this growth rate sustainable?” Over the past decades, China’s uprising as a huge economy power was undeniably prominent, first in Asia and then to the eyes of the world. The most popular answer as the world knows it is because China has “vast and cheap labors”, but that is not necessarily true. The idea of China’s development has been supported not only by huge labor force. Instead, it was also driven by all the changes that happen in the world, which allowed China to gain from its labor force, and also

Agriculture has steadily declined in China since the economic reforms in the early 1980s. Nevertheless, 43 percent of China’s workers are involved in agriculture. China is the world’s largest exporter of merchandise goods (Eckart, 2016). In 2009, 48 percent of China’s Gross Domestic Product (GDP) came from industry. Although, the U.S. receives about 17 percent of China’s exports, the Chinese government restricts import of U.S. goods and films. China’s natural abundance in Coal made for an excellent source of energy, but proved inadequate to supply the Country’s needs. Consequently, to meet the economy’s needs, China became the fourth-largest importer of oil. “China is the world’s leading producer of hydroelectricity (Defense, 2010).” Even though China’s economy is well on the rise, and projected to have the largest economy in the world by 2030, it is technically a developing country because of its low GDP. With that being said, statistics show that the amount of Chinese living below the poverty line has decreased from 53% in 1981 to 8% in 2001 (Defense, 2010).

Over the past couple decades, China’s economy has been shifting from an economy that relies on exports and low cost production to a consumer economy that has much more open markets than it used to. As a result, they are poised to regain their status as the largest economy in the world in terms of purchasing power. China used to make and produce products at a low price, now they want to build the machines that make these products instead. Looking forward, there will be four main trends that will drive the growth of China’s economy even if  growth is very marginal. These trends are; the shift in investment, the shift in capital flows, the shift in consumer leverage, and the shift in shopping(ecommerce).

Since initiating market reforms in 1978, China has experienced enormous and rapid economic growth, become one of the world’s largest economies. The seeds of this rapid economic growth were planted in 1978 when the Chinese Communist Party started to introduce capitalist market principles. This was done by moving from a centrally planned to a market based economy. The shift away from traditional Marxist policy created a scarcely concealed capitalist culture in China masked by a communist facade. One can argue that with wealth comes a much higher level of education. The economic development in China has created a society that is better educated and paid. Citizens are developing much more politicized views and are more actively expressing their opinions. If the economic inequality caused by their current specialized private sector continues to grow, the citizens, now increasingly aware of their rights, will be less likely to accept the domination of the state. Finally, due to the internet, the nationalism that has historically helped Communism to remain the dominant ideology in China is decreasing. Younger generations are experiencing a culture shift that favours a more democratic lifestyle. Globalization and the growing entry into foreign markets will create pressure for China to abandon their communist political self-identity, transitioning instead towards democracy.

China’s Gross Domestic Product (GDP) has seen positive growth every year since 1976, when their growth was -1.6%. In 2015, China’s GDP grew by 6.9% and so far, each quarter in 2016 has seen 6.7% growth. These numbers are actually China’s worst growth rates since 1990, when GDP only rose by 3.8%. China has actually held the position of the world’s second largest economy since 2009, right behind the United States. With China boasting the largest population in the world — 1.357 billion as of 2013 — the market holds a lot of opportunity for the fast food industry. In particular, meat consumption is at an all time high. China is growing increasingly dependent on imports in order to keep up with the demand. This generates the perfect opportunity for fast food chains to enter the market and feed the growing masses.

In today’s global market, China is one, if not the world’s most important player. When China’s economy is doing well, the majority of the world’s economies tend to do the same. When China’s economy is slow, the rest of the world usually follows.

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).

Over the past two decades, China has experienced rapid economic growth, which has also brought about a rise in social and economic inequality. A nation that once operated under the principle of egalitarianism, China now struggles with a level of inequality that has surpassed most of its East Asia neighbours. In the 1980’s, poverty was a problem restricted mainly to rural areas, but recently it has forayed into urban areas as well. Since the mid-1990’s, urban poverty has grown at a very fast pace under the influence of globalization (Fulong, Webster, and Yuting 5). The economic restructuring of China is a huge contributor to this phenomenon. The Chinese government officially recognized urban poverty as a problem in 2001 through a report