Factors in the Expansion of China’s Manufacturing Industry
By: Fabiola Grosshan
Submitted: 2010-06-23 03:21:06 | Word Count: 452
Over the past couple of decades, China’s economy has expanded exponentially. Today, the country is one of the biggest manufacturing centers and the third-largest economy in the world, providing western nations with everything from overseas printing to candle packaging solutions at prices that have become increasingly difficult to compete with. And even though China’s economic growth rate has slowed down in the last year, it is still expanding by larger increments than most of the rest of the world. For years now, investors and economists alike have been puzzled over what exactly is behind China’s success as a manufacturing economy, and several key factors have become apparent.
Technological Change
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In recent years, China has undergone a rapid process of incorporating new and advanced technologies into its economy. This is one huge advantage that China has over countries like the United States, which has already modernized its economy. Because China is still in the midst of modernization, it can incorporate new technologies to its current social and economic circumstances, technologies that have already been developed in richer countries and now only need to be adapted and used by China’s massive work force.
Open Financing Policy
One of the biggest things that has enabled China’s technological and manufacturing growth is an open investment policy that has incorporated foreign as well as domestic financing. Capital raised from within the Chinese economy has combined with direct foreign investment, thus fueling China’s rapid buildup of advanced technological initiatives.
Transfer of Labor Sectors
This is one growth factor that essentially mirrors what happened in the west with the advent of the first industrial revolution. In the past, Chinese labor was focused on the field of agriculture and other rural economies. But by transferring its labor force from the low-producing agricultural sectors to its service and industrial sectors, China has been able to increase its income. The move accounts for a full third of the growth in the average Chinese per capita income.
Investing in Human Capital
A large, skilled workforce is as the center of the growth of China marketing, which is why it’s no surprise that China’s recent investment in human capital has been extraordinary. The difference between the primary education systems of China and the United States alone is staggering, with Chinese students being focused heavily towards the fields of math and science. In terms of higher education, it took China only 8 years (from 1996 to 2003) to triple its number of university level students. The U.S. by comparison, took several decades to accomplish the same feat.
