China’s gross domestic product growth dropped to 6.9
percent last year from 7.3 percent the previous year, the National Bureau of
Statistics of China reported. And at the same time, GDP growth fell to 1.6 percent in the
fourth quarter from 1.8 percent in the third quarter, the bureau said in
Beijing Tuesday.
Behind these numbers there are a lot more going on. Most of these declines were limited to the manufacturing and heavy industry.
Which is actually a good thing, China has been known as “the world’s factory”
for a long time. Manufacturing companies from all over the world are attracted
by extremely low labor cost and lack of intellectual property related
regulations, and build up factories in China. On one hand, these low-cost manufacturing
is not creating much value, and in the long run the manufacturing industry will
reach the saturation point.
China has been
trying to change the focus from manufacturing to adding value to goods and
services. To achieve this goal,
government encourages startup companies within the high-tech and innovative industry
in different ways. And the ‘internet plus’ concept is a good example; related
policies have generated a wave of technology revolution among Chinese
traditional industries. These changes are pushing the economy into a better direction.
Recently, government pays more “attention” to firms in information
technology industry, by practice more strict enforcement to the law. Right now, several
companies are having trouble because of allowing people to watch free unauthorized
films, TV series. Personally I hate these policies. But deep down I know: in
order to successfully transform from a manufacturing economy to value adding
economy, technology improvement is necessary. And in the long run, these enforcements will
actually help to create a healthy and more regulated environment for the
possible technology improvement.
http://www.ibtimes.com/chinas-gdp-growth-rate-declines-69-2015-73-2014-lowest-annual-growth-rate-1990-2270108
Because of the depressed real-estate market and the accumulation of local government debate in domestic China, and the decreasing export, it's necessary for China to seek for a new development mode. On the other hand, actually, comparing with other countries, China's GDP growth rate is still at a high level. At the same time, the decrease in GDP growth rate can be seen as a sign that China is paying more attention to the quality of GDP. As we talked about in class, GDP sometimes cannot measure the social economic activity and average living standard.
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ReplyDeleteChina adding more value to goods and services explains the increase in production capacity I read about. Though it seems these new policies are decreasing annual GDP growth rate in the long run for China. I wonder if the Chinese technology industry's containment by the Chinese government is actually hindering a potentially new source of GDP growth for the country rather than promoting it because if they're moving away from manufacturing they'll need to provide desired consumer goods and services if they want to add value to goods and services' sector of their economy and continue its extraordinary economic growth.
ReplyDeleteGovernment involvement in Chinese business is what has driven their growth so far. Over the summer, I heard an economist refer to their organization as "capitalist focused communism." While they may have a significant involvement in their business, the government's focus on international trade is what has driven them so far. While Chinese companies are subject to very controlling real estate and development laws, their government intends to act as a catalyst in their businesses.
ReplyDeleteChina is still considered to be a "developing mareket." As the world's factory or the world's sweat shop, they are growing in the way that the USA had grown during the industrial revolution. If they want to grow their domestic economy and promote the growth of their own businesses as opposed to international investment, they must increase their patent laws. This is something that prevents the growth of "start-ups" or other smaller companies trying to obtain market share in a developing economy.
Example of patent trouble: Chinese automakers clone the land rover evoque as a vehicle called the land wind x7 http://i2.coventrytelegraph.net/incoming/article8173396.ece/ALTERNATES/s1023/evo5.jpg
Government involvement in Chinese business is what has driven their growth so far. Over the summer, I heard an economist refer to their organization as "capitalist focused communism." While they may have a significant involvement in their business, the government's focus on international trade is what has driven them so far. While Chinese companies are subject to very controlling real estate and development laws, their government intends to act as a catalyst in their businesses.
ReplyDeleteChina is still considered to be a "developing mareket." As the world's factory or the world's sweat shop, they are growing in the way that the USA had grown during the industrial revolution. If they want to grow their domestic economy and promote the growth of their own businesses as opposed to international investment, they must increase their patent laws. This is something that prevents the growth of "start-ups" or other smaller companies trying to obtain market share in a developing economy.
Example of patent trouble: Chinese automakers clone the land rover evoque as a vehicle called the land wind x7 http://i2.coventrytelegraph.net/incoming/article8173396.ece/ALTERNATES/s1023/evo5.jpg