Chinese Economy the second largest in the world will shortly surpass that of the US.
Reported By: Soha CRWE Newswire Middle East correspondent
China is the most populated country in the world and third largest country in terms of area. As far as the economic statistics are concerned, currently it surpassed Japan to become the second largest economy of the world.
Statistically speaking, approximately three decades ago the Chinese economy was not considered as a leading economy of the world. Some structural reforms introduced by the Chinese government in 1978 brought China into the race for the world leading economy.
Before 1978 all means of production were state owned, a different strategy was introduced by the Chinese government in the form of economic reforms. These economic reforms mainly included efforts to form rural and private enterprises, liberalized foreign trade and investment and educating the general work force.
From 1953 to 1978 the main emphasis by the Chinese government was laid upon urban industrial enterprises and restrictions were imposed on movement from rural to urban areas where as the same policy was reversed and the growth of rural enterprises was encouraged. As a result of this effort China has successfully moved millions of workers from farms to factories without creating an urban crisis. Foreign investments greatly increased by adopting an open door policy, which also increased the job opportunities in the country and linked China with international markets.
The annual average growth rate prior to the reforms was 6 percent with the some minor ups and downs, whereas after 1978 the growth rate moved up to 9 percent and during peak years it even grew more that 13 percent.
An IMF research team has successfully examined the country’s economic boom and concluded that the improved efficiency of the work force is the major factor behind all this success. This negates the traditional view according to which the major force behind a successful policy reform should be capital investment.
Chinese economy proved that although capital investment is very important towards economic growth but it becomes even more potent when accompanied by economic reforms that enhance the labor force productivity.
According to Albert Keidel, a specialist in development economist in East Asia, the Chinese economic size will be exactly equal to that of United States in 2035 and will be doubled in 2050. Therefore it is safe to conclude that China’s continued economic success will eventually bring an end to United States` global economic dominance in the near future.
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