Introduction to Economic Growth

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Economic growth is defined as a positive change in the level of production of goods and services by a country over a certain period of time. With that in mind, I must say that economic growth is often desirable for a country as a whole. However, one has to acknowledge and able to differentiate between Nominal Economic Growth (NEG) and Real Economic Growth (REG). NEG is derived without considering the effect of inflation whereas REG is calculated based on the effect of inflation of the current year. Therefore, it will be perfectly favorable for a country to experience the latter.

Current Background Studies of China

The number one populated country in the world of 1.3 billions, China has undergone a major restructuring for the past 30 years particularly at the economic sector. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in Gross Domestic Product (GDP) since 1978. Measured on purchasing power parity (PPP) basis that adjusts for price differences, China in 2009 stood as the second-largest economy in the world after US, although in per capita terms the country is still lower middle-income.

In addition, on 15 April 2010, China”s economy was reported to grow at a pace of 11.90% from a year earlier, published by (Appendice I). The Central Intelligence Agency (CIA) is an independent US Government agency responsible for providing national security intelligence to senior US policymakers. In its 2009 report, it ranked China as the number four leading country for economic growth at 8.70% compared to Macau, rank number one in the same category, growing at the rate of 13.20%.

Undeniable, economic growth has brought about both positive and negative impacts to China. In view of these, I absolutely agree to some economists who think that due to economic growth “a proportion of the population is worse off, few actually benefit while small number are seriously better off”. Nonetheless, I still strongly feel that it brings more positive than negative impacts to China as a whole. China has indeed experienced increased economic growth in the past few years. Positive Impacts on China

China’s rapidly growth in the economic has led to improvements in a variety of indicators such as life expectancy, literacy rate and poverty rates.

Life expectancy is the number of years the population is expected to live. As the economy in China performs at the peak, it will naturally bring an increased in the life expectancy to its population. When the government is cash rich, they will be more cautious about its population’s welfare and wellbeing. Therefore, more hospitals were built at many areas to reach out to more citizens. Hence if someone is ill, he/she is able to seek treatment immediately which will increase its chance of survival significantly. Once recover fully, he/she is then able to return to the pool of workforce that can boost the overall economy of the country.

Literacy rate is a percentage to measure the number of people who can read and write in the country. Many comprehend the vitality of skilled workers and professional in country that will bring about further improvement in the economy of the country. Due to this fact, literacy rate is the first thing that all country attempt to improve especially with the improvement in economy.

As more and more institutions and university are built to cater to most or all of the population, literacy rate of the country will increase. Together with government movement to encourage education, there has been an increased in the number of undergraduates and people who hold doctoral degrees fivefold in 10 years. Local professional and skilled labours are one of the most crucial resources that all countries including China will treasure. When these talented people become entrepreneurs, or add values to the current goods and services, the economy will bound to improve.

Poverty rate measures the percentage of people who are poor compared to a fixed benchmark of a country. Economic growth will also bring down the poverty rate of the country. Centuries ago, China was also a poor country with little or no development. As the leaders opened up China to the rest of the world and allow competition and markets to run by itself, China has been observed to have tremendous growth ever since.

As its populations are getting more educated, they possess certain value in the market that will earn them a regular income every month. With a regular flow of income into the household, they are able to meet with their basic needs. Gradually, they are able to purchase bigger house and car which unconsciously improve in their standard of living. Improvement in the living standards of the country will result in an increase in expenditure back to the market. Therefore, money will healthily slow freely in the market and bring about economic growth.

Negative Impact

Although economic growth has brought about many positive impacts, there are also disadvantages that we cannot neglect. The most important disadvantage is the inaccuracy GDP per capita to measure the income earns by its individual in the country.

To begin with, I cannot emphasize more that China is a vast country with more than 1.3 billion people staying above its land. Hence, it will be extra challenging for its leader to make sure all its policy reaches to everyone in the country. This limitation has led to major income disparity in the midst of economic growth. However, income disparity is inevitable especially in big country.


In Conclusion, even though many countries such as China, India, and Vietnam have experienced increased economic growth for many years, it is inevitable for a proportion of the population to be worst off, few to benefits, while a small number to be better off in the midst of economic growth. All in all, Economic growth is certainly desirable for all country.

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