China has shrugged off its “Copy Cat” image and quickly emerging as a forefront of innovation. It is the country that has successfully used its billion-plus population to its growth and driving economy. Over the period of decades, China has become “World’s Factory.” Even a thirty years ago, no one would have imagined that this Asian country could become the second largest economy in the world and will surpass the American economy by 2025.
It is an ideal time to discuss what are the major factors that drive China’s enormous success.
Political Stability- Economic development and political stability are profoundly interconnected. Stable political environment fosters economic growth. The communist government in China have ensured that their policies and decisions should accelerate economic growth. The Chinese government have set up laws in a way that encourages investment, protects foreign businesses legally, and offers good protection for copyrights. Since the days of Deng Xiaoping, China has realized that it is important to attract large foreign investments to establish export industries. They have set the tone and implemented policies that are still not disrupted and the current leadership is carrying the baton.
Huge Foreign Investment- According to the 2017 World Investment Report published by UNCTAD, China was ranked the world’s third largest FDI recipient after the United States and the UK. The country’s economy was ranked the second most attractive to multinational companies for 2017-2019, after the United States. It is the “Open-Door Policy” of China that immensely boosted the economic transformation of this country. Chinese authorities are also taking promising steps to lift restrictions on foreign investment in unconventional oil, mining and gas sector of China. It is truly a welcoming sign for the foreign businesses. Market experts are predicting that the amount of sourcing products from China will be tripled in the coming five or six years.
A Decadent Destination For Manufacturing- As it has been said earlier that no other country in the world has managed to utilize its population for the 360-degree growth of the country as China did. This Asian giant is has become the epicenter of manufacturing goods and items of almost infinite range. Labour-intensive and export-led production of cheap goods are the pillars of China’s magical success. Almost in every region of China you could find people are making something, manufacturing something or imitating something. Following are the reasons behind the strong manufacturing capabilities of China:
- Solid engineering and technical skills
- Low labor cost
- High investment in road, port and rail infrastructure
- Strong supply base
- Government support and business-friendly atmosphere
There are numerous other reasons that are equally contributing the grand success of China. The market-oriented reforms that took place in 1978 were the focal point and the beginning of China’s unprecedented economic performance. From an isolated communist nation to an investor-friendly open market, the transformation of China is truly remarkable.