China’s Successful Economic Growth Essay Example

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The economy of the People's Republic of China is the third largest in the world, after the United States and Japan and is attempting to overtake Japan as the second largest economy. China has had the fastest-growing major economy for the past 30 years with an average annual GDP growth rate above 10%.China's per capita income has likewise grown at an average annual rate of more than 8% over the last three decades drastically reducing poverty, but this rapid growth has been accompanied by rising income inequalities. China is the largest trading nation in the world and the largest exporter and second largest importer of goods. Their economic reforms began after 1978 began to generate significant and steady growth in investment, consumption and standards of living. China now participates extensively in the world market and private sector companies play a major role in the economy.

China has generally placed into operation reforms in a gradual method. As its role in world trade has steadily grown, its importance to the international economy has also increased rapidly. China's foreign trade has grown faster than its GDP for the past 25 years. China's growth comes both from huge state investment in communications and transportation as well as heavy industry and from private sector expansion in light industry instead of just exports, whose role in the economy appears to have been significantly overestimated. There are roadblocks that continue to constrain growth.

Available energy is insufficient to run at fully-installed industrial capacity, the transport system is inadequate to move sufficient quantities of such critical items as coal, and the communications system cannot yet fully meet the needs of

an economy of China's size although Microsoft is one of the firms that has a foothold in this country. The two most important sectors of the economy have traditionally been agriculture and industry, which together employ more than 70 percent of the labor force and produce more than 60 percent of GDP.The two sectors are different in many respects. Technology, labor productivity, and incomes have advanced much more rapidly in industry than in agriculture.

Agricultural output has been vulnerable to the effects of weather, while industry has been more directly influenced by the government. The differences between the two divisions have combined to form an economic and cultural social gap between the rural and urban areas, which is a major division in Chinese society.Although China has acquired some highly sophisticated production facilities through trade and also has built a number of advanced engineering plants capable of manufacturing an increasing range of sophisticated equipment, including nuclear weapons and satellites, most of its industrial output still comes from relatively ill-equipped factories. The technological level and quality standards of its industry as a whole are still fairly low. China had a difficult time in joining the World trade organization, due to their background of communism.

The first step was receiving the blessings of the United States and their backing.In 1999 China approached the United States in order to get a foothold and entrance to the World Trade Organization. With WTO membership, China foresaw that foreign companies and banks would increase their presence in the Chinese market, setting examples and creating competition for the domestic system. The most widely cited reason for China's push to join was that supporters

of reform saw it as a way to continue the restructuring of China. For example, many plans were been initiated to restructure and revitalize state owned enterprises since the mid-1980s, but only minor progress was made during the beginning processes in 1999.

Chinese leaders wanted China to be part of these developments, and there may have been increasing awareness that this would be much easier if China was seen as a believable partner in the international economic system, which would include protection of intellectual property. WTO membership was also expected to attract more foreign investment, some of which would bring desired new technology or help enhance China's own capabilities for technological development which Microsoft did.In 1987 China stated its construction objectives in the Three Step Development Strategy set out in 1987: Step One to double the 1980 GNP and ensure that the people have enough food and clothing was attained by the end of the 1980s. z Step Two was to quadruple the 1980 GNP by the end of the 20th century and this was achieved in 1995 ahead of schedule; Step Three was to increase per-capita GNP to the level of the medium-developed countries by 2050 at which point, the Chinese people will be fairly well-off and modernization will be basically realized.

By encouraging the growth of rural enterprises and not focusing exclusively on the urban industrial sector, China has successfully moved millions of workers off farms and into factories without creating an urban crisis. Finally, China's open door policy has encouraged foreign direct investment in the country, creating still more jobs and linking the Chinese economy with international markets.