The Rapid Economic Growth of China

August 24, 2018

Horndiplomat-Since China started market reforms in 1978, under the leadership of “Deng Xiaopin,” China shifted from a centrally planned economy to a market based economy. GDP growth has averaged nearly 10 percent annually, and has driven poverty out of 1.3 billion populations. The increase of what economists known as a “total factor production” TFP (THE PRODUCTIVITY OF LABOR AND CAPITAL) contributed much to the growth of GDP since it has adopted market oriented economy. In addition, Chinese have politicians who show greater responsibility to their nation rather their own self interest.

They also belong to a vast quantity of natural resources, and highly skilled labor force who always work at the cutting edge. For example, in 2015, manufacturing industrial sectors accounted for 40% of GDP. China takes world’s lead in the production of ore, steel, aluminum, electronics, chemicals, textiles, toys and aircraft etc.

Between 1978 and 2008, the size of the Chinese economy multiplied nearly 50 times over, and average annual GDP growth was approximately 10%. The initial reforms focused on agriculture but soon spread to the services and light manufacturing sectors. All of these were precursors to banking reforms, which led to perhaps the most important transformations in the Chinese economy in the 20th century.

Adult literacy rate for China (aged 15 and above) was 96.36% in 2015, growing at an average annual rate of 10.39% from 1982 to 2015. For instance, China trains 600,000 new engineering graduates every year.

China’s communist government began to institute capitalist market reforms in 1978, and over subsequent years, the Chinese have taken a sharp turn away from state-owned enterprises. As of 2013, State owned enterprise only accounted for 45% of all Chinese industrial output. That figure was nearly 80% in 1978; the remaining 22% were “collectively owned” enterprises. The result is an economic explosion that catapulted China to the second largest economy in the world, trailing only the United States

It is the second largest country in the global economy with a population of 1.3 billion, though China has made an economic miracle in many key areas, however, the income disparity still exists among the people, especially in rural populations where economic indicators of poverty and economic backwardness are substantially high.

Finally, the current debate on China’s future economy has two basic camps: the extremely” BULLISH CAMP” and the “BEARISH CAMP.”

By:Abdulqadir Omer Jama