Economic Growth in China- an overview
- Oct 13, 2016
- 3 min read
From the diagram above 1, we can see that, the GDP annual growth rate decreased from 2010 to 2016.
The economic growth is faced with pressure of decreasing. The consumption, investment and net exports all had a decrease in growth rate. The investment real estate development contributed most to the decreasing economic growth 2.
Does the economic structure contribute to the decreasing economic growth 3?
China, as a developing country, may have backward economic structure. Also, China is a country in the process of transition, so the economic structure still has to be improved.
However, the decreasing annual GDP growth rate is more likely to be caused by external reasons. In China, the economic growth was 10.6% in 2010, 9.5% in 2011, 7.9% in 2012 and 7.8% in 2013. Compare these figures with other countries such as India, Brazil and Singapore. The GDP growth rate decreased much more in these countries than in China. Take Singapore as an example, which is a high-income country. The economic growth rate also showed a decreasing trend. So the global economy might be faced with some problems after 2010.
For these countries, they are faced the mutual external reasons.
The first reason is that after 2008 financial crisis, the developed countries have not recovered totally such as the US, European countries and Japan. High-income economies accounted for almost 50% of the global GDP. For countries such as China, India, Brazil and Singapore, exports are very important. So the exports affected the economic growth of China 3.
Also, the investment is confronted with decreasing pressure. Almost all countries used expansionary policies to support investment after 2008 financial crisis. Most of the projects have finished being constructed after some years. So if there are no more new projects, the investment growth rate will decrease 3.
The economic growth potential may still be high 3.
There are some people thinking that the high economic growth rate in China has lasted for 35 years but other economic with high growth rate only have lasted for 20 years, so the economic growth of China may not have too much potential.
Actually, some people still think that China can have high economic growth potential.
The main reasons for economic growth are technology innovation, upgradation of industries and improvement of productivity. Most developed countries have the most advanced technologies, so if they want to have more innovation, they have to invent, which is very costly and risky. Developing countries have more possibility to draw on the experience of developed countries, which may decrease the cost and risk 3.
In China, the GDP per capita adjusted to PPP was between 20% and 30% of that of the US. When Japan was at similar percentage, the annual economic growth in Japan was 9.2% from 1951 to 1971. When Singapore was at similar level, the annual economic growth rate was 8.6% from 1967 to 1987. Therefore, the economic growth of China still has space to improve and the economic growth potential can be high 3.
Reference
1 Tradingeconomics.com. (2017). China GDP Annual Growth Rate | 1989-2017 | Data | Chart | Calendar. [online] Available at: http://www.tradingeconomics.com/china/gdp-growth-annual [Accessed 15 Apr. 2017].
2 Epaper.gmw.cn. (2017). China 2015: analysis, future and advice of economic situation-Guang Ming Daily-Epaper.gmw.cn. [online] Available at: http://epaper.gmw.cn/gmrb/html/2015-03/11/nw.D110000gmrb_20150311_1-15.htm?div=-1 [Accessed 15 Apr. 2017].
3 ChinaIRN.com. (2017). Economic growth in China has slowed recently_ChinaIRN.com. [online] Available at: http://www.chinairn.com/news/20141024/103152150.shtml [Accessed 15 Apr. 2017].
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