China economy Review Example

1 Introduction Since opening and reforming the market in 1978, China has turned from a plan economy to a market based economy system and achieved a high performance development of economy and social. It can be seen from that China has maintained its growth of gross domestic product (GDP) at a high level of 10 per cent one year and lifted more than 500 million people out of poverty, besides China has achieved or are within reaching its all Millennium Development Goals (World Bank, 2013). Due to the rapid growth of economy and the largest population of 1.

3 billion populations, China now has become the second largest economic entity (Fenby, 2013) and produces an increasingly essential influence to the global economy. However, China still cannot step into a developed country and the market of China also needs to be reformed further. In addition, according to Central Intelligence Agency (2013), China’s gross national income per capita of 9300 dollars only located at 124th in the world. Furthermore, there are approximately 128 million people in China’s rural areas who live under the national poverty line of RMB 2300 per year (nearly 1.

8 dollars a day) and 100 million more than under the previous standard (The Guardian, 2011). Besides, China also has the second largest poor population after India which means reducing poverty still should be remained as the primary objective for China (World Bank, 2013). Rapid developments of economy not only bring financial achievements but also cause several challenges such as demographic issues like baby boomers and Gen Y. In addition, technological issues like increasing the quality of products and promoting innovation also play an essential role in developing China’s economy.

Therefore, this paper will address these major problems in China to analyse the difficulties that China is facing and provide some recommendations for China to promote its economy effectively. 2 Main Issues 2. 1 Baby Boomers: How to deal with the huge aging population Baby boomer is the generation of born between 1946 and 1964 (United Nations Joint Staff Pension Fund, 2013). The youngest baby boomers are stepping to 59 years old and which means one of the most important issues for global economy is the issue of aging population and China is no expectation.

According to BBC (2012), there are over 110 million people in China aged more than 65 years old which is a significant burden of catering for a country. In addition, unlike other developed countries such as the United Kingdom (GOV, 2013) and the United States (Keny, Lee & Mather, 2011) which both have higher proportion of aging population (PRB, ), aging population in China is more serious and is described as the unlucky generation due to several historic volatilities in China last century (The Economist, 1998).

For example, one of the most miserable policy-led disaster is three-year famine which during from 1959 to 1961 and caused between 14 million and 26 million excess deaths within the three years (Society for Anglo-Chinese Understanding, 2013) due to the lack of productivity. In addition, the surviving people also did not receive enough nutrition because family members who had high performance productivity and labour power would be treated preferentially which means infants and small children (particularly girls) would be especially vulnerable.

The sequel of this policy-led disaster can be inferred from a survey of death rates in China’s 18 provinces in 1988. It can be indicated from the survey that Sichuan and Gansu province appeared to pay the heavy price and other provinces such as Anhui, Guangxi, Guizhou and Hunan province’ death level during this period was unusual high which were 2. 5 times the normal ones. Therefore, healthcare for baby boomers in China now has become one of the most austere social issues which would cost vast number of financial and human resources.

Another historic humbling in China would be the cultural revolution from 1967 to 1978 (Hou & Zhou, 1999) which can be described as the lost decade particularly in the field of technology. According to Hou and Zhou (1999), nearly 17 million youth were forced to leave their urban work and life to stay in rural areas and one of the most negative effects was hindering the process of education. Different from that other countries’ students studied peacefully, high school and college students in China were in a commotional situation.

In 1970, the red guards had controlled most government administrations and educational institutions and made them in a state of paralysis and there was no class in the school (Pepper, 1996; Unger, 1982). Therefore, the educational level of baby boomers is particular limited. Thus, it is difficult for baby boomers in China to learn some new simple technology or new practical skills by themselves to earn funds and take care themselves in their aging period. Therefore, baby boomers in China will cause heavier burdens of health care and financial assistance for governments than other countries such as the United States and the United Kingdom.

2. 2 Gen Y: The second-generation migrant workers bring new challenge and opportunity for China’s urbanisation The Y generation were born between 1981 and 2000 (Erickson, 2009) and the population of living independently this generation is growing rapidly. Each country should give more concerns on this particular generation which would be the major labours in 20 years. However, each country has its own issue of generation Y to face. For example, it is reported that there are more than 0.

7 billion farmers in China (Chen, 2011) and with the rapid urbanisation there was a vast number of these farmers chosen to work in city and this group were called as migrant workers, and now a new special group of generation Y raised up that cannot be ignored is the second-generation migrant workers. Although the second-generation migrant workers have high educational level than the first-generation migrant workers and expect to learn new skills to adapt to the urban life, some age characteristics also influence their mental and physical activities.

For instance, generation Y is the first group with computers and Internets, and the virtual world became the important part of their life as consequence their life are among numerous temptations which may cause impulsive phenomenon to make their mind unstable and be difficult to concentrate on one thing (United Nations Joint Staff Pension Fund, 2013), it may also cause their sensitive feelings to citizens’ opinion which would may raise some unnecessary disputes.

It is noted that the second-generation migrant workers have higher expectation than their predecessors of involving cities, therefore to be involved in cities more effectively some excessive expectations of working arise from their minds that they would exclude doing routine works due to the low income but they do not have enough skills and knowledge to satisfy the technological works which can bring profitable returns for them (People Daily, 2010). Therefore, how to absorb this huge scale of labour forces is the new challenge for China to develop economy.

2. 3 Technological Issue: Quality and Innovation

China now still maintain the rapid sustained economic growth with increased the GDP by 10. 3 per cent in 2010 developed it by 9. 2 per cent and grew it by 8 per cent in 8% (Breznitz & Murphree, 2013). However, China is just described as the the workshop of the world. In addition, Chinese firms still lack international competence and the scale of global brands is too limited. There are two main factors may contribute to this phenomenon as follow: quality and innovation. 2. 3. 1 Quality To build superior firm’s competence cannot lack quality which can be thought of as the reliability of a company’s reputation (Hill & Jones).

There are something bad for China’s manufacturing firms that “Made in China” label gradually become the symbol of inferior and dangerous products (Midler, 2010). For example, In China’s worst food safety scare for years, the powder was deliberately added to substandard milk sold by the Sanlu dairy group to pass nutrition tests which caused a vast number of infants and children poisoned by the inferior milk. Sanlu was one of the most trusted companies but did not pay enough attention on quality assurance which contributed to one of the part of over 300 thousand children sicked by toxic chemical melamine.

However, this tragedy could be decreased if the governments executed their responsibility. It was reported that in 2007 there were some complaints of children sicked by drinking milk, but Sanlu reacted slowly and even they realised that their factories were producing the inferior milk they still kept the process flowing and the governments made a promise that would investigate milk issue but this promise just stopped in the paper without any actual measures (Sommerville, 2009).

Since the scandal of milk, several series of quality issue have been found in recent years especially in the area of food safety like frozen dumplings and chicken (Wang, 2013) which caused individuals lost their confidence on Chinese companies even the governments are no expectation because the undeveloped legal system which caused insufficient supervision and sanction is the main reason (Midler, 2010). 2. 3. 2 Innovation Innovation has been described widely as an essential role to competitive success due to the process of competition is operated by creativeness (Hill & Jones, 2010).

Innovation decides the differentiation of a company’s reputation by providing something unique that improve the reputation significantly. However, although China can produce everything for the world, it is difficult for this world’s factory to create innovative things Schuman (2013). According to Schuman, Chinese companies have poor competences in the international market due to they do not have high level of skills and high quality experts which are the vital elements to create their own products which can be seen from the 2013 Talent Shortage Survey Research Results (2013) as below.

Source: Man Power Group, 2013 Talent Shortage Survey Research Results It can be indicated that the largest talent gap in China is technician which needs high technology and compared to other developed countries which are the main rivals of China such as the United States (7th), the United Kingdom (8th) and Japan (6th) this shortage should be paid more attention.

It is clear that high quality experts are related with education closely, according to PwC (2012) although there are over 2000 universities (Zhang, 2012) in China, only 16 of them can be qualified into world top 500 which either number or proportion both have a huge discrepancy with the United States as can be seen below. In addition, according to the government (2013), China only uses 3. 41 per cent of its GDP. Therefore, the main reason contributes to this issue may be the poor investment on education. Source: PwC, Closing the talent gap in the emerging world 3

Conclusion

To sum up, although China has impressed to the world by its rapid economic growth and remarkable production capacity, there still exists several challenges for China to develop economy to a high new level such as the aging population which is consisted of the “unlucky generation”-baby boomers, China has to pay for the historic mistakes, and the second-generation migrant workers as the special group of generation Y also should be attached important to. In addition, China must shift the meaning of “Made in China” from inferior and uncreative to high quality and innovation.

4 Recommendations To take economy to higher level, China firstly has to be responsible for its products and changes the bias of “Made in China” and this is related to the legal system highly, therefore the governments in China should take some strict and actual measures to supervise companies. Besides, China has to learn invent to compete in the increasingly fierce global environment which needs China should pay more attention on the educational area such as increase the percentage of GDP for investing on education.

In addition, China also should treat baby boomers appropriately such as improving the system for aging populations’ health care and decreasing the financial burdens such as addressing some simple and practical skills to aging individuals which can learn from the United Kingdom that elderly people can operating a cab. Furthermore, the second-generation migrant workers as the special group of generation Y also bring some challenges for China.

To absorb these huge labour forces effectively, China should take efforts in various aspects such as providing training courses for the second-generation migrant workers to help them adapt to complicated works and operating some measures to decrease their mental pressures such as eliminating discrimination which requires efforts for both sides like psychological guidance for the special group and punishing the citizens reasonably which bring injustices and prejudices. 5 Reference List BBC, (2012). Ageing China: Changes and challenges. Retrieved 19th, 2013 from http://www.

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