China’s economic development in the past 30 years has been phenomenal. It has overtaken several countries including Germany and Japan to become the world’s 2nd largest economy(GDP US$5.7 trillion). It has become the largest exporter in the world. There is discussion already,on when China would overtake USA(GDP US$ 14.6 trillion) to become the largest economy. However, it appears that China may not overtake USA in GDP, in the near future, as its development is based on weak foundation:
a. unlike in countries like India, in China, the contribution of foreign invested companies to the GDP is very high- about 40%. Foreign direct investment in China is nearly US$ 1 trillion.
b. contribution of foreign invested firms to china’s foreign trade is over 50%
c. if foreign firms withdraw, China would lose its position as the 2nd largest economy and the largest exporter. GDP growth rate would also fall substantially from the present
level of around 10%
d.China’s investment in research and development is low- about 1.5% of its GDP, compared to 3% in USA. It depends on foreign countries for technology.
e.arable land in China is limited-only about 140 million hectare(just about 15% of total area) for its population of 1350 million. USA has about 175 million hectares for a population of about 300 million.
f.agricultural land is over exploited with high input of fertilizers. Soil degradation is likely to lead to drop in agricultural production.( China has however done a good thing in leasing large areas of agricultural land in Africa.)
g. natural and man-made calamities take place more often in China than in many countries.
While the achievement of China in the last 30 years is adorable, it may also have to be noted that this has been possible because of foreign assistance, which means foreign developed countries also have contributed to the progress. Of course, the foreign countries have benefited enormously from their investments.