China - a Rising Economy

The Rise and Future of China

An economic review by Henry Jones and Richard White

Introduction

The Chinese economy has become a global focal point over the last decade. China appears to have overcome a tumultuous early 20th century and risen back to a point of economic prosperity or shengshi not seen in the region since the 1700’s (The Economist, 2011). Surpassing America to become the world’s largest manufacturer in 2010, China is now speculated to become, by at least one measure, the world’s largest economy before this year closes (Giles, 2014). This growth presents issues and benefits for China and the rest of the world both in an economic and external context. As such it is important that we have some understanding of how China has come to be in such a position and what implications this has for the global, and Chinese economy in the future. Through a study of recent literature by Chinese and western economists we here attempt to gain an understanding of the ‘bigger picture’ of China’s economy and how it sits on a global level.

First Steps towards reform

During the period of 1800 to 1950, China's communist regime left the economy wanting, to the point where the country experienced a period of decline in GDP. This prompted action by the government in 1952, which saw the beginning of Chinese industrialisation. Subsequently in 1978, accompanied by the death of Chairman Mao Zedong and the implementation of the governmental policy: "Reform and opening up," the Chinese economy was to find it first real means of growth.

Change of Agricultural sector, and supply of labour to productive sectors

During the period from 1952 to 1978, 70% of china's population held rural hukou – a visa type equivalent allowing work rights in the respective areas. and worked in the agricultural sector (Weng, 2012). During this period, the state took massive investment from the farms and invested heavily in the industrial sector leading to externalities such as the great leap...