http://www.economist.com/node/21549938
This article discusses the growth process in China. As we
all know, China has seen considerable growth in recent decades and has become a
center for international manufacturing and production. This is, in part, to
firms taking advantage of the huge supply of human labor available in the
country. Urbanization has occurred and sped up the process considerably. The Chinese government has recognized that
this type of growth is not sustainable so they have invested a lot of money into
Research and Development. However, too few of these funds have led to actual
research for improved goods or developing new ideas. Critics believe this is because of the government
involvement in the system. Can China overcome this common problem?
China’s dilemma reminds me of our discussion of intensive
and extensive growth. The government
either needs to find a better way of improving its intensive growth – through
changing the incentive system for innovation or lessening the government’s
control of the market. Will there be such a substantial decline in the growth
rate that China will be forced to do something or will they gradually change their
policy to improve their long-term growth?
9 comments:
do you think china will be able to sustain their rapid growth in the future as their supply of labor diminishes?
This article reminds me of the economic system transformation. The extensive growth had given enough energy to the Chinese economy over the past years, however, facing a new level of growth, that was far from enough. At the same time facing the need from a more open market, the government has to change its economic system in corresponding to the change of its economy. Therefore, more intensive growth methods and power are needed.
I still think extensive growth can give China the needed push to grow for the next decade. Much of the coastal cities have been developed through extensive growth, but there are still hundreds of cities that are inland that need to be developed and this can occur through extensive development that has build many of the great costal cities. China does not need to focus on driving there own innovation they can continue through extensive growth and use the intensive growth (ie technology/innovation) from developed countries of West. This will allow them to best use the limited supply of capital they have to develop the poorest areas of the country.
I agree with Tim. China can continue to grow through extensive growth by using the technologies that it has developed during the past fifty years. And in order to keep up with the new technologies that are constantly being invented, China will definitely have to make a few changes to the prevailing cultural norms.
The GDP per capital in China is still far to small compared with developed nations and it indeed has the capacity to grow for years at least using the current extensive growing method. The government is trying hard to change this unsustainable growth pathway but its effort will probably in vein unless it further looses its regulation and let the invisible hand control price and demand.
I agree with many of the above comments. I think that the extensive growth China is currently experiencing will last for the next few years especially with the massive growth in population. However as we discussed in class, China will need intensive growth in order to sustain their current growth rate. Although intensive growth is being developed with growing education in the country I would anticipate a leveling off of growth before the intensive growth can have a full impact.
I agree with the fact that China will continue to grow but I believe they are going to run into labor and environmental issues. As they continue to develop, the environment is going to continue to get worse and people are going to be enlightened and want better conditions, so the government will run into problems here.
China needs to support its growth (both intensive and extensive) with other programs that keep businesses and employees happy and in the area. As the country becomes more developed, the working conditions are going to have to increase or the employees will eventually leave for other work. Also, because there are already so many factories in China, other nations are starting to use less developed countries for their factories. Soon a shift from this type of economy to a less factory intensive economy must take place for the country to continue to grow and become more like its economic competitors such as the US.
As an insider, I agree that China could still reply on extensive growth in the, say at least next decade. The population hasn't been totally utilized yet.
But personally I do not hope to see this happening because the serious environment degeneration.
But, in order to attain innovation and significant technological development, China still has a lot of to do on education, and knowledge protection.
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