China has seen unprecedented economic growth in the last three decades which is often termed as “the Chinese Miracle”. However, the county is now facing some challenges as well that can be a potential threat to its rapid industrial growth. In this essay, the primary elements of Chinese economic growth and its prospects are discussed.
Growth Trends, Economic Challenges, and Future
From 1982 to 2006, China has maintained a growth rate of around 9 percent which till now no other country has received (Malkiel, 2009). In less than 20 years, one of the most populated cities of the country was transformed into a city of upscale apartments and skyscrapers. China has now more than 170 cities with a population of around 1 million each while the United States has only 10 such cities (Malkiel, 2009). This growth is also accompanied by the gradual decline in the poverty ratio of the country. The industrial sector is one of the most prominent aspects of this rapid economic recovery and growth. Consider, for example, the railway sector of China. About 40 years ago, the railway network was not even comparable to that of the US during the civil war. But now these segments are a lot superior to the railway’s system of any other country. This all has made China the second-largest economy in the world.
The reason behind this rapid progress, development and growth is the major shift in the political and social setup of the country that was initiated by Deng in 1978 after the death of Mao who introduced new economic policies with a vision to make China a great nation once again (Ray, 2002). Under Mao rule, the growth rate of the economy was extremely slow while all the agriculture sector of the country was based on the conventional means of production because he believed in self-sufficiency and restricted the imports of all foreign technology and goods. However, Deng was extremely inspired by the modern economic policies of the neighbouring eastern states such as North Korea, so he reconstructed the political and social setup of China and introduced a free market system, decollectivisation, corporate agriculture, household responsibility system and similar other reforms that increased production tremendously and contribute to the country’s growth.
However, there are some challenges as well that China is currently facing and if not mitigated effectively, they can disturb its economic growth (Malkiel, 2009). The ageing population is one such challenge. As the proportion of the ageing people in the society continues to increase, the government spending on their health increase as well while the number of young adults for the support and in general to sustain the vast production facility of the country also decreases (Zhang, 2012). Similar, China is facing some conflicts with the neighbouring countries i.e., Taiwan and Japan, which if not settled can lead to many adverse impacts for the country. The uneven distribution of wealth and increasing pollution are also potential threat to the competitive position of China in the global market. However, the major threat to the country’s economy is the exponentially increasing debt level along with the GDP which shows somewhat inorganic growth of the country (Al Jazeera English, 2016). So, in light of these challenges, especially the debt problem, I do not think that the Chinese economic miracle will continue.
Most of the problems that many countries are now facing are very similar to what China experienced 30 years ago. So, the underlying mechanism of the Chinese growth is a valuable lesson for them to resolve their economic problems. However, China itself has now reached the peak of its economic growth and soon or later it will face some decline in its growth because the high level of debt is not sustainable.
Al Jazeera English. (2016). The End of China Inc? | 101 East. Www.youtube.com. https://youtu.be/nGHmk4UeK_w
Malkiel, B. G. (2009). The Chinese Economic Miracle: Can It Last? Proceedings of the American Philosophical Society, 153(2), 193–199. JSTOR. https://www.jstor.org/stable/40541658?seq=1
Ray, A. (2002). The Chinese Economic Miracle: Lessons to Be Learnt. Economic and Political Weekly, 37(37), 3835–3848. JSTOR. https://www.jstor.org/stable/4412606?seq=1
Zhang, W. (2012). The Other Side of the Chinese Economic Miracle. International Journal of Health Services, 42(1), 9–27. https://doi.org/10.2190/hs.42.1.b