Thursday, August 26, 2010

BEHIND CHINA'S RISING G.D.P.


Just like a seismic shift transfers energy across continents a seismic wave in the world economy has recently shifted Japan from the 2nd biggest economy to the 3rd position making China the next biggest economy after the U.S. Although it was well predicted, it sent shockwaves thru the nations.

Japan was holding the position of 2nd biggest economy since 1967 since it overtook West Germany which was holding the 2nd position then. The defeat in the 2nd world war had taught some lessons to Japan, it learned, for instance, that it is better to be friendly with U.S than remaining as an enemy. Japan signed a security treaty with U.S for unqualified military protection in the year 1952. The treaty helped it save military expenses and turn full attention to the growth regime . The miracle of Japan starts from there.
Though Japan remained in the 2nd position, it was not in the pink of economic health lately. 

Japan’s economy is export oriented. The global recession and strong Yen were dampening the exports. It has a huge public debt too. Japan has a habit of taking short-term measures for long standing economic ailments and as a result of it fundamental problems remained in the system to rise its head occasionally.

The growth of China begins from a revelation from Russia.. When the erstwhile U.S.S.R was got fragmented under Gorbachev, China was closely watching the transformation with anxiety, fearing that the same mass upheaval can spread to China also unless checked. It surmised that a possibility was always there. It was then that China decided to fully open up its economy and bring in more wealth on assuming that if people have enough spending money and overall prosperity they would not meddle with state affairs or bother for a democratically elected government.

Like Japan’s decision to be friendly with U.S and to concentrate on economic matters China’s decision to open up economy was also a land mark one. China fiercely followed reform measures on all areas. The urban people gradually got more interested in investments and share price movements than in day-to-day politics.
China is a communist country .Generally communists obey their Manifesto and never go beyond it even to save their own country. China gave holiday for the fundamentalist communist doctrines and opened up its economy. It was another land mark decision on its part. However it did not choose democracy or multi party system. China thought that democracy would only complicate the country’s progress.

It was the discipline and iron rule that helped China to make progress swiftly. The programs could be implemented as fancied by the Government .The population in China is billion plus and to give them basic amenities like food clothing and housing itself is a great task. Although there is huge gap between the rich and the poor among the population China could not only alleviate poverty to a large extent but also bring in prosperity and style to a sizable section of the population by its reform policies. It is no mean achievement.


Now it has become the 2nd biggest economy in the world though there is still huge gap between the rich and poor sections of society there.  The gap is inevitable when economy opens up for competition. Any way China is now rich and many nations  owe large funds to China including the U.S. Those countries which borrowed money from China refrain from criticizing it. The check-book-diplomacy is convenient  for China to hide human-right violations.

Although China became number two in G.D.P. it has yet to close gap in the per capita income area with Japan and U.S. An average income of a person in China is only about $6000 where as it is $ 36000 in Japan and $ 46000 in the U.S.

 China is not inactive to close the gap. The one child norm is strictly followed in China under State direction and guidance. The present population would come down to half almost in a matter of decades and the per capita income would also soar up . It is an example of how one party rule can be successfully put to use for long term welfare of the State. No democratically elected Government would dare or even dream of taking up such an unpopular project.

As for Japan, its superb products can easily find vast market in the booming economy of China to retrieve its 2nd position and it would also be a sweet revenge if made viable.



Images from Google

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