All Roads lead to China and its economy

The article “All Roads lead to China” dated 5th December 2009 in The Star Bizweek focuses on China’s rise as an economic powerhouse, with the stage set to become the largest economy of the world. Continuous rapid economic development till date has placed China right at the heels of United States and Japan. After a market-orientated reform programme in 1970s, China turned into the centre of attraction for foreign investments from all over the world. The nation’s importance in the global economy is evident with its government policies and local companies’ actions being closely monitored. The staggering population in China of 1.3 billion provides an attractive customer base besides serving as a cheap labour force. In line with a boom in the manufacturing sector, China’s demand for raw materials also propels correspondingly. This has not only transformed the way in which commodities are traded, but also led China to indulge in the acquisition of foreign assets and the formation of alliances with resource-rich countries. Despite of downbeats ranging from the low quality of goods produced to the accusation and allegation aimed towards China, the China economy is still going strong with corporations envisioning to compete against other established international players.

The introduction of the market-orientated reform programme in 1970s do clearly seems to be a masterful move which has resulted in China enjoying rapid yet encouraging economic developments over the years. In addition, with a much improved and predictable legal system in practice, the republic seems to have strummed the right note in the global economy game, with investments pouring in from different parts of the world. It is indeed amazing to think how the China economy has managed to emerge as one of the dominant force in such short time span. With such thriving potential and capacity of the China economy, no wonder it is by no boast to claim that any business considering itself to be a global player has to enter the China market, as stated in the article.

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The major advantage that China enjoys and has successfully utilized over the years is the huge population which provides a cheap, appealing labour force for industries, particularly the manufacturing sector. Though China is not able to match with tech-savvy nations such Japan, they have understood the population advantage which they gain over other countries and thus embark on a labour-intensive-centered economy development. On top of that, a competitive surrounding too serves as a catalyst in China’s economic development. Low wage may seem to be a fair reason to explain China’s competitiveness, but Kwan (2002) pointed out that the productivity of Chinese workers also has to be taken into account as a factor in China’s competitiveness. He explains that though China pays low wage for their workers like how Bangladesh and Somalia pay their respective workers, the relatively high productivity of Chinese workers has placed their competitiveness on par with United States. This indicates why till date, there has yet to be any countries able to match up with the cost advantage of companies based or branched in China.

Amidst of the advantage discussed above, there are several setbacks occurring concurrently with China’s economic progress. The first revolves around China’s very own legal system. Though China’s legal system has been more consistent and predictable with businesses enjoying a smoother entrance into the republic’s market, it still has its flaws and could still prove to be an obstacle for companies venturing into China. Recently, BBC (2010) reported a conflict between Google and the Chinese government with the former threatening to pull out of the nation due to cyber attacks and tight surveillance by the Chinese government to limit freedom of speech in the internet. With China continuously imposing tight regulatory and censorship rules over the internet while Google holding firm to its stand of prioritizing moral concerns ahead of businesses, the conflict has demonstrated that China’s restricted openness will to certain extent hold back the republic’s potential to expand its economy.

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Additionally, there is also the factor of quality that China has to seriously look into. The recent years have saw China’s exports raising safety concerns all around the world. The people worldwide are basically getting cheap goods at the expense of their health and safety. At the same time, the reliability and durability of China-made products have also raised concerns and dissatisfactions from the outside world. From toothpaste to pet food to toys recalled over the years, the quality control in China seemingly to have deteriorated from bad to worse. Of all the quality flops, the most serious case saw tens of thousands hospitalized due to melamine-contaminated dairy products. The scandal not only tarnished the nation’s image, but it has also puts China’s credibility and ethical responsibility into question.

Moving on, China’s domination in the global economy will soon be severely tested with the issue of inflation surfacing in line with the prosperous developments. According to People’s Daily Online (2010), experts have been predicting inflation in 2010 and the challenge lies ahead for China’s economy to ‘prevent inflation and to control the inflationary expectations’. With increased demand for commodities due to rising consumption power, inflation do seem inevitable for China and it would be interesting to see how the Chinese government will deal with this upcoming obstacle.

Although China’s economy has progressed immensely for the past 30 years, there are certain areas that still can be further improved to allow further expansion of the promising market. In the legal matters prospect, China could have given its legal system a thorough review to widen its doors to companies such as Google to encourage more potential investments. On the other hand, China can address to the problem of low quality goods by tightening the quality control regulation to regain consumers’ confidence towards China-made products. If the relevant problems have been attended and rectified accordingly, it is only a matter of time before China replaces United States at the top of the rankings.

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BBC (2010) Google ‘may pull out of China after Gmail cyber attack’ [Online], Available: [accessed 11 January 2010]

Kwan, C.H. (2002) The Myth of China Competitiveness, [Online], Available: [accessed 11 January 2010]

People’s Daily Online (2010) Experts: Preventing inflation is the biggest challenges for China’s economy in 2010 [Online], Available: [accessed 11 January 2010]

Bibliography (2007) China product quality under spotlight [Online], Available: [accessed 11 January 2010]

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