Economic Issues
Before Deng Xiaoping came to power as Chairman of the People’s Republic of China and instated economic reforms that gave China’s economy some capitalistic characteristics, China's economy was centrally planned. Since the period of economic reform, China has evolved greatly economically. China’s economy is “currently the world’s second largest economy after the U.S.” (Economy Watch). Additionally, the nation is a major player in the global economy, as its contribution to economy has “increased from 11% in 2000 to over 13% in 2004 which in turn, dwarfs the share of the economies of Japan, France and the U.K.” (Economy Watch). Due to China’s economic boom, the Chinese are enjoying higher standards of living and are able to buy “consumer goods such as cars and television sets, which were once reserved for the elite” (Economy Watch). This increase in consumption has also led to negative environmental impacts as more and more natural resources are exhausted to meet the demands of Chinese consumers. The changes in China’s economic policy contributed to the country’s economic success.
Although economic reform helped transform the course of the Chinese economy, China’s status as an economic superpower is also due to a variety of factors namely capital, technology, markets and most importantly, its abundance of cheap labor. Capital and technology were acquired by overseas investment, and the necessary market of exports emerged through the demand of foreign consumers such as the United States (Wang). However, China’s economic success is not the result of solely these three factors, but also a cheap, “young and productive labor force” (Wang). The element of cheap labor was essential to China’s economic strength as businesses sought to maximize profits and minimize expenses. China’s role as an economic world power is largely due to China’s large population and the great number of workers it provides.
Although economic reform helped transform the course of the Chinese economy, China’s status as an economic superpower is also due to a variety of factors namely capital, technology, markets and most importantly, its abundance of cheap labor. Capital and technology were acquired by overseas investment, and the necessary market of exports emerged through the demand of foreign consumers such as the United States (Wang). However, China’s economic success is not the result of solely these three factors, but also a cheap, “young and productive labor force” (Wang). The element of cheap labor was essential to China’s economic strength as businesses sought to maximize profits and minimize expenses. China’s role as an economic world power is largely due to China’s large population and the great number of workers it provides.
The era of uninterrupted supplies of young, cheap Chinese labor is over. — Feng Weng
With the implementation of the one-child policy, China began losing its greatest asset, its cheap labor force. The policy has resulted in “a sustained decline in new entrants into its labor force and in the number of young migrants. The era of uninterrupted supplies of young, cheap Chinese labor is over” (Wang). Businesses will no longer be able to rely on China’s supply of cheap labor and will seek to do business elsewhere where they can make more money. The severing of business ties with China will harm the Chinese economy as well as alter the state of the world economy. In addition, the decrease in the number of available workers coupled with old age pensions and increasing healthcare costs for the growing aging population will “put a severe strain on the country’s growing national output” (Economy Watch). With fewer people working, the Chinese economy will lose its robustness and only children will have a difficult time supporting their parents and possibly grandparents in addition to their families. Also, with a decrease in the younger population there will be fewer consumers (Wang). The one-child policy has resulted in tremendous detrimental impacts to the international economy and the economic situation of China.
Since China is a major economic power in the world and still has the world’s largest population, the implications of the demographic crisis in China will almost certainly spread from the domestic to the international arena. — Shengyi Chang
Copyright © 2013 by Alexa Tsintolas. All rights reserved.
