China has slowly emerged as a global power due to a remarkable period of rapid growth in its economy. Ever since market reforms were initiated in China in 1978, the focus shifted from a centrally-planned to a market-based economy. It has experienced rapid economic and social development within a few years. China’s GDP growth has averaged nearly 10 percent a year, which is the fastest expansion by a major economy in the human history and it has managed to lift more than 800 million people out of poverty which is a great achievement.
China's economic growth story starts with strong political decision making and leadership qualities. It started when the transition of leadership in China has been very peaceful and smooth. After the death of Chinese leader Mao Zedong, the new leader Deng Xiao Ping adopted market economy in December 1978 and was instrumental and responsible for modernization. Later, Premier Zhu RongJi paved the way for China’s entry into the World Trade Organization (WTO). When President Jiang Zemin proposed the scheme of promoting business and entrepreneurial class into the country’s one-party system, it greatly helped China’s economic expansion. Besides, the economic reforms began in China started in the early eighties during the rule of Deng Xiaoping, when Hu Jintao enforced innovative economic policies through private companies and lesser governmental control which lifted the China’s sluggish economy to a robust one. With a successful leadership along with flexible and innovative economic policy China took advantage of globalization. The leadership maintained an export orientation in their industries by attracting foreign investment, and maintaining a sound monetary and fiscal policy.
China's transformation from rural based economy to a manufacturing based economy has yielded numerous results and fuelled the growth of the economy. Not just jobs, the manufacturing strengthened the financial stability of the country. Now, China makes and sells more manufacturing goods than any other country on the earth. The range of Chinese goods includes cement, steel, aluminum, iron, toys, chemical, electronics, and many other products. Chinese manufacturing is the largest and most diverse sector. Besides, China is the world leader in many types of goods. China manufactures personal computers, solar cells, shoes, smartphones etc.
China is one of the first country’s to successfully allocate huge funds in public sectors. The Chinese investment effort has remained stronger in order to maintain high levels of economic growth, since investment reforms can generate huge gains which would allow rapid increases in per capita consumption, and greatly help in government expenditures targeted at sustainable development.
Besides, public investment, China adopted export strategy and encouraged foreign investment. They opened a large number of special economic zones. These operated as designated zones where MNCs was offered incentives such as reduced tax rates, duty free procurement of goods to set up manufacturing operations. Over a period of time, Chinese exports started to flood the markets around the world. China’s exported goods and services represent 19.6 % of the Chinese GDP(Gross Domestic Product). From a continental point of view, around half (48.5%) of Chinese exports by value were delivered to many Asian countries, while 22 % were sold to North American importers. Rest was shipped to Europe (18.0 %), Latin America (4.2 %), Africa (4.1 %).
China followed robust government policies which were ably supported by strong anti-corruption policies. Though, China is no exception to bribery, huge efforts have been made to bring corruption in governance under control. For example, around 182,000 government officials have been penalized in 2014. Several high level party members have been removed and several legal cases of anti-corruption of high officials in China have been leveled. Perhaps China has strongly emerged as a country with stringent anti-corruption law. China scored 41 points out of 100 on the 2017 Corruption Perceptions Index reported by Transparency International. Corruption Index in China averaged 34.29 Points from 1995 until 2017, reaching an all-time high of 41 Points in 2017 and a record low of 21.60 Points in 1995.
Ever since, Chinese economic reforms were implemented, it greatly helped poor in the country through employment. In From the early 1980’s, China has uplifted more than 800 million people out of poverty, which makes the country the most successful nation in eliminating poverty. Besides, economic reforms, China’s annexation of Hong Kong fuelled more foreign investment. Since around three-fifths of China’s foreign direct investment are financed through Hong Kong, and billions of dollars of China’s assets were locked in the big financial corporations of Hong Kong.
Though rapid economic progresses were made, China still remains a developing country. How ? China’s per capita income is still a fraction of that in Western countries. Besides, China’s market reforms are still incomplete. China rapid economic growth has increased inequality among urban population; large scale urbanization also posed great challenges to environmental sustainability which has created big external imbalances. Besides, China is also facing demographic pressures related to an aging population and a large displacement of domestic labour.
Finally, over reliance of China over US Technology in various industries is proving to be a serious threat for Chinese companies. Since many companies like BATX (Baidu, Alibaba, Tencent, Xiaomi), Didi (China's Uber), China Mobile, China Telecom, Petro China or SAIC Motor are dependent on technologies, components, software and intellectual properties from US companies like Apple, 3M, AMD, Applied Materials, Seagate, Cisco, Corning, Google, Intel, Micron, Microsoft, Qualcomm. Any ban on technology export could severely hurt these companies. For example, U.S. imposed a 7-year ban on the sale of American technologies to China's second largest telecommunications supplier ZTE, which indirectly stops the growth of the company. Though ZTE settled the issue with US government, unless these issues are sorted, China's economic growth with come to standstill in the near future or within a decade. So the only other way is that China must be self-sufficient in core technologies like processors, memories, storage, networking or wireless in the next few years.