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Is the Sustainability of China’s Growth Guaranteed?

in International Business

Is the Sustainability of China’s Growth Guaranteed?

China is seeing a 10% growth on average for the past 3 decades and is believed to become the world’s largest exporter and manufacturer. China moved from a state controlled economy to a more liberal economy in 1978 by encouraging foreign trade and investment, increasing formation of rural enterprises and private businesses, educating its workforce, and investing in industrial production. This strategy has clearly proven to be working for China, as it is standing second after the U.S. for having the largest economy in the world. It is the capital investment, i.e. new machinery, better technology and infrastructure that has helped China to raise its output.

However, China’s economic data shows the growth to be cooling.

China’s economy expanded at its weakest pace in 2-1/2 years, with the sagging real estate and export sectors heralding a sharper slowdown in coming months and fresh pro-growth measures from the government.

It is time for China to embrace some market-oriented reforms for the sustainability of its growth. World Bank in one of its researches has pinpointed certain reforms that China has to undertake.

  • Enact structural reforms to promote a market-based economy. This could be achieved by redefining the role of government, reforming state enterprises, developing the private sector and promoting competition
  • Quicken the pace of innovation, both internally and by participating in global research projects
  • Encourage investment in green projects and increase efficiency of resource use
  • Promote social security for all
  • Strengthen the fiscal system by mobilizing additional revenues and boosting local government financing


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