China has experimented an annual economic growth of around 10%. They have over 1.3 billion of people. It has become the production plant of the world, from trinkets to High-Tec products. The Deutsche Bank recently pointed out that China may overcome the US as the first world economy during 2020’s decade.
China recently surpassed Japan as the second world’s largest economy. China, being the biggest buyer of American debt, is quite serious about strength its economic structure.
Thus, considering these curious prospects of this extreme growth, we must wonder ourselves: is it possible to consolidate the economic power of China?
On first instance, China faces the challenge of wealth distribution. According to the International Monetary Fund, China has a GDP per capita of just US$4000, having the 97th position in the world; and considerably far away from the US status having US$48000. A country full of contrasts, whist you have opulence in the coast side of China, selling Ferraris and opening Cartier store; in the countryside people are starving. China is having an unbalanced growth. This is a critical point to generate riots.
On the other hand, Chinese labour cost is rising according to Reuters. People’s Bank of China recently stated that Chinese government must act upon strengthen the internal market to extend their intentions to continue growing. Increasing consumption power is critical to achieve that. Cheap labour, one of the main drivers of the Chinese economic boom, could be compromised in order to attract future foreign investment.
In addition to this more expensive labour cost prospect, Fan Gang, a respected Chinese economist stated that China needs 150 million new job positions annually to guarantee the outstanding 8% annual growth rate. This is equivalent to generate 375 companies of the size of IBM, employment wise. Cost and volume of the labour force seem to be conspiring against China.
Exports, another of the Chinese economic growth pillars, could lose attractiveness because Yuan revaluation. International pressures may cause some negative effect to this strategic factor of the Chinese economy.
It is a paradox, that this time a communist regime is not obstructing the dynamics of an economy. Since this communist political power acts as a power to only control people, we should not blame this time communism as a source of obstruction for the Chinese economic development. At the end, it has been under a communist government that China applied western economic measures to facilitate this boom.
China is looking forward to continuing under this pace. Indeed, an unbalanced growth. This is a development approach that sooner or later, will rise questions about human rights and labour laws. The Chinese phenomenon could end as massive building with an unsound base.
.JPG)
