ECONOMIC

DEVELOPMENT IN
CHINA.
CHL062
Agricultural development
• China is a country with a large population but less arable land. With only 7 percent of the world's
cultivated land, China has to feed one fifth of the world's population. Therefore, China's
agriculture is an important issue and draws wide attention of the world. Some foreigners once
raised the question, " Who will feed China?" China's leaders and agriculture experts' reply was,
"We Chinese will feed ourselves."
• China is a country with a large population but less arable land. With only 7 percent of the world's
cultivated land, China has to feed one fifth of the world's population. Therefore, China's
agriculture is an important issue and draws wide attention of the world. Some foreigners once
raised the question, " Who will feed China?" China's leaders and agriculture experts' reply was,
"We Chinese will feed ourselves."
• This sector has developed rapidly since reforms in the rural areas began in 1978. The major
reforms were: the household contract responsibility system, which restored to the farmers the
right to use land, arrange farm work, and to dispose of their output; canceling the state market
monopoly of agricultural products, and of price controls over most of agricultural and ancillary
products; abolishing many restrictive policies, allowing farmers to develop diversified business
and set up township enterprises so as to fire their enthusiasm for production. The reforms
emancipated and developed rural productive forces, promoted the rapid growth of agriculture -
particularly in grain production - and the optimization of agricultural structure. The achievements
have been remarkable.
• Development of irrigation systems even as far as during the rise and fall of
dynasties helped to propel food security. The ancient waterway( Grand Canal)
which was first constructed as early as the 4th century BCE, was rebuilt in 607
CE, and has been used ever since. Though it was used for trade it also played a
major role in irrigation during the dry season and till today these waterways are
fuly utilized then and today.
• Seed Engineering: since the rise and fall of dynasties Chinese scientists worked
on seeds that were either and/or drought resistant, disease resistant and also
high yielding strains. Seeds and plants have gone through improvement over
time.
• Food security for such a huge population has eliminated issues of extra expenses
in importation of food.
• Ofcourse it hasn't been a flawless system
 Industrial and Manufacturing development
Since the turn of the 21st century, a distinctive Chinese variety of industrial
capitalism has taken place. Foreign firms and Chinese efforts for gaining
technology lead to the quick industrialization of China which reflects the “stage
skipping” phenomenon. As Chinese industrialization jumped directly from imitating
mature technologies to innovation, it was described according to some optics as
“leapfrogging”.
Chinese industrialization raised the country requirements to import aircraft,
machinery, production equipment, telecommunications technology, and various
raw materials. This situation has advantages as well as inconvenient to
international business.
Since the first industrial revolution, the economic change and development could
not happen without the improvement of the manufacturing sector. It is associated
with higher productivity growth and per capita incomes, described as “structural
bonus”
• China has emerged as the world's largest manufacturer according to the World
Bank. . In 2016, the value of China's manufacturing on a gross value added basis
was 49.2% higher than the U.S. level. Manufacturing plays a considerably more
important role in the Chinese economy than it does for the United States. In
2016, China's gross valued added manufacturing was equal to 28.7% of its GDP,
compared to 11.6% for the United States
 INTERNATIONAL TRADE
• Trade has been one of the largest economy drivers for China
• International trade and investment facilitate the economic growth as they are not only the
sources of job creation but also income increase and prices decrease. Countries who are
members of the international economy benefit from economic stability and better living
standards.
• According to trade statistics, recently, China has progressively gained a main role in
international trade due to its importance for traditional and largest trading associates such
as the United States and the Euro area. On December 2011, China joined the World Trade
Organization, ever since due to its quick trade expansion and profound structural change
its economy has continued to grow. After this integration, the Chinese government started
to reduce tariffs, extended trade rights and liberalized its regime in order to attract foreign
direct investment. The value of China’s merchandise exports increased from $14 billion in
1979 to $23 trillion in 2014 with an annual growth of 18.0% from 1990 to 2014, whilst
importation of merchandise rose from $18 billion to about $2.0 trillion with an annual
growth of 16.6% in the same period.
CHEAP LABOR
• China's high-quality but relatively cheap labor force will allow the country's
economy to maintain its rapid growth in the coming decade, an industry expertS
predicted.
• Though cheap labor works against the laborers, but the abundance of labourers
has driven the establishment of factories in China for a majority of companies
fromaround the world.
Transport and telecommunication
• Great emphasis has been placed on developing the country’s transport
infrastructure because it is so closely related to developing the national economy,
consolidating the national defense system, and strengthening national unification.
Nevertheless, China’s domestic transport system continues to constitute a major
constraint on economic growth and the efficient movement of goods and people.
Railroads, some still employing steam locomotives, provide the major means for
freight haulage, but their capacity cannot meet demand for the shipment of coal
and other goods. In addition, roads and waterways are providing an increasing
proportion of China’s overall transport.
• Since 1949 China’s transport and communications policies, influenced by political,
military, and economic considerations, have experienced changes of emphasis in
different periods. Thus, just after 1949 the primary concern was to repair existing
lines of communication, to give priority to military transport needs, and to
strengthen political control.
• During most of the 1950s, new lines were built, while at the same time old lines
were improved. During the Great Leap Forward much of the improvement of
regional transportation became the responsibility of the general population, and
many small railways were constructed. After 1963, emphasis was placed on
developing transportation in rural, mountainous, and, especially, forested areas
in order to help promote agricultural production; simultaneously the
development of international communications was energetically pursued, and
the scope of ocean transport was broadened considerably.
• Initially, as China’s railways and highways were mostly concentrated in the
coastal regions, access to the interior was difficult. This situation has been
improved considerably, as railways and highways have been built in the remote
border areas of the northwest and southwest.All parts of China, except certain
remote areas of Tibet, are accessible by rail, road, water, or air.
 VERSTAILITY OF THE Financial Sector
• Economists generally attribute much of China's rapid economic growth to two main
factors: large-scale capital investment (financed by large domestic savings and foreign
investment) and rapid productivity growth. These two factors appear to have gone
together hand in hand. Economic reforms led to higher efficiency in the economy, which
boosted output and increased resources for additional investment in the economy.

• China has historically maintained a high rate of savings. When reforms were initiated in
1979, domestic savings as a percentage of GDP stood at 32%. However, most Chinese
savings during this period were generated by the profits of SOEs, which were used by the
central government for domestic investment. Economic reforms, which included the
decentralization of economic production, led to substantial growth in Chinese household
savings as well as corporate savings. As a result, China's gross savings as a percentage of
GDP is the highest among major economies. The large level of domestic savings has
enabled China to support a high level of investment. In fact, China's gross domestic
savings levels far exceed its domestic investment levels, which have made China a large
net global lender.
• Several economists have concluded that productivity gains (i.e., increases in
efficiency) have been another major factor in China's rapid economic growth.
The improvements to productivity were caused largely by a reallocation of
resources to more productive uses, especially in sectors that were formerly
heavily controlled by the central government, such as agriculture, trade, and
services. For example, agricultural reforms boosted production, freeing workers
to pursue employment in the more productive manufacturing sector. China's
decentralization of the economy led to the rise of non-state enterprises (such as
private firms), which tended to pursue more productive activities than the
centrally controlled SOEs and were more market-oriented and more efficient.
Additionally, a greater share of the economy (mainly the export sector) was
exposed to competitive forces. Local and provincial governments were allowed
to establish and operate various enterprises without interference from the
government. In addition, FDI in China brought with it new technology and
processes that boosted efficiency.
Foreign Direct Investment (FDI) in China
• China's trade and investment reforms and incentives led to a surge in FDI beginning in the early
1990s. Such flows have been a major source of China's productivity gains and rapid economic
and trade growth. There were reportedly 445,244 foreign-invested enterprises (FIEs) registered
in China in 2010, employing 55.2 million workers or 15.9% of the urban workforce.That level
rose from 2.3% in 1990 to a high of 35.9% in 2003, but fell to 25.9% in 2011.28 In addition, FIEs
are responsible for a significant level of China's foreign trade. At their peak, FIEs accounted for
58.3% of Chinese exports in 2005 and 59.7% of imports, but these levels have subsequently
fallen, reaching 41.7% and 43.7%, respectively, in 2018The United Nations Conference on Trade
and Development (UNCTAD) reports that China has become a both a major recipient of global
FDI as well as a major provider of FDI outflows .29 China's FDI inflows in 2018 were $139 billion,
making it the world's second-largest recipient of FDI after the United States.30 China's FDI
outflows have grew rapidly after 2005 and exceeded FDI inflows for the first time in 2015.
China's FDI outflows reached a historic peak of $196.1 billion in 2016, but declined in 2017 and
2018, reflecting a crackdown by the Chinese government on investment deemed wasteful and
well as greater scrutiny by foreign governments of China's efforts to obtain advanced
technology firms and other strategic assets. Still, China was the world's second-largest source of
FDI outflows (after Japan).