China Economic Growth

Introduction

China’s entry into the World Trade Organization in November 2001, results in a number of specific commitments to trade and investment liberalization that have substantially opened the Chinese economy to foreign firms made by the Chinese government. Despite this impressive growth, employees are increasingly demanding higher wages and better working conditions. Some analysts believe that the era of China’s reliance on low cost labor to fuel its economic growth may be coming to an end. Increasingly, the Chinese government and Chinese industry are investing in higher value-added products such as clean energy technology, aviation and avionics. China’s growth has been unparalleled and china will no doubt play an increasingly important role in global economic affairs in the future.

Questions

1. Do you think china will continue to achieve record growth? What factors could hurt its prospect?

Yes, China will continue to achieve record growth because of the enormous investment China is making in education. More educated workers are much more productive workers. In China, high school and college enrolments are rising steeply due to significant state investment. Second, is China's high investment level . After division of labour, the largest element in economic growth is growth of fixed investment which tangible assets not only in a developing economy such as China but also in developed economies. However, as rising wages stimulate domestic demand, they are making Chinese workers more expensive and less competitive globally in exactly the kind of low-cost manufacturing that has formed the basis of the Chinese economy. That, however, may push China’s export strategy in a direction many believe it needs to go in order to create sustainable future growth.

2. Because of an abundance of cheap labor, China has been called “the workshop of the world.” Do you think this will still be the case a decade from now? Why or why not?

Yes, I think there will be the end of cheap labour in China for some reasons. First, because of the rising wages. China’s urban areas have a dual labour market: one for urban workers and the China’s urban areas has a dual labour market: one for urban workers and the other for low-skilled migrant workers. China’s wages have also increased compared with the wages of other developing economies. Furthermore, the wages of