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China Economy

China Economy Becomes World Class

China Economy has been a hot topic lately amongst politicians, economists, and business executives around the world.  Many are in awe of the growth of the China economy over the last thirty years.  There are three driving forces behind the China Economy; the same ones which drove Japan and the Four Dragons (Hong Kong, Taiwan, South Korea, Singapore) to world economic powers after the second world war and from the 1960's to the 1980's respectively.  

Photo Credits: HongKong-Februar-2007 - A. Feldmann

China Economy - 3 Reasons for Growth

China Economy is fueled by high quality human capital, functioning market institutions and an early stage of economic development.

  1. Human Capital

    Human Capital is the ability of the Chinese people which involves the skill and work ethic of the labor force and the ingenuity and brilliance of the entrepreneurs.  The human capital quality is part of the country's culture and makeup.  Much of this is transferred from generation to generation through family education. Countries with world class economic power such as Japan, Germany, South Korea, the United States and China all have high quality human capital.
  2. Functioning Market Institutions

    The second driving force behind the China Economy is a functional set of market institutions.  Market institutions began to develop in China in 1978.  The Chinese government went through economic reform transforming the China Economy from a planned economy to a market economy.  Market institutions provided motivation and rewards for hard work.  Resources are also channeled to the right areas through supply and demand.
  3. Early Stage of Economic Development

    The third driving factor behind the China economy is the technology gap between China and the most advanced nations. During China's early stage of economic development, the technology gap is large.  This provides China with an opportunity to catch up quickly through the adaptation of advanced technologies.  As the China Economy matures, the technology gap will narrow and the growth rate will decrease.  However, it is anticipated that the China Economy will continue to grow more than 8% for the next 10 to 15 years.

8 Impacts of the China Economy

The growth of the China economy in the last 20 years has brought significant changes to the Chinese people.

The result of all of these impacts is due to a booming economy which is full of opportunities for the China exports and Import from China entrepreneurs from around the world.