China Economic Essay

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However, GDP does not well measure people’s living of standard. Since GDP measures the output in the whole country, yet there is a wide gap in incomes between northwest areas and southeast areas. Those southeast areas are densely populated and were reformed earlier, so people in these regions may be more likely to be wealthy, while people in northwest areas tend to have fewer job opportunities, be less educated and earn less money.

When it comes to GDP per capita of China, it still ranks 90th in the world. Whether the distribution of income and the spread of wealth are equal or not cannot be shown by GDP, and the rich get richer and the relative poor people get poorer because of more opportunities. Negative externalities are always brought about with the economic growth. In the period of Great Leap Forward (1958-1961), radical people were misled to produce greater, faster and cheaper goods regardless of the fact. After reforms in 1978, people spared no efforts to use the energy like coal, oil, steel and water to increase productivity. These abuses of energy lead to air and water pollution that have rooted in our daily life. Evidence shows that over 96% of Chinese is living in places where PM2.5 is above the Chinese National Ambient Air Quality Standard Level 2 Standard. In the long run, people are more likely to get lung cancer. (Ma, Z., et al, 2014)

People sacrifice their leisure time and work six days a week to make more money, and then these hard work is calculated into the GDP, but actually people are not happy or even not willing to do so. (Tutor2U, 2014) It will also affect the longevity of people. Since people work too hard when they are young, it will bring some hidden troubles for the future, for example, people who hurry to have meals will be more likely to get stomachache, which will reduce the life happiness or even shorten their life span. (Canuto, O., 2012, p.1) More money isn’t equal to better life, and GDP cannot fully measures the living standards.

Comparing the costs with the benefits, we can see that China’s recent growth has more benefits than costs, while the limitation of GDP is not fully representative of wellbeing of economy condition and social problems. GDP cannot describe the industrial structure, investment and exportation, health care, unequal treatment, the existence of black market, demographic structure and migration of labor and so on.

There are also many differences in benefits between urban and rural areas. There is one scheme for urban workers, another for non-workers and a third for rural folk, so people in different places are treated unequally and it also widens the gap between cities and villages. (The Economist, p.12) So people in rural areas and undeveloped areas cannot get more benefits from the fast economic growth and their living standards cannot be improved quickly.

When it comes to health care, one general practitioner of hospital only covers 22,000 people, and many poor people cannot afford to pay the money of visiting hospital. (The Economist, p.13) Money that spent on health care and minimum pensions only takes up 5.7% in GDP, while other countries spend twice as much as China. (The Economist, p.13)

The industrial structure of China cannot well reflected by GDP, and our economy still relies on manufacture industry which mainly produce low value added products.

Our importation is far less than exportation, and our spending is still less than incomes and investment is less than savings, which phenomenon is called China’s surplus.(The Economist, p.3) Exportation occupies a great percent in GDP, which means our economy relies on external demands to a great extent. In other words, if there is a big shrink in external demands, our economy have to be faced with financial crisis.

The statistics shows that if the real rate on one-year deposits rose 3%, the household savings just decreases 0.5% in GDP, which means that people’s will of consumption cannot be stimulated. (The Economics, p.11) The consumption has still increased but cannot catch up with the growth of GDP. The percentage was only 34% of GDP by the end of 2010 compared with 53% of Japan’s lowest post-war ratio and 49% in South Korea. (The Economist, p.11) So there is not enough incentive for consumption, and GDP cannot be increased by internal demand.

GDP includes products that are produced in the black market, so the growth of GDP doesn’t reflect actual and standardized market level. (Tutor 2U.net, 2014)

GDP doesn’t show the demographic structure that related to aging population. Because the old have bigger percentage in the whole population and they are willing to save their money rather than spend it, it will lead to less consumption, which decreases the aggregate demand. Also, pensions have to be paid for their retirement, which is a great amount in government spending.

The increasing existence of social problems like air pollution, stress on enrolment, high medical fee, limited living space, high parking fee, and high expenses of living and so on makes people feel pressed, and want to leave China for other relaxing places. Those who believe that they can be further promoted and developed in other developed countries with the help of their advanced model. These two kinds of people will emigrate to other countries, which is a great loss of domestic labor.

GDP will bring about inflation, which means the value of money is less than before. If the growth of people’s income is below the inflation rate, then people do not get the benefit of the growth of GDP, instead, they get poorer, because they can use this money to buy fewer goods.

China is faced with a serious problem whether this growth is sustainable in the future. Sustainability is the condition that people don’t destroy the environment or abuse the resources when pursuing economic growth. China’s economic growth is not sustainable because many local officials will be rewarded for its fast growth rather than sustainability for the political accomplishments. The statistics shows that urban residents use electricity three times as much as rural residents and eat ten times as much sugar, this shows that urbanization will consume much more energy and resources. (Hook, L., 2012) This will also cause imbalance between urbanization and sustainability. If the economy keeps going in this way regardless of sustainability, China will eat its own bitter fruit.

In conclusion, China has gone through great economic growth due to suitable policies. Although there are many costs of high GDP, it is beneficial for the country overall. The limitation of GDP and non-sustainable development model are threats to China’s