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On China’s economic miracle

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On China’s economic miracle

In celebration of the founding anniversary of the People’s Republic of China, it becomes inevitable to look back on the country’s transformation and the process it has to go through to achieve progress.

It took China less than 70 years to become one of the world’s greatest economic powerhouse.On the down side of it all is the deepening inequality across the Asian giant

Chris Leung, DBS chief China economist recalls how poor China is until the communist party took control. China was pretty much relying on self sufficiency, no trading partners, nor diplomatic relationships.

Since then, China has introduced a number of market reforms to open up trade routes and investment flows that has helped millions of people out of poverty.

The most costly famine in human history was accounted in 1959-1960 where almost 10-40 million people died. It was dubbed as Mao Zedong’s Great Leap Forward, which on the contrary to its goal, has become one of the biggest human disasters of the 20th century. Afterwards, the Cultural Revolution came about in the 1960’s. It was a campaign Mao launched to get rid of the Communist party but has destroyed the country’s social fabric eventually.

Deng Xiaping began reshaping the economy after Mao’s death in 1976. By that time, peasants were allowed to farm their own land, thus improving their way of living limiting food shortages. Foreign investment became a welcome idea as the US and China re-established diplomatic ties in 1979. Money started to pour in, as people took advantage of cheaper labor and lower rent costs.

Standard Chartered Bank’s global chief economist David Mann exclaimed that it was from the end of the 1970s onwards that the most impressive economic miracle of any economy in history has been seen in China.

It was through the 1990’s that China began to register rapid growth rates. In 1985, China became the world’s largest trading nation in goods.

As an aftermath, the economic reforms improved the lives of over 850 million Chinese people as confirmed by the World Bank. China has even projected to end absolute poverty come 2020.

Another good thing that came about this improvement is that China is set to have at least 27% in the work force having a university education by 2030, just about the same as how Germany is doing today.

However there are still setbacks as, the benefits of economic success haven’t spread evenly across China’s population of 1.3 billion people. Inequality has become more rampant mostly in rural and urban areas.

Mann has even cited that the economy is not advanced as there has been obvious gaps between different part. World Bank supported the idea saying that China’s income per person is still of a developing country, less than a quarter of the average advanced economies.

Now, China is somehow shifting to an era of slower growth as demands for its goods has seen a decline in numbers. In addition, the trade tension with the United States does not make the scenario look better. The country’s economic outlook is also challenged by the pressures of demographic shifts and the aging population.

Given the current situation China is in, it is still set to establish a new front in global economic development. China is on its way to funding a massive global infrastructure project, the Belt and Road Initiative. The Silk Road aims to connect almost half the world’s population and one-fifth of global GDP, setting up trade and investment links that stretch across the world.

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