China Economic Growth Stage 1

ChinaEconomic Growth


Accordingto Garnaut (2014), the Gross Domestic Product/ the GDP serves as themost widely used measure of an economy’s production or output. Itrefers to the total value of output produced within a country’snational boundaries for a given period. The output of interestentails both goods and services. It is interesting to use the GDPsince it is an accurate measure of the size of an economy. The GDPper capita is used to indicate the living standards in a countrywhile the GDP growth rate remains the single best indicator ofeconomic growth (Chinaoverview, 2015).Consequently, it provides an overall picture of the status of theeconomy. It enables policy makers to evaluate the movements in theeconomy as expanding or contracting. It also enables policy makers todecide the appropriate interventions to inflations and recessions.The current project pays emphasis to the trend of Chinese GDP and thefactors behind the past fast growth. Besides, it evaluates therequired actions to sustain economic growth. The Gross Domesticproduct has been used to assess and describe the various aspects ofthe project (Chinaoverview, 2015).

Inchina’s case, the GDP curve has consistently assumed an upwarddirection within the past 40 years. The trend of economic growth asindicated by the GDP shows that the Chinese economy GDP surpassedthat of Italy in the year 2000. The France economy was surpassed in2002 and the UK economy in 2006. The German economy was surpassed in2007 and his Japanese economy in 2009. Currently, the Chinese economyremains the second-largest economy in the United States of America.The growth is as a result of government policy on international tradeand the society structure (Chinaoverview, 2015).Concerning government policy, the Chinese economy has encountered aseries of critical growth phase since the liberalization of theChinese economy in the year 1978. Specifically, the government policyto open up the economy resulted into witnessed tremendous growth. TheGDP increased from less than 150 billion in 1978 to 827 billion inthe year 2012. Besides, the liberalization allowed 600 people millionto escape from poverty (Garnaut, 2014).

Accordingto Jonge(2015), the need to measure the GDP performance of the Chineseeconomy is due to many factors. First, the strength of the Chineseeconomy has enabled the country to provide financial assistance toregions such as the Latin America and Africa. The funding is mainlyfor enhancing economic development. The resultant support provided toother countries is due to the economy’s ability to produce excesscapacities. Increased production emanates from the use of enhancedmethods of production and efficient technologies. The GDP measureincreases the capacity to establish whether the Chinese economy cansustain the financial aid to developing countries in the future(Chinaoverview, 2015).

TheGDP can measure deviations in the capacity of production. Besides itplays a significant role in determining the cost of production.Consequently, using the GDP as a measure establishes the capacity formass production. Mass production further reduces the cost incurredduring the manufacture and provision of goods and services. Theability to determine China’s production of extra units increasesthe country’s capacity to export to other countries (Jonge,2015).

Second,there is the need for increased monitoring of the position of theChinese economy due to its role as a provider of financial assistanceto other countries. Provision of funding to China has strengthenedits influence on the world economics and made it a global superpower. Consequently, the increased need for monitoring emanates from thepressure to protect the economy from falling. The failure of theeconomy would, therefore, imply reduced financial assistance tocountries that depend on Chinese support. In the case of economicfailure, the disappointment to provide funding would suggest a lostopportunity to acquire extra income from interest charged onfinancial aid (Garnaut, 2014).

Garnaut(2014) stipulates that the GDP is an important measure for use by thecentral bank. It enables the control of macroeconomic factors such asinterest rates from the growth observed in the GDP. The measurementof the economy’s performance further increases the ability tomeasure the country’s development. Constant frequency enhancesimprovement in development by maintaining a stable GDP. The regularmonitoring increases the capacity to improve development strategiesby the identification of possible modifications such as in the use ofthe technology.


Thegroup analyzes entail the level of Gross Domestic Product and thelevel of Carbon Dioxide (CO2) emissions. Besides, the sectionevaluates the impact of the working age population and populationgrowth rate as independent variables. The hypothesis behind thecurrent research is that China’s level of GDP is positively relatedto the volume of Carbon dioxide emission: a rise in the level of GDPcontributes to an increase in the volume of C02 emitted in theenvironment (Garnaut, 2014).

Carbondioxide emissions.

Talbergand Meinshausen(2015) provide that the Chinese economy has become one of thegreatest world economies due to the increase in the level of GDP.During a ten year period between 1966 to 197, the carbon dioxideemission was recorded at 1 ton per capita. The Chinese economysubsequently experienced an 8% increase in GDP between 1978 and 1998that was associated with a rise in the level of Carbon Dioxideemission during the same period. Consequently, there was a decline inCO2 emission between 1980 and 1981 by 1 ton per capita. The resultantdecrease occurred after the Chinese government realized that theenvironment was part of the economy (Talberg,&amp Meinshausen, 2015).

Theperiod after 1981 experienced a significant change in the prioritiesof the government. Specifically, the environment became a secondaryfactor since the government was inclined to increase economicperformance by any means possible. Specifically, to improve thedevelopment of the economy the government decided to increase energyproduction. An increase in energy production further resulted in theconsumption of more carbon (Talberg,&amp Meinshausen, 2015).

Duringthe years between 2003 and 2011, carbon dioxide emissions increasedfrom four to 7 tons per capita. Consequently, the total GDP increasedfrom 13.66 trillion to 48.41 trillion. Although the Chinese economyis dependent on both agriculture and the industry, the industry playsa bigger role. Consequently, the Chinese industry is associated withhigh energy requirements that further imply into high carbon dioxideemissions. The failure of the government to enact laws to govern CO2emissions plays a significant role in determining the amount ofcarbon dioxide emissions (Talberg,&amp Meinshausen, 2015).

Workingage and population growth rate

Regardingthe societal structure, the Chinese labor supply, and the rapidcapital accumulation have majorly contributed to Chinas GDP growth.According to the World Bank, China remains to be the most populatedcountry with a population of 1.36 billion people. The Chinese laborforce remains the key factor behind the increased production of theeconomy. The increase in population in China has led to a supply ofcheap labor due to limited job opportunities (XU, 2013).

Inaddition to the population, the composition of the working age in theChinese economy has further played the part in development..Specifically, the Chinese working age ranges from 14 to 64 years. .Despite the high supply of labor in China, the labor capacity has adark future. It is anticipated that he Chinese labor supply will bewoefully inadequate for the Chinese policy of one child per couple.The system implies that shortly, there will be a lower number ofchildren under the age of 14 years. Specifically, the working agepopulation is expected to reduce from 970 million in 2010 to only 870million in 2050. The decline translates to an annual decline rate of3.66 million. Consequently, there will be fewer people to workcompared to the current situation. Besides, the number of peopleentering the aging population bracket keeps increasing day after day.The current retirement age for male workers in China is 60 yearswhile that of the females’ stands at 50 years (World Bank, n.d).

Specifically,research has indicated that China has 178 million citizens thatbelong to the aging population category. The population of the agedin China is equal to 23% of the world`s aged population. The Chineseprovides financial assistance to the aging population. Consequently,the economy has to be strong to enhance the continued funding. Thehigh level of GDP produced by the labor force is required to maintainthe financial assistance provided to the aged (Lallanilla, 2013).

China’sindustrialization and related carbon dioxide emission

Lallanilla,(2013) stipulates that China’s targeted economic growth remains at7.5% per annum with an aim to quadruple its economy within a timespan of 20 years. However, the economic growth poses a seriousproblem by creating a conflict between human and nature. According toJonge(2015), the Chinese economy is expected to suffer unless issues ofair and water degradation are given priority. Similarly, Talbergand Meinshausen (2015)accord that currently the Chinese economy has prioritized economicdevelopment at the expense of the environment. Consequently, Chinahas the most polluted environment including the skies and waterways. Garnaut (2014) provides that the primary source of pollution is dueto the massive overreliance on coal for energy production.Consequently, the use of coal has turned China into the world leadingCO2 emitter in the world.

Davis(2015) provides that the China’s environmental crisis presents achallenge to the country’s great industrialization. According toLallanilla (2013), the average growth per anum averages toapproximately 10% per in the last decade. Jonge(2015) contends that the economic upsurge has come at an expense tothe environment and public health. Consequently, it is the largestsource of carbon emissions. Specifically, China has become theworld`s, most significant source of carbon emissions. Davis, (2015)agrees that China produces a third of the total carbon dioxideemitted to the environment in the whole world. Besides, China is madeup of sixteen of the of the world`s largest top twenty most pollutedcities. Consequently, the life expectancy in the north part of Chinahas decreased by 5.5 years due to pollution. It is also characterizedby severe water contamination scarcity and deterioration landproblems.

Accordingto the World Bank (n.d.), the rate of pollution in China cost thecountry approximately 9% of the gross national income in the year2008. Besides, the country is threating to undermine its economicgrowth by exhausting public patience with the government`s pace ofreforms. The pollution has further reduced the country’s standingas it expands its global influence. China has consequently endangeredits stability as the ruling party faces increased media checks andpublic discontent.

XU(2013) provides that the history of Chinese pollution problem date afew decades past. The dynastic leaders consolidated China’s economyand exploited the country’s natural resources by using ways thatcontributed to famines. The Chinese Confucian roots further assistedto spur the policies that allowed the man to use nature. Theconfusion roots hindered for the development of conservation ethos.The current environmental problem emanates from not only thecurrently made choices but also from attitudes, institutions andapproaches that evolved over a couple of centuries. It was in 1972that China developed environmental systems after the United NationsConference on Human Environment. By then, the environment was in amiserable situation that was later increased by economic reforms thatoccurred in the late 1970’s. The industrial reforms stimulated theChinese industrial output by more than 11.4 %. The legacy of theindustrial reforms that left China in the current environmentalconstraints. Specifically, the changes called for the diffusion ofauthority to the provinces. It led to the proliferation of townshipand village enterprises as an encouragement to develop ruralindustries. In the year 1997, the township and village enterprisesgenerated approximately a third of the country’s GDP. However, thelocal governments were hard to monitor and consequently, they seldomupheld environmental standards. Currently, there is a problem in theenforcement of laws at the local level. The officials retain theeconomic incentives of production to ignore law enforcement.

China’senergy consumption has increased by 130% within a period of ten yearsfrom the year 2000 to 2010. In the year 2013, Beijing experienced along-lasting period of smog. It was so severe that the citizensdubbed it as “airpocalypse.” The smog entailed a concentration ofhazardous particles that are forty times the level proclaimed as safeby the World Health Organization. Besides, later in the year 2013 thecity of Harbin experienced a decrease in visibility to less than 50meters. The installation of air monitoring devices in theseventy-four cities indicated that the air quality in 80% of thetowns failed to meet the national standards for half a month.Besides, less than 1% of China’s 500 biggest cities have met theWHO requirements on air standards (Lallanilla, 2013).

Themain cause of pollution

Accordingto XU (2013), the use of Coal is the primary cause of air pollutionin China. China is the world’s largest producer of coal itaccounts for almost 50% of global consumption. Coal attributes toproducing 90% of China’s emission of sulfur dioxide andapproximately half of the particulate emissions. Besides, Davis(2015) provides that the northern part of China is the main burner ofcoal since it produces 70% of the country’s energy requirements. Inthe year 2011, coal emissions contributed to 25% of premature deaths.Consequently, China is the largest emitter of related greenhousegasses. It overtook the United States of America in the year 2007.

Accordingto Talberg and Meinshausen (2015), China faces other environmentalhardships such as water pollution and depletion in addition to theair-related pollution. Lallanilla (2013) agrees that there is grosswater contamination due to waste that has further led to severeshortages. The majority, two-thirds of Chinese cities, lack enoughsupply of water despite the fact that the Chinese government is incharge of water supply to thirteen neighboring countries. Besides,the china’s government has dammed a majority of the rivers found onthe Tibetan plateau (Davis, 2015). The impact of water shortages isfelt in by the rural dwellers. Approximately 300 to 500 millionpeople do not have access to piped water. A majority of the Chineseindustries are located along the major rivers and have consequentlypolluted the water supplies. In the year 2005, there was a plantexplosion that leaked hundreds of tons of dangerous materials intothe Songhua River (XU, 2013).

Theincreased pollution in China has attracted media attention.Specifically, the lack of appropriate waste disposal, removal andprocessing has magnified the pollution menace. During the year 2013,there were approximately 16000 dead pigs floating in the ShanghaiRiver (Davis, 2015). XU (2013) asserts that almost 70% of Chineseunderground water and Chinese rivers have been polluted. Thenegligent farming methods magnify further the issue of pollution.Consequently, pollution related problems have turned Chinese arableland into deserts that occupy approximately 27.5% of China’s totalland. The deserts have affected nearly 400 million of Chinese lives(Lallanilla, 2013). The World Bank estimates that the overall cost ofwater scarcity associated with pollution is approximately 147 billionRMB. It further translates to almost 1% of the country’s GDP (WorldBank, n.d).

Relatedindustrialization to environmental pollution

Similarto the related environmental degradation, an overview of the statusof the Chinese economy provides that the economy experienced anastonishing growth in the last few decades (XU, 2013). The growthcatapulted the economy into becoming the second largest worldeconomy. The process of Chinese economic development began in theyear 1978 (Davis, 2015). The Chinese government came up with aprogram to establish economic reforms. During the time, the countrywas ranked as number nine concerning its gross domestic product GDP.The product GDP at the time was 214 billion USD. After a period of 35years, the Chinese economy now ranks as the second largest with anominal GDP of 9.2 trillion USD (Lallanilla, 2013).

First,the Chinese economy has become the world’s manufacturing hub. Itssecondary sector comprised of construction and industry provides thelargest share of GDP. In the year 2013, the country propelled intothe tertiary sector that currently produces the largest share of itsGDP. Specifically, the tertiary sector contributes to 46.1% of ChinasGDP (Davis, 2015).

China’sbalance of payments is extremely reliable. The country has recorded asurplus balance of payment for each year consequent to 1994. In thelast 20 years, the Chinese economy has only experienced a deficittwice. The surpluses recorded on the balance of payments, placedmassive pressure on the country’s currency. Consequently, thecentral bank was pushed to sterilize the national foreign exchangethat got into China. Consequently, the Chinese foreign exchangecurrency had skyrocketed to approximately 40 million United StatesDollars in 2014. The Chinese currency account reached its peak in theyear 2007 where it represented 10.1 % of the total GDP (XU, 2013).

XU(2013) provides that an overview of china’s trade structureindicates merchandise surpluses since 1993. The total trade hasreported growth from USD 100 to USD 42 trillion in three decades. Inthe year 2013, the country surpassed the United States as the world’sbiggest trading nation. Similarly, Davis (2015) states that massivegovernment investment programs characterize the Chinese economy.Consequently, China has become the world`s manufacturing hub. Thesituation has led to the growth of trade since China joined the WorldTrade Center in the year 2010. The country further benefitted fromthe steady improvement in trade since the year 2000. The Chinesegovernment has engaged its economy into several multilateralagreements that have led to new markets for Chinese products. Forexample, the Chinese government signed the Closer EconomicPartnership agreement with Hong Kong and Macau (Lallanilla, 2013). Italso signed a Free Trade Agreement (FTA) with ASEAN nations in theyear 2010. The agreement created the world’s largest free tradearea regarding national GDP.

Theexports from China include machinery and electronics. They make upapproximately 55% of the country’s total exports. Garments accountfor 13% while construction material and equipment represent 7% of theexports. The majority of Chinese exports -40% are taken to Asia(Miller, 2015). North America and Europe import 24% and 23%respectively. Besides of 8% of exports are taken to Africa.

Inconclusion, the cost of Chinese environmental damage related toindustrialization is approximately 9% of the gross national income(Garnaut, 2014). The World Bank estimates provide that the green GDPin the year 2010 was equal to 3.5% of the country’s GDP (Jonge,2015). The consequent degradation in the environment has led to afurther decline in public health. Air pollution in China hascontributed to 1.2 million premature deaths since 2010. The urban airin the northern part of China has been associated with causingserious health complications (Davis, 2015). The complications entailcardiovascular, cerebral vascular and related respiratorycomplications. Besides, 11 % of digestive related complications havebeen associated with unsafe drinking water. Specifically, there areincreased cases of human H7N9 virus since the year 2013. The virushas claimed more than fifty lives. The virus was caused by eatingunhealthy chicken and due to contaminated environments. The increasein the GDP production of the Chinese economy is positively related tothe increase in CO2 emission. The emission of CO2 causesenvironmental degradation. The environmental degradation isassociated with increased smog and significant health-relatedproblems (Talberg, &amp Meinshausen, 2015).

Accordingto XU (2013), the resultant pollution has further led to an increasein the citizen outrage inform of social unrest. The workingpopulation in China has conducted demonstrations owing to theirknowledge of the exposure to health threats. For example, in the year2012 there was a protest against the expansion of a petrochemicalplant in Ningbo. Consequently, the expansion prospects weresuspended. Several moths after the suspension, there was anotherdemonstration in Shanxi province after a factory spilled tons ofheavily toxic material into local water resources. In the year 2013,there were thousands of Protestants in the southwest city of Kunming(Lallanilla, 2013). The protest was against the erection of achemical plant t produce nearly a million tons of carcinogenicchemicals per year. The major movement of the protest has been fromrural to urban centers. Consequently, more protests are beingconducted online (XU, 2013).


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