The Problems of China's Economic Growth

lemDevin Larson

9/25/12

The Problems of China’s Economic Growth

From the Silk Road to the free trade organizations of today, international trade has played an important role in the development of today’s national economies. Without international trade, nations would be limited to the goods and services produced only within their borders. It has been known as the link between national economies and it has continued to grow with time. A popular nation associated with international trade is China. With 1.2 billion people and the world's fastest growing major economy, China is hailed as potentially the "market of all markets," states The Encyclopedia of the Nations. Due to China’s success in international trade, the nation is now, next to the United States, the second largest recipient of foreign capital.

Even though China’s economy has experienced a constant positive growth for the past decade, it cannot expect to always exceed expectations.

In recent months, China’s economy has been slowing down. The 8% GDP growth rate that has been constant for the last decade is now showing a major decline. The average quarterly GDP growth rate has been recorded at 1.8% which is China’s lowest growth rate in the past three years. The graph shown on the following page displays the change in China’s GDP growth rate. At first glance, the Chinese economy looks to be performing very well and helping its economy grow to be one of the greatest. However, regardless of China’s impressive standings, its economy is experiencing a downturn that can significantly alter the nation’s success. This downturn is the result of many economic problems that will continue to grow if they are not addresses.

One persisting economic problem is the growing income inequality. An article describing the problems of Chinese economic growth indicates, “China’s economic growth has benefited the south and eastern regions more than anywhere else.” This has created a large gap in the income levels in the...