The Reality of China’s Growth

China’s continuous double digit economic growth may not be sustainable in the long term. The Chinese economy has consistently posted high growth figures even as the rest of the major world economy giants undergo recession. Though probable, such a trend is unlikely to last long and will likely stall in the near future.

One of the reasons postulated for the eventual decline in the Chinese economic growth is that the Chinese economy is highly dependent on foreign demand. Although many Chinese officials try to downplay this interconnectedness with other world economies, the evidence is clear (Breslin 1180).

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Chinese officials go as far as to manipulate international trade figures in order to downplay the emerging fact that, the projected growth may be partly a function of manipulated figures. At the beginning of this year (2011), analysts and critics reported that some Chinese officials had the figures in copper trade altered in order to inflate the import numbers.

Furthermore, as the European and American economies struggle with the mounting debt and perpetual economic crises, China, on the other hand, as the biggest foreign exchange holder of American and European debt, is bound to be drawn into the arising economic uncertainties.

Another reason that analysts believe that the sustained growth of the Chinese economy is impossible is because it defies basic economic growth cycle patterns.

Cycles of economic boom and recession are inevitable in any economy. The reason why the Chinese people have been able to experience the continuous and sustained growth is that, the Chinese government intervenes to cushion its markets from recession. The heavy presence of government in nearly all spheres of the economy also paints a negative picture of the Chinese economy and its long-term prognosis.

The Chinese economy is also heavily industrial and manufacture oriented, pointing to an unwieldy economy that needs to adapt and be nimble in order to survive an uncertain future.

Furthermore, although the Chinese are famed for their entrepreneurial spirit, the policies of the Chinese government sometimes stifle the enterprising pursuits of the Chinese. Many dynamic businesses and firms that mushroom are sometimes quickly ‘swallowed’ or muscled out of business by the major firms that may enjoy the support of the state.

Such practices tend to erode the spirit of entrepreneurship in the long term. China also has a huge labor force that sometimes poses a challenge to the government (Shuanglin and Song 2254).

Ingeniously, the Chinese government absorbs the mass labor force into the huge and expanding Chinese service industry, with many hotels employing as many workers as possible. Many of these laborers are usually workers from other sectors of the economy that may have collapsed previously.

Therefore, in conclusion, the continued high growth rate of the Chinese thriftiness is unsustainable in the end. The sustained growth, as has been discussed, is more a function of government policy and interference than a result of exclusive market dynamics at play.

Inevitably, the Chinese economy will soon experience recession that is common to all economies. To what extent the government can cushion its citizens when this happens is an open question. However, in the end, the Chinese are better of preparing for such an eventuality than denying it.

The economic stability of China is tied to its political stability, and when the markets eventually experience a recession, many analysts believe that political instability may ensue, and such an occurrence would unnecessarily erode the decades of political and economic progress.

Works Cited

Breslin, Shaun. “The politics of Chinese trade and the Asian financial crises: questioning the wisdom of export-led growth.” Third World Quarterly 20.6 (1999): 1179-1199.

Shuanglin, Lin, and Shunfeng Song. “Urban Economic Growth in China: Theory and Evidence.” Urban Studies 39.12 (2002): 2251-2266.