Report on China's Economic Growth: Policies, and Development Analysis

This report provides an in-depth analysis of China's remarkable economic growth over the past three decades, examining the key drivers behind its success. It highlights the significant economic reforms implemented since 1979, including the introduction of market mechanisms, special economic zones, and policies promoting foreign direct investment (FDI). The report discusses the impact of low-cost labor and trade commodities, emphasizing the role of manufactured goods in China's export-oriented economy. It also explores the evolution of FDI flows, illustrating how China became a major destination for international investment. Furthermore, the report acknowledges the changing focus of Chinese exports towards emerging markets and heavy industrial products. Finally, it underscores the need for China to continue its transition to a market economy through industry reforms, private sector growth, and increased competition to sustain future economic growth.

China’s Economic Growth
Principles of Economics
Introduction

China's fast economic growth has been incredible for the last three
decades since 1978. According to the World Bank, the annual GDP growth
has risen over 10% a year (Figure 1) and taken over 850 million people
out of poverty. Initiating opportunities for farmers 'costs and possession
contributed to subsequent free market purchases. However, owing to its
large availability of workers, low job costs, secure political and economic
environment and pro-FDI policies, China has become one of the most
attractive FDI destinations in the world. Low-Cost labour production has
benefited China’s economic growth as well.
Economic Reforms
China introduced many economic reforms starting in 1979. The central
government introduced farmers 'buying and ownership opportunities to
sell a portion of their products on the open market. Furthermore, the
government set up four special economic zones along the coast to draw
international investment, raise exports, and bring high-tech goods into
China. Provincial or municipal governments, usually permitted to work and
to function in the field of free-market policy, rather than under the
supervision and regulation of state planning have been granted economic
power over different businesses. Citizens have also been allowed to
launch companies themselves. Additional coastal regions and cities have
been identified as open towns and emerging zones, allowing them to
experiment with market policies and offer tax and trade opportunities that
draw foreign investment.
Foreign Direct Investments
We should accept that China has made some enormous strides in
becoming one of today's fastest rising economies over the past three
decades since the reforms of the late 1970s. Promoting the inflow of
foreign direct investment (FDI) is an essential part of the cycle of
economic change. China has been one of FDI's most popular destinations,
following more than 30 years of economic change. China's growing
openness to foreign direct investment has greatly contributed to its
exceptional success in production. While being a developing economy,
China's international trade and Gross Domestic Product (GDP) increased
by an average of around 15 percent and 9 percent annually from 1979 to
1997 respectively, 8.7 percent in 2009, and the actual GDP, according to
the World Bank, recently expanded at an average annual pace of 10
percent over a span of twenty-five years. Data also reveals that the stock
of FDI in China as of 1990 was less than $19 billion, and in 1999 it
increased to more than $300 billion.

While not all countries have achieved high rates of economic
development, China has become the world's second-largest recipient of
FDI after the United States, as its economic growth pays homage to
several factors like agriculture, investment in human resources, especially
education, but most notably its openness to foreign trade and investment.
The potential of China to lure international investments is much more
successful than any other developed nation and most definitely the rest of
the world. FDI flows into China soared from $3.5 billion in 1990 to $69
billion in 2006, which in effect led significantly to China's rapid economic
growth.
Trade Commodities
Chinese low-cost production in many low-cost labor-intensive industries
has made it globally profitable. Manufactured goods thus form a large
share of trade-in China. Most of the Chinese products include parts and
modules manufactured in finished goods, such as consumer electronics
and laptops, and exported thereafter. Many Chinese employees are
comparatively poor in value added to these goods in China due to the
product's total value when delivered abroad.
The major imports included machinery and supplies for electricity; natural
energy; nuclear plants, boilers, and ores for machinery; and photographic,
medical or surgical instruments. Electrical machinery and appliances are
China's main exports, including generators, boilers, and turbines; electric
furniture; plastics; and automobiles.
China's exporter companies have dominated much of the last 20 years in
the manufacture and distribution of customers 'goods in developed rich
countries. Yet China is now changing the focus on exports into emerging
countries – for example, overseas sales of giant earthmovers, mobile
network hardware and building materials – exporting heavy industrial
products. Many are better and more competitive goods, making it easier
for Chinese firms to pay their workers higher wages.
Conclusion
It is no doubt that China has been successful in its economic growth for
the last three decades. It is speculated that China is now slowing down in
its growth. China should investigate innovative models in growing its
economy once again. China should finish its transition to a market
economy by reforming industry, property, labour and finance, boost its
private sector, open up its markets to expanded competition and
creativity, and ensure equitable incentives for achieving its objective of a
new economic growth system.

China Annual GDP Growth(%) Figure 1