China’s economy: Double edged?

25 Apr

Over the past 3 decades, China’s economic growth has been around 10% per year, but this year it looks set to fall to 6%. The shear speed of China’s previous growth was too much to sustain, and therefore as expected, China is slowing down. Last year was the slowest growth since the 2008 global recession, and 2013 looks set to be an even slower growth rate. However, having said that, there are still predictions alleging that by 2040, China’s economy will reach $123 trillion, completing the adaptation from a poor country in 2000, to a super rich country in 2040. This is thought to be the case due to China’s enormous investment in education finally paying off. Better educated workers tend to work harder, and progress further, increasing the potential within the nation. Furthermore, with better set universities in the country, there will be a smaller demand for students to further their education abroad, thus increasing domestic revenue.

On the other hand, it is not to say China’s vastly expansive economy has not come without impediments. The obvious downfall has been the environmental cost. With 2 coal fired power stations being built in China per week, the environmental cost is monumental. The electricity needed for these new factories is causing devastating environmental effects globally, and certainly needs addressing. In addition, China’s inflation is rising to severely high levels, and needs to be curbed, or China may suffer an economic crisis, which in turn could have monumentous effects upon the global economy.

 

Sources:

http://www.dailynews.lk/2013/04/10/wld02.asp

http://www.foreignpolicy.com/articles/2010/01/04/123000000000000

http://www.bbc.co.uk/news/world-asia-china-20069627

http://www.kpmg.com/cn/en/IssuesAndInsights/ArticlesPublications/Documents/China-12th-Five-Year-Plan-China-Economic-Growth-201203-2.pdf

 

  

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One Response to “China’s economy: Double edged?”

  1. timhaythorne April 25, 2013 at 4:25 pm #

    I think you raise a really interesting point about China’s growing human capital levels. What will happen to China’s labour force over the next 30 years? As more people gain levels of education which warrant them employment outside of a mass production plant, will China still hold an advantage in cheap manufacturing of goods?

    China’s service sector is already growing, as is the pattern across much of the Western world, as this particular industry offers a higher level of cost-effective employment. Many students have gone abroad for education, and this partnered with the ever-improving levels of education provisions at home may mean that China’s export patterns are drastically reconfigured to a form much more familiar to our own – just on an astonishingly grander scale.

    It is right, however, to pay attention to the externalities and drawbacks of all this change. Sustaining this sort of growth and infrastructure change can be very costly in terms of resources and pollution, and these two restraints may be what hampers China’s rise to greatness over the coming decades.

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