Case Study 3

Understanding a Development Miracle: CHINA

Chapter 4 Contemporary Models of Development and Underdevelopment

Economic Development

2021

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 I. SUMMARY OF FACTS

CHINA’S DEMOGRAPHICS as of 2019

CHINA
Land Area 9,597,000 million km²
Population 328.2 million
Political System PEOPLE'S CONGRESS SYSTEM
Buddhism, Taoism, Catholicism, Protestantism, and
Religion
Islam
GDP for 2019 was $14.34 trillion,
GDP 3.22% increase.
China GDP growth rate for 2019 was 6.11%,
GDP GROWTH
a 0.64% decline .
China GDP per capita for 2019 was
GDP per capita $10,262, a 2.86% increase.
China’s GNP for 2019 was $14,555.44B,
GNP a 8.85% increase.
GNP per capita China’s GNP per capita for 2019 was $10,410.
China’s GNP for 2019 was $23.47 trillion,
GNI 8.5% increase.
China’s GNI per capita for 2019 was
GNI per capita $10,410, a 8.44% increase.
Source: https://www.macrotrends.net/countries/CHN/china/

As of recent years, China has been one of the fast-growing economies in the
globe, reaching an almost 10% growth rate for a span of 30 years. By its economic
reforms in 1979, wherein they had opened their foreign trades, China’s GDP
skyrocketed by 9.5% through 2018, which had been said as the fastest sustained
expansion by a major economy in history. However, China’s success isn’t focused on
its foreign trading but that was just a mere kick-start. Tracing China’s sources of
success throughout its economic years, it would be initially directed to the
strategies of where they have introduced a progressive economic policy, promoting
exports with growing expertise and technological material, and it began its dramatic
rise around 1980, more than a decade before substantial trade liberalization.

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 Additionally, this growth was also remarked of its people and government
efforts and initiatives, such ideals had put work into the economic development of
China. But it should be noted that China, like any other imperfect developed
country, had previewed series of economic dilemmas that some are still happening
until now.

✓ Using the population as an advantage

By the late 1980s, the emphasis on economic development had diverted to

China, as investors continued to pour money into the country, largely because of
the attraction of its imminent market of more than 1.3 billion households. In
exchange for allowing to sell to Chinese people, the government played off potential
buyers who wanted access to China's customers, requesting and receiving
substantial technology transfer, public and private Chinese business collaborations,
local content, and other concessions. However, there were hundreds of Chinese
individuals who remain in severe poverty, such as rural peasants in some parts of
the world who face a lack of security; official corruption, including allegations of
enforceable legal seizures from peasants; increasing local taxes; and limited
changes in technology or skills. At the same time, amid increasing average incomes,
inequality in China has risen dramatically; inequality has now reached about the
same amount as in the United States, the worst among developed countries. Behind
China's remarkable population development, Richard Easterlin discovered that the
people in the country gains in happiness and satisfaction have simply not kept pace.

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 ✓ Investments on Health and Education Sector

China had experienced major death in the 1950s due to famine caused by poor
central planning decisions and political pressures that led party and government
officials to regularly overstate the harvest prospects. China has the majority of the
world's most polluted cities, and health issues are on the rise. Water resource
issues, deforestation, and habitat loss all jeopardize the prospects for long-term
sustainability. Severe traffic congestion is now generating not only suffering but also
deaths among several other significant and rising health issues. This reached
catastrophic proportions during the so-called Beijing "airpocalypse" of January 2013,
when pollution indicators exceeded 40 times World Health Organization standards;
many other cities, including Tianjin and Harbin, were seriously impacted. Such
tragedies were only partially offset by China's early and continuing focus on basic
health and education, and then on fertility reductions by China's one-child policy.
However, when paired with market incentives, these basic first steps in education,
health, and ultimately fertility helped set the stage for development and poverty
reduction. However, just this 2021, China had again begun another serious health
case, which targeted not only China but globally. Covid-19 had impacted China’s
economic growth since 2019 (see table above), so does affect the economies in the
world.

✓ Continuous developments on Domestic Product

China's government has used its central power to manage cross-industry

investments. State regulation of licenses and other business agreements supported
China in securing better deals than many other developing countries that relied on
private company-level financial transactions. However, there is growing concern
that China has undergone a development bubble stage, with many investments of
inferior quality, especially in real estate, some utilities, and manufacturing
industries. Nonetheless, China's rapid growth has been unprecedented. The most
popular cases reported were widely publicized scandals involving the safety of food,
drugs, and other consumer goods, which posed a threat to the worldwide reputation
of Chinese-made commodities. Consumer safety requirements are poor, and
regulatory enforcement is weak. International investors, as well as the government,
are all to account. China's regulatory institutions would have to close the gap with
several other dimensions of national economic development.

✓ Development of rural areas

China’s growth in the 1980s and early 1990s was due to rural township and
village enterprises, which had a quasi-cooperative and quasi-municipally owned
character. Deng Xiaoping, the Chinese leader, paid a visit to the southern China
regions that had been leading in growth and reform in 1991 and announced, "You
should be bolder and evolve faster." Following his speech and its greater
investment, there was a substantial spike of investment and growth, as well as
policy reform. This had given solutions to hundreds of millions of low-income
farmers in the rural areas. The more producers located in China, the greater the
benefits for an increasing number of suppliers to operate there. At this point,
investments started to feed on themselves in cumulative causation.

Economists typically attribute a significant portion of China's rapid economic

growth to two major factors: large-scale capital spending (financed by large
domestic savings and foreign investment) and rapid productivity growth. These two
elements seem to have worked in tandem. Economic reforms improved economic
productivity, which increased production and freed up capital for additional
investment in the economy. Economists argue that China's innovation growth will be
difficult to achieve, particularly if it is largely state-driven and imposes new
restrictions on foreign firms.

II. PROBLEMS

1. How will China eradicate their yearly increase of national health cases
such as contagious diseases, low child’s mortality rate, and etc.?

2. How can China maintain their reputation towards their manufacturing

industry which proactively indicates worldwide dilemma in accordance
with their low quality of goods delivered to different foreign trading-
partners?

III. SOLUTIONS

PROBLEM 1: Continuous National Severe Health Cases

SOLUTIONS:

1. Strengthening its primary health care system with core responsibilities

in preventing and managing contagious and airborne diseases and
emerging infectious diseases.

The primary health-care system's deficiencies include inadequate preparation

and educational resources for physicians, a fee-for-service model that promotes
needless testing and procedures, a lack of alignment between clinical care and the
public health service as well as between separate health-care industries, and
insufficient quality of care across the entente. With this, the initial steps of China
should be the:

(1) enhancement of the quality of training for primary health-care physicians,

(2) establishment of performance accountability to incentivise high-quality and high-

value care; (3) integration of clinical care with the basic public health services, and

(4) strengthening of the coordination between primary health-care institutions and

hospitals. Additionally, China should consider modernising its primary health-care
system through the establishment of a learning health system built on digital data
and innovative technologies.

China's development in primary health-care system requires success

assessment and transparency, including comprehensive metrics, accurate data, and
in-depth research, as well as financial and non-financial incentive mechanisms. A
key component to a more healthy nation is the promotion of healthy lifestyles and
physical fitness, including through the development of polluted cities, to ensure a
greater focus on prevention rather than treatment.

2. Making health as one of the national political priority and reform the
societal and cultural belief of China towards wet markets

China's food consumption is emblematic. Though Chinese consumers have

adopted supermarkets and pre-packaged goods, the country's economic growth has
not resulted in a decline in traditional Chinese forms of consumption, such as the
demand for "warm meat". “Wet markets” form an integral part of the Chinese
market and of Chinese social life. The market sold a number of wild animals in
addition to seafood. Whatever the case, while shutting them down temporarily and
curbing wild-animal trade has advantages when it comes to preventing disease, a
permanent shut down or abolition of “wet markets” would have an immense and
unpredictable impact on everyday life and well-being in China.

PROBLEM 2: International export products’ reputation

SOLUTIONS:

1. Investing on their man power to create and develop new set of notable
products that fairly compensates their cost.

Costs of export products are less expensive in China than in other countries because
the Chinese government imposes few health and safety or environmental
regulations. China doesn't provide workers ' compensation insurance for their
workers so workers hurt on the job don't receive any compensation when they are
injured to the point that they are disabled. This certain choice of manufacturing
strategy barely portrays development. The welfare of the citizen is a great factor
that should be considered in viewing the economic development of a country.
Hence, China must have a safer, comfortable, and clean policy reform throughout
its labor industry. This will increase labor quality and efficiency that will eventually
give a positive impact on the quality of the manufactured products as a whole.
2. Have an ethical an equal business perspective to the cost, profit and
quality.

China has a major advantage in its export industry. Exports are one of the
success factors of China and investing in them can eventually make the country
boost its global reputation so does development. As it has been mentioned in the
past chapters, economic development does not only count the numerical statistics
of the country but rather focuses on its level together with the nation and citizen
holistic factors. If they would deliver promising international product quality, China
would greatly have an opening to more trading partners. This would also attract and
cherish existing friendship and will denote camaraderie to the neighboring
countries.

IV. RECOMMENDATION

For the first problem, the first solution would be much advantageous and
practical. Considering the current technological advancements of China, so does
their economic extents, a more developed basic health care system equipped with
more active and direct non-governmental plans and activities to those more health-
deficient citizens, will open a relevant kind of economic development.

For the second problem, the second solution would greatly give the difference
to China’s manufacturing economy, so does with its performance on its export
trading system. Trading partners will eventually invest more in their export capital
towards China, which would likely help the growth rate of China’s trading profits.
China will surely boost and maintain its international camaraderie and promote
peace and order.

V. CONCLUSION

No matter how crucial and objective the global perspective towards

development and prosperity, new economic models are focused on how to achieve
development without disregarding multi-disciplinary citizen’s welfare. Chapter 4 had
discussed the focus and influence of the new models of economic development
wherein it highlights the effectiveness of development to the country through
governmental and citizen mutual understanding in implementing and improving
development strategy for the nation, considering a more associative framework that
closes the gap of the government and the people that will result to a more clear
appraisal of locally binding constraints on the ability of a developing nation. China’s
miraculous success can never be questioned numerically, but its dilemma falls on
the importance of the nation’s people welfare. A nation’s success that compensates
the well-being and security of not only its people but the people around, eradicates
the true sense of economic development. The mutual trust between the people and
the state will create a deep intervention that can move the economy to a preferred
equilibrium or even to a higher permanent rate of growth that can then be self-
sustaining.