Wednesday, October 31, 2012

Enhancement of Chinese and Asiatic Economic Markets

During the 2012 US Presidential campaign it would be difficult for an interested voter to not hear about China's loans to the United States, China's supposed currency manipulation, and the growth of China compared to the United States. While China has indeed enjoyed growth clearly outpacing GDP over the last decade, the reasons for that growth go back nearly half a century.

Chinese Economic Reform
Within the People's Republic of China during 1978 reformists sought to overhaul the economic system and policies in China. Although China represented one of the most complex economies prior to the twentieth century, it was far from the largest or most lucrative. Then came the late twentieth century.

Around 1978 China embraced capitalistic policies and allowed for foreign investment, open agriculture, and greater exporting. About ten years after the inauguration of China's initial moves towards capitalism in 1978, the communist government of China allowed for enhanced privatization and outsourcing alongside protectionist economic policies and lessening of price controls. With cheap labor and natural resources like oil and efficient banking, China has proved a formidable economic force on the global stage as the decades have tallied.

Today's China
Western nations like the United States remain in awe of China's economic performance in 2005 to the present day. In 2005 China's private sector growth accounting for an astonishing 70% of its total GDP. Because the United States is plagued by sluggish growth and poor loans to GDP ratios, it might be shrewd for United States investors to park their money in China for the short term.

Nonetheless, China's growth really can't be overstated - from the initial economic overhaul in 1978 which enabled China to compete with other capitalistic systems in an increasingly globalized economic landscape, China has experienced nearly 10% growth per year. That phenomenal growth encapsulates China's annual economic progress from 1978 to 2010, and there's scant indication that China's growth is waning.

Caveats to Red Growth
It should be noted that as China's growth has swelled, China's income inequality has ballooned and its protectionist qualities have increased. Having said that, more Chinese citizens than ever enjoy historically unrivaled levels of wealth and prosperity. Although many Chinese citizens have been segued from the farms to the cities and factories, however, that transition may have traded economic enfranchisement for quality of life concerns.

Logistics of Improvement in Eastern Economies
Many economists have noted that the transition from state, centralized economic policy to protectionist privation in Eastern economic markets accounts for the recent upsurge in Asian fiscal markets. The Chinese economic structure, specifically, has jettisoned many of its barriers, taxes, and regulations of yesterday to reward private investment and economic prosperity. China's economic growth can further be attributed to the high volume of exports stemming from the nineteen eighties and continuing to the present day, cheap labor and living conditions, bolstering of industrialization, and the relative vitiation of markets by communist regimes.

Red on Top?
Although China is certainly enjoying greater growth than the United States at the moment thanks to decentralization and protectionist policies, China and other Asian countries actually face concerns like income inequality and a halting of growth as the twenty first century deepens.

Liz Melford writes about economics, travel & more at