Abstract This paper focuses on the development of China’s Economy. It discusses the transformations that China experienced to move forward and become the world’s fastest growing economy. China’s development occurred mainly because they began to focus on manufacturing and exporting. Growth also occurred due to borrowing technology and the skilled and cheap labor force. INTRODUCTION A Development Miracle China China, officially know as The Peoples Republic of China, is the world’s most populous country with a population of over 1. billion people. The capital of China is Beijing and the president is Hua Jinato. China currently has the world’s fastest developing economy, and it is estimated that from 1978 to 2008 China has grown at a constant rate of approximately 9% a year. In the year 2008, GDP per capita was five times the amount than it was in the year 1978. The People’s Republic of China is also responsible for the most dramatic reduction in poverty, from 53% in the year 1981 to 8% in 2001; about 400 million fewer people are living in extreme poverty(TODARO 2012).
This growth miracle has occurred due to the transformation into a market-oriented economy and also as a result of improving their technology. BODY There have been many speculations as to how China has developed at such a rapid rate and also many conclusions. The case of China is one that is very interesting as there is no particular school of thought or specific development policy that is responsible for rapid growth but rather a combination.
China is a very good example of how policies that implement trade, markets and globalization are highly beneficial as manufactured exports are China’s primary area of focus. Since the 1980’s when china began its transformation into a market-oriented economy it was a very poor country with a per capita income of US $182 and a trade dependence ratio of 11. 2 %; since then China has mad a dramatic transformation. China now has a per capita GDP of US $3,688 and in the year 2009 China became the world’s second largest economy and also the world’s largest exporter of merchandise (LIN 008). Prior to the 1980’s China’s economy was very traditional; only after the liberalization reforms and cultural counter- revolution in the late 1970’s under Deng Xiaoping we begin to see improvement in China’s economy. Rapid growth began in 1980 due to rural township and village enterprises, which had quasi- cooperative and quasi- municipally, owned character. China’s ability to reform its economy very rapidly to become more efficient has also been one of the key factors responsible for rapid growth.
As the industrial revolution began, the catalyst occurred that transformed China from an agrarian society where over 80% of its labor force worked in traditional agriculture, into a society that focused on nonagricultural sectors and manufacturing (LIN 2010). Investors were first attracted to China as they had cheap labor, with high skills and good work habits for its low-income level. In the beginning the manufacturing sector was mainly labor-intensive but later with the introduction of advanced technology it became more capital- intensive.
Since the 1980’s the service sector has dominated and this structural change has been constant. The manufacturing industry is what transformed China, due to external investors. The more producers located in China the greater the benefits for an increasing number of suppliers. Another advantage that China had over other developing nations was the ability to borrow technology. China did not have to invent technology or industries; they simply had to be innovators. The state was able to borrow technology, industries and institutions at low risks and costs from more advanced countries.
Due to globalization and technological advance, there were more market incentives. These market incentives increased trade and GDP. Industrial policies that were implemented helped to ensure that exports of increasingly higher skill and technology content. Accompanying this change in the industrial structure was an increase in the scale of production, the required capital and skill, the market scope, and also the risks (LIN 2008). To be efficient the Chinese had to effectively use technology and labor to reduce the transaction costs.
Some economist claim that the Chinese quasi-capitalism economic model is much more effective than that of the American Laissez- faire model, due to China’s extraordinary growth. However, a major source of China’s growth comes from an influx of capital and the mobilization of labor (THE ECONOMIST, 2009). As more capital, labor and technology is being added to any economy, there is sure to be growth. China’s economy continues to experience tremendous growth as a result of global consumers and also the worldwide demand for products.
CONCLUSION An important question always asked is if whether of not other developing countries can follow China’s footsteps and experience massive growth. Each developing country differs from others but as long as they are capable of borrowing technology from more advanced countries, they will be able to advance their industries and experience growth. As long as resources such as capital, labor and technology are used effectively growth is sure to occur. There are many claims as to why China has seen massive economic growth and development.
The main reason for China’s growth is due to its shift from a country focused on agriculture to one that is export-oriented and focused on manufacturing. Another important factor that assisted was the ability to borrow technology from other countries also helped to spark the industrial revolution, which lead to the transformation. China also developed as they had a skilled labor force with very good work habits for its low-income level. What occurred in China is nothing short of a miracle however, as long as the proper policies are implemented at the right time, economic growth and development are sure to occur.
References Todaro , P. & Smith, C. (2012). Economic Development. Eleventh Edition. Pearson enterprises. New York, city. Lin, J. (2010). China’s Mircale. Retrieved from: http://blogs. worldbank. org/africacan/china Lin, J. (2008). China’s Miracle Demystified. http://siteresources. worldbank. org/DEC/Resources/ChinaMiracleDemystified-Shanghai. pdf The Economist (2009). China’s Growth Miracle. Retrieved from: http://www. economist. com/blogs/freeexchange/2009/05/chinese_growth_miracle Centre for Policy and Development Systems (2012). China’s Growth: Assessing the Implications.
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