China Uncovered: The Economy

After long being ruled by communism, China is now devoted to private enterprise. There are currently 1,590,000 millionaires and 319 billionaires in China, second to only the United States with 565.

One thing is for certain: this new superpower is taking on the west – but can China keep moving forward or have we seen the best of the Asian giant? Experts predict that within 20 years, China will be the world’s number one economic superpower. If you look at the majority of things you own, I bet half of them say ‘Made In China’ – but the country may have a rough decade ahead after their economic growth started to decline in 2010, which has led to increasing pressure towards the ruling Communist Party. Also, because China’s growth hasn’t been geographically distributed evenly, cities with coastal ties are thriving, but places with less access to international markets are struggling and are comparatively poorer. This problem may only get worse as China continues to urbanise.

Until 2015, China was the world’s fastest-growing major economy, with growth rates averaging 10% over 30 years. Last year, China’s economy grew by 6.7 % compared with 6.9% a year earlier according to official data, marking its slowest growth since 1990. But Chinese economic growth topped expectations yet again in the June quarter, with GDP expanding 6.9% from a year earlier, which exceeded forecasts by 0.1%.I spent a day in China’s Pudong, the future of Shanghai. 20 years ago Pudong was derelict, but now its skyline matches that of Manhattan and is home to China’s elite and super-rich. Prior to 1990, the tallest building in Pudong was a 20-metre high fire station, but now, there are over 1100 skyscrapers – including the world’s second tallest building, The Shanghai Tower.

Shanghai is Communist China’s world showpiece city, and in the near future will be the richest, most well-developed city on planet earth if it continues to expand. Lujiazui is located in the heart of Pudong and is where China’s future truly lies. There are currently over 370,000 millionaires in Shanghai alone, which are as a result of the state planned economic plan to transform China into the richest and most powerful country on the planet.

The state-sponsored development continues to grow, but a top Chinese lawmaker has warned, when speaking to the Financial Times, that profiteering by real estate developers is taking money out of the Chinese economy, as authorities make efforts to contain property prices. An increase in real estate prices, sales and construction have powered China’s economy this year, putting the GDP on the path to its first annual growth since 2010.

Back in 1990 China produced less than 3% of global manufacturing output by value, but now the Asian powerhouse makes almost half of the world’s goods – and it is showing no sign of slowing. In 2016, China shipped $2.119 trillion worth of goods around the world – a 76.3% increase since 2009, but a 7.1% decrease from 2015. China shipped $557.1 billion worth of electrical machinery, $47.8 billion worth of footwear and $60.4 billion of vehicles, to name a few.

Although China continues to expand within its borders, Xi Jinping is planning to strengthen its influence beyond mainland China. After being launched nearly four years ago, China’s masterplan aims to pump hundreds of billions of pounds into developing roads, ports and other projects across Asia, Africa and Europe.According to Forbes four of the World’s Top 10 Companies are Chinese, with Industrial & Commercial Bank of China (ICBC) taking the top spot after its sales increased 24% and profits 17%. But despite this, China is still not considered a developed country, with the biggest reason being that its per capita GDP remains below any accepted minimum threshold for developed-country status. Its capitalist winners and socialist losers have opened up its cheap labour to the world and everyone has bought into it, but at what cost? There is clearly mass inequality in China and it seems to seriously lack a middle-class, so while the super-rich gets even richer, there are over 150 million people living on less than $2 a day, despite Chinese President Xi Jinping insisting China has lifted more than 700 million people out of poverty.

The World Bank began tracking poverty in China in 1981. In that year, 88.3% of China’s population lived on less than $1.90 a day. In 2010, after years of economic growth, this percentage was down to 11.2%, a drastic change that only seems to be improving.

A recent survey showed that 83% of Chinese believe that tomorrow will be better than today and this confidence is what continues to drive the Chinese economy. So will the Chinese economy continue to thrive? I think so, even after many global investors thought the bubble was bursting when China’s stock market and currency both plunged last January.Although China is a challenging country to define, its transformation from a poor developing country 65 years ago into an economic giant today offers great lessons to not only developing countries but to the world as a whole.

Thomas Mackie