Why China’s Economy Will Be #1 In 2050

by Daniel Crompton in Economics, January 13, 2012

Recent predictions of world economies in 2050 by HSBC have pitched China above the United States at the number one spot. This paper examines the contributing factors in China’s recent economic growth which may ultimately result in its impressive global economical position.

Having seen a decline in real terms through the nineteenth and early twentieth centuries the Chinese government recognised the need for drastic national reforms in order to instigate recovery and realise its economic potential.

In 1978 the Chinese government initialised the first and most important of two reformative stages which would see the country’s economy develop into the force it is regarded as today. The capitalist economic reforms which were implemented at this time in order to stimulate economic growth included:

The initialisation of a program to submit strict state controls on productive assets and give permission to entrepreneurs to start up businesses;

heavy investment in the formation of rural enterprises geographically diversifying commercial revenues and decentralising business;

relaxation of foreign trade and investment restrictions which encouraged external investment and enabled greater exportation;

an increase in industry and

the recognition of the benefit of an educated workforce.

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China’s rise has come at a price with not only wealth rising and poverty being reduced, but also wealth inequality increasing. The retention of government monopolies on both the fuel and banking sectors has also been the subject of much international criticism.

Perhaps the greatest outcome of these incentives was the overall increase in productivity seen by China which accounted for more than 42% of growth to 1994. This factors in changes in working population and therefore is impressively a direct result of increased efficiency.

After the reforms of 1978 China saw its economic growth increase to an average of roughly 9.5% a year, peaking at over 13%, with increased stability.

The second stage of economic reforms came relatively recently in the 1980s and 90s and involved the diminution of government control over prices including the relaxation of many protectionist policies and regulations. This allowed China’s private sector to flourish, accounting for roughly 70% of the gross domestic product by 2005.

About the author

Daniel is a professional freelance SEO enthusiast and web / graphic designer with eif media and a paid writer and blogger for Triond, a place where original content is rewarded.

Some of his foolish beliefs include making the internet a more attractive and informative place.