The Economy Of China And Emerging Issues

China’s economy has established itself as the fastest-growing economy in the world

maintained a sustainable growth, with the growth of new factories, processing equipment, and

communications systems, and an increase in productivity (e.g. improved labor efficiency) was

the driving force behind the fast economic boom. The GDP of China is the largest in the world.

For over 30 years China has maintained an economic growth of 9.61% on average. The

economic growth, increase in industrialization, export, and inflow of FDI reduced poverty and

helped the economic growth significantly in China.

Despite the economic growth the debt -GDP ratio of China has increased by 260%, this

includes private, corporate debts as well as government debts. Along with the growth of

industrialization, it must also have environmental equilibrium in terms of growth with a

population of more than 1 billion, the growth rate has caused serious challenges in the

environment. The fundamental issues that have arisen due to economic growth are pollution,

food safety, unemployment, and inflation. Furthermore, it has also created a major amount of

people shift to urban areas since that’s where most jobs are available. In 2017, almost 60 percent

of the population lives in urban areas. And the government does not provide benefits to the

citizens who shifted to urban areas. This has heavily affected domestic demand as they prefer

saving overspending.

There are various other negative externalities of the development of China’s economy.

As china’s CO2 emissions have been growing whereas other countries like the USA have been

decreasing its co2 emission . This major cause is industrialized cities and increased use of

personal vehicles. Another major issue is income inequality, undervaluation of the currency, and

inflation.
 Comparision to Solow Growth Model

The Solow growth model is an economic growth model, which analyzes shifts in

economic production over time as a result of changes in population growth, interest and savings

rate and the speed of technological advancement (Ouyang. Y., & Tang. L., 2019).

This Solow pattern is similar to China's economic development. It assumes that some

factors determine competitive capacities, such as labor force ability, capital stock valuation,

energy consumption output and the technological advancements that is engaged in the production

process. The growth of these factors in China is high these determine the productive potential.

This states the economic growth has long term effects on the saving rates of the country,

political, and environmental power.

References

Ouyang, Y., Yi, X., & Tang, L. (2019). Analysis of Dynamic Mechanism of Economic Growth

in Large Developed Countries. In Growth and Transformation of Emerging Powers (pp. 23-46).

Palgrave Macmillan, Singapore.