Ever since China opened their doors to the world in 1978, their economy has been synonymous with growth. The Chinese government has set aim on equality and sustainable growth, or what can be known as “the harmonious society”. However, there are many issues occurring that hinder China from this goal.
1. Currently, China is undergoing a major demographic change. This is mostly attributed to its rapidly aging population. It may be difficult to maintain the current high savings rate as the population ages, and money will be allocated towards them.
2. Unfortunately, China’s export growth is based primarily on the expansion of low-wage manufacturing.
Low wage manufacturing mainly comes from coastal Chinese suppliers who are utilizing mostly imported technology and equipment.
3. China’s recent economic growth has created a high demand for energy and raw materials that are rather expensive to acquire. Industrialization, urbanization and rapid economic growth are creating many environmental
concerns, similar to those that plague the United States. These ecological challenges could potentially limit China’s further economic growth and development.
4. China’s GDP is very unevenly distributed. In fact, their current GDP /capita rating is 92nd. This is mostly because of the less developed western parts of the country that aren’t equipped with many manufacturing factories. Also,
income disparities between urban and rural areas have only continued to increase with growth.
While there are certainly drawbacks to China’s emerging economy, there are obviously still a great deal of benefits as well. Just like any developing nation, China must be able to adapt to their growing economy in order to achieve sustainable growth. I recommend reading this article by Marco Rossini who outlines China’s goals of becoming a “Harmonious Society” and its innovation policy, titled Chinese Innovation Policy: Achieving the “Harmonious Society”.