Running head: China’s Growth 1

China’s Growth

Name

Institution
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China’s Growth
China’s Growth

The economy of china has is growing fast as compared to the global markets. This has been as a

result of the major plans embarked by the government of reforming the economy since 1978 by

controlling every productive asset. In order to realize the goal of reforming its economy, China

has used different strategies that have proved to revive and help propel the economy of China.

Some of the strategies such as liberalization of foreign trade and investment, education of the

workforce and investment in industrial production have formed a major backbone to the growth

of China.

Liberalization of foreign trade has also contributed to the growth of China in a number of

ways as suggested by Deng (2013). It has removed the barriers to international investing

therefore attracting foreign investors to invest in the opening markets in China. Moreover China

has also reduced tariff barriers, and trade laws which have allowed the free flow of capital

investment therefore making the local companies to attract investors from foreign countries.

Through liberalization, the values of stock markets increased in values as well as political risks

have been minimized making the fund managers and stock investors to seize new opportunities

as they emerge in China Markets. Lastly, it has created a diversification for investors as they can

included assets owning in their portfolio.

The human capital has been a pillar to growth of China economy which has made the

government not to focus on the rapid growth of its economy only, but also shift focus on the

development of its human capital. Human capital influences the labour productivity and

economic growth (Son, 2010) of any nation which necessitated the government to educate its

workforce as an initiative of developing its workforce. Through education, the workforce is

educated on their human rights as well as the policies that should protect them against
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China’s Growth

exploitation. This in return has helped improve the social welfare of the workforce as well as

improving the quality of life of its citizens. It is through education that decision on matters such

as health insurance cover policy and how to secure loans is achieved with informed judgments.

Despite investment in industrial production contributing to the growth of the economy of

China, most of the businesses were state owned as compared to private owned. In the local level,

peasant farmers were only able to produce goods from small plots for local free market initiated

by the government. The shift towards a market economy led local municipalities and provinces

to invest in industries that they considered to have profits such as light manufacturing. In return,

this shifted the focus of China’s economy reforming strategy from agriculture to industry

development according to Cheng (2007). China joining the World trade organization in 2001

created an expanded market of the manufactured goods which mostly were electronics. This had

an impact as the demand of manufactured goods in the global market could not be achieved

necessitating the government to invest in industries that produced the goods.

In conclusion, though the investment in industrial production led to conversion of private

businesses to state owned due to the share accrued from capital investment, we cannot ignore

that the economy of China has grown rapidly. The inter relation between the human capital

development through education, liberation of the foreign trade and investment in industrial

production has attributed to the rapid growth of China’s economy.

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China’s Growth

References

Son, H. H. (2010). Human capital development. Manila, Philippines: Asian Development Bank.

Cheng, J. I. (2007). Economics and foreign investment in China. New York: Nova Science
Publishers.

Deng, Z. (2013). Foreign direct investment in China: Spillover effects on domestic enterprises.
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China’s Growth

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China’s Growth