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Table Of Contents:
1. Executive Summary03
2. China An Economic Wonder.03
3. Indicators Of Chinas Economic Development.05
GNI Per Capita.06
Human Development Index0
Education And Health Indicators.07

4. China And The Classical Theories Of Development..07

The Linear-Stages-Of-Growth Model07
Theories And Patterns Of Structural Change..07
The International-Dependence Model.07
The Neoclassical Free Market Counterrevolution07

5. Poverty And Inequality In China.08

Inequality..08
Gini Coefficient..08
Poverty Line..09
Poverty Headcount Ratio.09
Poverty Gaps.09

6. Global Comparison China & Malaysia.10

Agriculture, Service And Industry Sector10
Human Development Index.11
Big Mac Index.11
Income Category And Distribution Of Guinea Coefficient11

7. The Population Structure of China Past & Present..11

The Demographic Transition Age in China..12
China & The Malthusian Population Trap.13
Effects Of High Population Growth..13
Policies On Population Control.13

8. The Appearance Of Industrial Districts In China13

9.

Migration & Development In China.15

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The Huko System & Migration..15

Trends Of Migration Since 1982..17
Current Migration Issues18

10. Child Labour..19

11. Supply Vs Demand Of Education20
Education Distribution.20
Gender Gap.20

12. Internal & International Migration21

13. Health21
14. Agriculture: Then & Now.21
The Past..21
The Present..22

15. Rural Development..22

16. Women & Rural Development.23
17. Important Policies.23
18. Trade In China.24
Trade Partners25
Exports.25
Imports25

19. Cross Country Analysis..26

China With Malaysia..26
China With Thailand29

20. References.30

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Executive Summary:
By any standard, China's economic execution throughout the most recent three
decades has been great. GDP development, on average, is 10 percent a year, and in
excess of 500 million individuals were lifted out of absolute poverty. China is
presently the planet's biggest exporter and maker, and its second biggest economy.
This report attempts to provide a systematic assessment of China Economy on the
basis of certain economic models, historical trends and global comparison. The
report highlights the most fundamental policies that China adopted to transform
itself into a rising super power and the biggest exporter of the world. The report
also evaluates China through the classical development theories and discusses the
rising inequalities and declining poverty in the chinas populace along with a
detailed discussion on migration, population structure, urbanization, child labour,
education & health issues, agriculture, rural development, imports and exports and
the role of women.

China An Economic Wonder:

From 1978 to 2008, the economy of China developed at a normal rate of roughly
9% a year. China's wages for every capita by 2008 was well over five times what it
was in 1978. Development was three times the rate that might be recognized
respectable by the later principles of most low-earnings countries.
China is hailed as a sample of the profits of business sectors, exchange, and
globalization. Manufactured exports are a key to China's development. In any case
China has likewise embraced activist modern strategies and has set out on its time
of fast development around 1980, more than prior decade critical exchange
liberalization. Additionally, much of China's development in the 1980s and early
1990s was because of Country Township and village undertakings, which had a
semi agreeable and semi municipally possessed character.
By the late 1980s, the locus of provincial development moved to China as investors
started to pour ventures into China in vast part as a result of the charm of its
possible market of more than 1.3 billion purchasers. Despite the fact that the
business sector was constrained from the beginning, early investors discovered
high motivators to export from a various special economic zones on the southeast
coast. These speculators identified that China offered extremely modest work with

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uncommonly high aptitudes and work propensities for its salary level. The central
planning of China's first decades after its 1949 Communist insurgency was by
most measures a disappointment. About 30 million individuals expired in a late1950s through starvation brought on by poor central planning decisions and
politics. Such debacles were just incompletely balance by the early and continuous
accentuation on fundamental health and education in China and afterward on
diminishments of fertility through China's one-child policy. At the same time these
essential first steps on education, health, and finally fertility helped set the stage
for development and destitution decrease when later joined together with business
sector incentives.
Mody, Ashoka & Wang, Fang-Yi (1997) of the World Bank analyzed the
explanations for streamlined development in China and finished up:
Although industry-specific featuresthe degree of specialization and competition
had some influence on growth, much of the action came from region specific
influences and regional spillovers. Regional influences included the open-door policies
and special economic zones that successfully attracted investments from overseas
Chinese to particular locations. Existing regional strengths, especially high-quality
human capital and infrastructure, also contributed to growth. Our results illuminate
the interplay between conditions conducive for growthfor example, the contribution
of foreign expertise is greatly enhanced by available human capital. China made
judicious use of the advantages of backwardness by targeting areas that were less
developed and less encumbered by the legacy of existing institutions, although it was
fortunate in this regard that the backward regions were in close proximity to Hong
Kong and Taiwan.
Thus the China case also explains the concept of complementarities.
In other transition and advancing nations, state-owned enterprises (SOEs) were
sold off to private investors equitably rapidly, although in China these stayed in
government hands for an augmented period. The administration tried to change
them inside, with restricted victory. But in the meantime, China has permitted and
empowered another, more effective sector to act like an adult around them. Lately,
China has privatized or shut a large portion of the more modest SOEs. Numerous
bigger SOEs press on to work in a generally wasteful way, and a few economists
suspect that their gathering obligation will finally posture huge budgetary dangers
to the economy.

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In addition, Chinese authorities and researchers are additionally worried about
helplessness to the "Middle Income Trap" and are captivating discourses with Latin
American nations on this subject; Yiping and Tingsong (2010) focused on that what
"truly trapped numerous Latin America and Middle East center pay nations was
absence of improvement ability. They neglected to climb the mechanical step past
asset based exercises. This will likewise be the genuine test for China." There are a
few lopsided characteristics in China's economy that may expedite issues going
forward. China's exceptionally huge trade surplus has gone under expanding
feedback, as this was broadly contended to be one of the underlying explanations
for the worldwide financial crisis
Finally, for workers in parts of China where the rustic segment has completed well,
prior area changes have been around the reasons - with the revolution setting the
stage and the late-1970s changes giving more terrific motivators to distinctive
agriculturists. Remittances from migrant workers have energized an administration
area boom in some provincial zones, and costs gained by farmers have for the most
part climbed, especially close to urban zones.

Indicators Of Chinas Economic Development:

Since 1978, China decided and shifted over to the Market based economy from a
Centrally Planned economy and it has been successful in reducing around 500
million people in poverty and meeting its
Millennium

Development

Goals.

This

situation accompanied with the fact that it

grew with a GDP of around 9-10% is
unable to satisfy the statement that China
is still a Developing Country.
Surprised by the fact that it is claimed to
be the second largest economy in the
world with a growing population , one
cannot make out the reason for this

Population, 1,353,600.7
total both
sexes
(thousands)
Indicator
Population, total both sexes
(thousands)
Population, urban (%) (% of
population)
Population, female
(thousands)
Population, male
(thousands)

Value
1,353,600.7
51.9
650,798.35
702,802.34

contrasting statement. According to the

World Bank figures, china had a GNI per capita of $6,091 in 2012 ranking 90 th in
the global arena, with the poverty line at $1.8 per day.

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Great economic targets have been achieved and Chinas 12th Five Year plan, aims to
lessen the intensity of issues like growing inequality etc. and improve the living
standards of the people and thus plans to keep its economic growth within
sustainable limits-7%.
China is considered to be an Upper Middle Income country with the per capita
income being around $6,000. It remained a Lowe Middle Income country until
2009. Currently the Human Development Report of UN shows that China lies at
101 out of 187 countries and its HDI rose at 2% annually since 1980 to 0.699 in
2012. This places china above regional average.

Figure 1: Trends in Chinas HDI

component indices 1980-2012
China has experienced a 2.3% annual growth in
its urbanization figures and around 47% of its
rural population has moved to the urban areas
Mean years of
schooling (of
7.5
adults) (years)
Indicator
Public expenditure on
education (% of GDP) (%)
Primary school dropout
rates (% of primary school
cohort)
Expected Years of
Schooling (of children)
(years)
Adult literacy rate, both
sexes (% aged 15 and
above)
Mean years of schooling (of
adults) (years)
Education index
Combined gross enrolment
in education (both sexes)
(%)

creati
ng
Value
1.9

surge
in the
jobs
demanded and the housing costs. This

12.7

has eventually led to the industrial

growth of china as the people are more

11.7

available for work and they demand

better standard of living. Although a

94.3
7.5
0.627
70.0

great rise in population is expected but

they cause a socioeconomic disparity
between the rich and the poor. The gap
has increased and caused the poverty
rate to rise to 10.2% of the total people,
living below the poverty line.

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China and The Classical Theories Of

Development:
The classical theories classify into four broad schools of thought:

1) Linear Stages Of Growth:

Rostows Stage Of Growth:

China appears to be in the drive to maturity stage. China began its economic
development process in the 1970s.In the 1970s, Chinas development process took
off, and its economy swelled rapidly. At present, in 2013, Chinas economy, while
still booming, has slowed down to some extent, and while poverty and lower
incomes (as compared to developed nations) still exist, China has overcome much
of its economic problems.

Harrod-Domar Growth Model:

In China: the initial growth start owes itself to the influx of investment that the
government and to some extent the public made. Technological growth has also
played a part in economic growth, and Chinas labor force, already large, has
become more skilled and specialized.

2) Structural Change Models:

The Lewis Theory Of Development:

In China, since the start of economic development, the rural sector has shrunk
from 80% of the population in the 1960s to 40% at present. This has been mainly
due to rural-to-urban migration, increasing productivity and labor force in the
urban sector. This rural-to-urban migration is still continuing and so is the
development of the rural sector.

3) The International Dependence Model:

This concept presents a general idea that it is the developed countries that,
whether intentionally or not, inhibit development in developing countries. Whether
or not this is true is a different case. However if this is true, it has certainly not
shown itself in the development of China. The historic lethargy of China before the
World War 2, when much of the nation was immersed in drugs has been often
blamed on the West. However since China has begun its growth process, little
evidence can be seen of any developing nations influence on its policies or any
negative impacts of the sort.

4) The Neoclassical Counterrevolution:

China has a socialist market system, as opposed to a capitalist system. Between

2010 and the present, Chinas GDP has been the second largest in the world after
USA (it was $5.87 in 2010). Whether this development can be attributed to the

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socialist system, or whether the difference from the potential maximum can be
blamed upon it cannot be said at this stage of our discussion.

Poverty and Inequality In China:

China, where poverty exhibited high rates in the earlier times, succeeded in
decreasing absolute poverty from 85% in 1981 to 13.1% in 2008 by adopting
economic reforms in the late 1970s (about 600 mln people taken out of
poverty).Today after the evolution of MDGs, UN declared China to be the first
country to realize the MDG of reducing the rank of its poor by 50% and praised its
efforts in decreasing poverty from 60 % in 1990 to 12% in 2010. According to the
standard $1.25, about 13.1% of the population lives below poverty line. In 2000s
about 45% of countrys wealth was in the hands of 10% of the population. Along
with poverty, increasing income disparity continues to prevail.

Inequality:

China, a partially egalitarian state, falls

behind Japan, US and even Eastern Europe
in terms of income inequality. A place where
the top 5% earns about 23% of the national
income and the lowest 5% earned only 0.1 %
of the total income, China represents a wide
gap of income distribution. This gap is not
only due to the presence of urban, rural
population but also because of the regional differences. There is a huge disparity
between the top-tier coastal areas and the interior region of China. The
implementation of reforms in 1978 of introducing market economy at the coastal
areas created imbalance in the northern, interior and western China and is still
seen today. China is ranked 53rd in terms of income inequality. The middle class
makes up about 23% of the whole population of china which is far less than that of
developed countries.

Gini Coefficient:
Gini coefficient is used to measure
income inequality in countries. In
china gini was 0.275 in 1980s and rose
to 0.474 in 2012 proving the fact that
there is inequality among the people of
china and it has thus increased.
Source: National Bureau of Statistics

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The gini coefficients plotted above show how it deteriorated steadily from 2003 to
2008 and then gradually improved after that. The achieving of one of the
millennium Development Goals of reducing poverty by 50% proves this.

Poverty Line:

Country 1999 2001 2004 2008 2009 2010 2011 2012

China

10

10

10

2.8

2.8 13.4

Source: CIA World Factbook

China has set its poverty line at 6.3 yaun ($1), which is higher than the World
Banks standard. Hence, all the people earning less than 6.3 yaun per day are
declared poor. About 98.99 mln of the rural population is below poverty line and
according to the World Bank standards, 13.1% lies below the line.

Poverty Headcount Ratio:

Chinas head count ratio in 2009 was
11.8% according to $1.25 per day.
Source: World
Working Group

Bank,

Global

Poverty

The graph above shows that head count

ratio changed drastically from 1981 to
2009. Standing at 84.02 in 1981, China
had a huge percentage of people living below
poverty

line.

As

the

years

passed

on

it

decreased and reached 11.8% in 2009.

Poverty Gap:

The poverty gap in 2008 at

$1.25 was 3.24 which fell from 4.03 in the previous years

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Global Comparison China & Malaysia:

The great integration of China with the world economy and specifically with the
Asian countries needs to be analyzed for a better insight into Chinese economy.
Malaysia, no matter how small in size to China has always been a tough competitor
for China, especially in manufacturing sector.
Table 1 illustrates the economic trends related to their total populace.

The
trends in trade to GDP ratio of the economies shows the basic threat that china
perceives as trade being the blood line for any developing country in this globally
integrated economy.

Agriculture, Service and Industry sector:

A comparison of Agriculture, Service and Industry sector will further reveal the
competition between the two countries as the whole concept of DEVELOPMENT
revolves around these basic three institutions.
Table 2:

According to this table, Malaysia seems to lead in the more tech savvy world
economy i.e. ranking 28th in the world whereas China is on 40 th position in
technological achievement.

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In the Light of Development Theories:

GDP (A basic indicator for growth):
China gdp was ranked 3 rd in the world in 2006 i.e $10,210,000,000,000 which is
around 31 times greater as that of Malaysia.
Also the GDP annual growth rate of china is 10.2 % (one of the highest in the
world) where as Malaysian economy is only at 5.4 %. This shows the ever
increasing gap between the economies of the two countries. Nevertheless we see
the PPP gap to be evident too as china leads more than 28 countries in term of the
cheapness of the same purchasing bucket at both the countries.
Lets take into account other variable such as:

Human Development Index:

On the contrary Malaysia leads china in the HDI as its ranked 61 st in the world
whereas China is at 88th. (Watkins, 2006)

Big Mac Index:

In Malaysia its 1.47$ whereas its $1.30 in china i.e. 13% more in china.

Aid as % of GDP:
In China its 0.2 % as compared to 0.1 % in Malaysia .We can infer that foreign
dependency of china economy is higher which portrays a negative picture of its
development. (Nationmaster.com, 2002)

Income Category and Distribution and Guinea Coefficient:

A lower middle income form the basic category for mass consumption in Chinese
society which is a positive indicator in terms of development as majority of the
population lies under LMI whereas Upper middle income is mass consumption
category is Malaysia.

The Population Structure of China Past &

Present:
China has been the most populous nation of the world for several centuries. It hit
the population mark of one billion in 1982.

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Chinas vast population growth of the past can be attributed to a major extent to
tradition and the ideas and actions of rulers and leaders. Of particular importance
here is Mao Zedong and the Communist rule that believed a larger population
would mean a more powerful nation.
Chinas population is approximated to be 4 million in 2100 BC. Since then it has
blossomed to 1344 million by the year 2012, according to the most recent census.
However, at present Chinas growth rate is only 0.47%, ranking 159 th in the world.
A

growing

concern

for

China now is the gender

disparity

in

population

number. In 2010, 48.73%

of Chinese were women
while 51.27% were men.
Another issue at hand is
the population distribution
where the youth ratio in
the population is very low
given the implementation of birth control policies. The chart below shows the
population distribution of China in 2012.

The Demographic Transition Age in China:

Before the 20th century, China had very high birth rates. However, to counter the
birth rates, the death rates were very high too. Starting from 1949 and the policies
of Mao Zedong a period of high economic growth and industrialization started
(known as the Great Leap Forward) leading to a boom in the population. However,
political mismanagement at a massive level resulted in famine and disease, and a
decline in population.
Following

the

baby

boom

the

population swelled again, and the

economy recovered. Today, Chinas
birth rates have fallen even lower than
the death rates, which are also very
low. We can say China has entered the
final stage of the demographic transition.

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China & The Malthusian Population Trap:

According to articles written on the subject, the demographic transition that took
place in China is different from what happened in the West and unlike the West,
Chinas population transformation does not follow the Malthusian model. Chinas
demographics show unique trends that cannot be explained by Malthusians
poverty trap.

Effects of High Population Growth:

Although population growth rates have decreased drastically in China in the past
three decades, sufficiently to bring the population to a decline, the already existing
population is huge enough to take a while to show some actual decrease in
numbers (explained by the hidden momentum). China still struggles with
population issues.

Policies on Population Control:

The most well-known policy China has implemented is the single-child family
program which encourages people to have one child per family. However, a large
part of Chinas population is rural and has a more conventional approach to family
planning, which suggests that if this could be changed, the birth rates can fall even
more drastically.
Chinas single-child incentives have worked very well, but when we look at some
countries such as India, we see that the policies of empowering and educating
women have worked out even better. China could take up this approach in its rural
areas which consist of a vast majority of population in addition to the existing
policies.

The Appearance of Industrial Districts in

China:
Before the 1980s, business in China was stateowned, and industrial facilities were
scattered geologically for military safeguard. Starting in 1980, Special Economic
Zones, for example Shenzhen were made to lure foreign firms in numerous
commercial ventures; domesticated firms sold inputs to them, yet not as groups.
Township and village enterprises (TVEs) then developed, launched outside of
nearby governments yet "enigmatically claimed" by them. TVE supervisors normally

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attempted a mixed bag of exercises, and early 1990s field research discovered
confirmation that firms in the same or identified commercial enterprises were
placing in close nearness to one another. Yet beginning in the mid-1990s, TVEs
quickly privatized, and a blend of rivalry, reactions to credit imperatives, a richness
of entrepreneurial ability, and steady local policies prompted the development of
restricted modern groups. Be that as it may like other Chinese establishments,
some may at last demonstrate "transitional.
The Zhili Township kids' garment cluster contemplated by Fleisher and associates
saw "a critical ascent in specialization and outsourcing around firms. "Median
speculation to begin a business more than multiplied, yet bank advances remain
unnecessary as numerous business visionaries produced sufficient investment
funds. Consequently, numerous firms entered, and after 2000, wages rose and
productivity fell. Accordingly, firms offering specifically to business sectors tried to
"signal their dedication to product quality"about half by building trademarks and
almost a fifth attaining International Organization for Standardization (ISO)
certificate. In the while, nature of subcontractors is "observed by their outsourcing
accomplices." Social capital is significant, Fleisher and partners finished up:
"Clustering inside built groups where long-time relationships around family and
neighbors predominate offers an institutional substitute for court implementation
of contractual relationships around borrowers and banks and between outsourcing
firms and their subcontractors." They likewise reported that "township government
has infringed wellbeing regulations according to major streamlined mishaps" and
helped "forestall a damaging 'race to the lowest part' as far as product quality and
employee security is concerned where markets are unsuccessful to do that.
From firm overviews in the Puyuan cashmere sweater area, Ruan and Zhang
discovered that state-claimed banks seldom offer credits to little and medium-size
ventures. Anyhow little firms acquire from relatives and companions and give and
accept credit from purchasers and dealers, so clusters lower "capital boundaries to
entry through the division of work, empowering people to pick the right kind of
specialization as per their capital portfolio," while a deeper division of work permits
"individuals with diverse abilities and endowments to uncover their own particular
positions." Similar decisions accompany from an investigation of the planet's
biggest footwear cluster in Wenzhou.

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With a comprehensive analysis of 1995 and 2004 firm statistics, Long and Zhang
affirm that "China's fast industrialization is stamped by expanded clustering." Their
examination upholds the determination that

clustering of firms unwinds credit

obligations through "two systems: (1) inside a cluster, finer division of work brings
down the capital restraints, and (2) closer nearness makes the procurement of
exchange credit around firms relatively easier. They uncover that clusters use
more "entrepreneurs and labour, and less capital, contrasted with non-clustered
huge manufacturing plants" and therefore take after comparative advantage. They
found that clusters could be convenient in nations confronting a "lack of capital
and a ineffective monetary framework." However, they alert, "clustering may be a
second-best answer for the financing issue when the local conditions don't allow
simple access to general financing." Thus clustering, such as TVEs, could be a
transitional

structure

until

financial

markets

develop,

formal

contract

implementation might be given, and bigger investments are required.

Migration and Development in China Trends,

Geography and Current Issues:
China's ascent as the 'worlds manufacturing plant' is denitely one of the grandest
stories of the 21st Century. China's strength in assembling has made it a real
player in the worldwide economy. This China example of overcoming adversity is
nearly entwined with the migration story: without the epic-scale relocation of
workers which supplies very nearly innite cheap human labour to power the
China financial motor the rising of China might be completely incomprehensible.
Low cost migrant labour is the thing that makes 'China value' so persistent
(Harney, 2008). The most recent three decades have seen the planet's 'Great
Migration' an expected 200250 million country occupants have moved to urban
areas and towns inside China (Chan, 2012a). To place this in point of view, the
volume of the Great Migration of Europeans to North America from 1800 to the
World War I was just a portion of Chinas, on the order of 50 million people.

The Huko System & Migration:

After the Communist Revolution in 1949, China decided on the universal, Stalinist
development system of quick industrialization focused on substantial industry in
urban communities and extraction of horticultural surplus from the lower class
(Chan, 1994). This technique was predicated after abusing the rural labour by

16 | P a g e
denying it geographic portability and access to state welfare. From the mid-1950s,
the legislature over and over acquainted measures with stem provincial outows,
reaching a state of perfection, in 1958, in the formal codication of an exhaustive
enlistment framework to control populace mobility. The regulation announced that
all internal migration be liable to regard by the pertinent nearby government.
Starting there, Chinese residents lost the flexibility of migration and movement
inside their own particular nation. Every individual is relegated a hukou
(enrollment status), classied as "provincial" or 'urban', in a specic managerial
unit. The hukou system served a focal instrument of the charge framework
intended for the big push industrialization, to avert workers from leaving from the
farmland. This industrialization method headed China to make, basically, two
altogether different social orders: from one viewpoint the urban class, whose parts
worked in the priority and ensured industrial area and who had entry to (at any
rate essential) social welfare and full citizenship; and then again the laborers, who
were fixed to the area to handle a horticultural surplus for industrialization and
who needed to battle for themselves. Hukou change, alluding to transform from the
rural to the urban class, was tightly regulated and allowed just under extremely
constrained conditions, typically when it was as per state industrialization
arranges. The hukou framework was not only a method of restricting provincial
urban populace and work portability, as it has been normally delineated,
additionally an arrangement of social control pointed at prohibiting the rural
populace from access to state-provided products, welfare, and privileges with the
goal that the rural populace fragment remains cheap and oppressed.
One's hukou classication remains unaltered regardless of where he/she moves,
unless he/she impacts a formal hukou transformation, which is very nearly
difficult to get for a ordinary rural migrant. As an aftereffect of this institutional
configuration, they are committed
to low-end processing plant and
administration

employments.

In

numerous urban communities and

export zones, local proclaims have
additionally

prohibited

migrants

from consuming occupations other

than those in the low-talented 3-D
(unsafe, messy, and demeaning)

17 | P a g e
classification. The dissent of local urban hukou to transient laborers, joined
together with their ample supply and absence of access to legitimate help, has
made a vast, effortlessly exploitable, yet exceedingly versatile, and exible
streamlined workforce for China's export economy. The internal migrant work
power is comparable to the low cost migrant labour in the traditional Lewis model
of the infinite supply of work. It has enormously helped China's development as the
planet's 'most efcient' i.e. the least cost maker. Figure 1 diagrams the
fundamental segments of China's double social order, with specific reference to
position in the social (and economic) hierarchy(pyramid), kind of hukou (urban or
provincial), and rural/urban area in two distinctive authentic periods Maos (pre1979) era and the present.
Alarmingly, their numbers have been swelling quickly: actually prohibiting those
employed in township or village endeavors near their home villages, the measure of
the rural migrant work force has stretched from 2030 million in the 1980s to near
160 million in 2011. The aggregate number of (urban) populace without local
hukou was significantly higher, arriving at 230 million in 2011. Once more, to put
the number in view, the aggregate number of global transients is assessed by the
United Nations to be 214 million in 2010, which is more modest than China's nonhukou populace in urban regions. The fast extension of China's basically
disappointed population, essentially in urban regions, has come to be its notable
feature in the last quarter.

Trends & Geography of Migration since 1982:

The yearly number of hukou vagrants recorded by the Ministry of Public Security
remained moderately stable, drifting between 17 and 21 million in the most recent
three decades. Indeed, the rate of hukou migration, as a rate of China's total
populace, has declined signicantly, from 1.7% in 1982 to just 1.3% in 2010.
Hukou migrants incorporate chiefly rural-rural and rural-urban migrants. Precise
data about the composition is not accessible, however it is truly certain that hukou
change for numerous transients remains extremely stringent in particularly
expansive urban areas.
Between 1987 and 1995, the normal annual build in the amount of individuals
who stayed in a spot unique in relation to their hukou enrollment place was not
exactly 2 million. This gure surged to 10 million for every year in 20002010. An
also upward pattern is seen in the amount of rural migrant laborers. The normal

18 | P a g e
expand was in the vicinity of 6 million in 20022011, contrasted with a yearly
average of 5 million in the past two decades. Furthermore, the gap, both in total
and relative terms, between the genuine urban populace and those without rural
hukou has broadened in the most recent 1015 years, inferring a noticeably
irritating pattern that more individuals in urban areas and towns succumb to the
burdened classification 'in the city however not of the city' (Chan, 2011). The quick
swelling of the non-hukou populace in the city corresponds with China's
ascendency to being Worlds Factory.
As a major aspect of the Great Migration, interprovincial migration has expanded
signicantly too since 1990, from just 10.7 million in 19901995 to 55.2 million in
20052010.9 These cross-area ows are very nearly completely village-to-city
movements. The aggregate interprovincial movement in those two decades
(dependent upon those four 5-year periods) totalled 136.3 million. This number
tallies more than once of the aforementioned same interprovincial migrants who
moved more than once in those four periods. In 2010, 85.8 million individuals
existed in a spot with a hukou enrolled in an alternate territory, contrasted with
just 42.4 million in 2000. The doubling of the out-of-province hukou populace
mirrors the same level of progress in the in general non-hukou populace in the
same period (from 121 to 221 million).

Current Migration Issues:

While the planet economy was still soiled in
recession

in

2010,

China's

economy

proceeded to develop, but at a slower pace. In

that year, China likewise surpassed Japan to
turn

into

the

planet's

second

biggest

economy. At present, with Europe's serious

debt crises, and the US and Japan battling to
maintain

development,

numerous

have

looked to China as the rescuer of the planet

economy. As brought up in the recent past,
China's prosperity in being the planet's plant depends intensely on its own
mammoth army of cheap migrant laborers, made conceivable by its special hukou
framework. Lately, an arrangement of rather sensational and signicant occasions
identified with migrant labour in China has cautioned us to a developing new
actuality that the parts that make the 'China model' tick may be on the borderline

19 | P a g e
of a tectonic change. In addition, the model likewise looks more delicate than
outcasts have depicted. These issues have genuine implications for both China and
for the global economy.

Child Labour:
Poverty gives birth to issues that plague the very nature of a countrys prosperity.
Out of the many issues, child labor is of major concern. However, regardless of it
being a feature of the poor countries, its also visible in the economically active
giants like China. Over here children under age of 16 are not suppose to be
employed.
Although there are no statistics available on the extent of child labor in China due
to its governments policy of declaring it a state secret, its presence is advocated by
the number of reported incidents. With such policy we can only make estimates
such as the one based on school dropout
ratios. In 2005 MOE (Ministry of Education)
stated that every year about 300 million
dropouts enter the labor market. Children
leave school and start working mostly in
private industries. This act is prevalent in
most of
poverty,

China
low

since

miseries

returns

on

such as

education

cultural preference of boys birth,

and

compels

the families to send their kids to work. On

the other hand employers favor these children since they can be satisfied with low
wages without security and health concerns.
Cited from: A Review Of the Available Literature Covering Child Labor In China. May 2009.
The above pie chart represents one of the
provinces of china where school dropouts
result in child labor.
More over its seen that unlike poverty being
a major issue for child labor, children in
chinas

rural

employment

due

areas
to

move

unsatisfying

towards
school

conditions resulting in lower academic achievements.

20 | P a g e
Cited from: Analysis of the Influential Factors for School Dropout in Chinese Rural Regions . 2008.
Most of Chinas success depends on this kind of labor since many of them are
involved in the export industry. Based on the global concerns China has
implemented many policies for controlling it but very little has been done so far.

Supply of Education Vs Demand of

Education:
Although Chinas education system is directed by the government, market forces
play a huge role in its regulation. There is a growing demand resulting from both
an increasing population and an increasing portion of the population that wants
education. The booming economy of China also attracts many people towards
education. Other factors affecting demand of education in China are private costs,
expected earnings, parental education and family income background.
On the number of private educational institutions in China is increasing in
response to the growing demand of education. The increasing number of private
educational institutes also shows Chinas shift towards a market economy.

Education Distribution:
Education in China, though not as widespread and evenly distributed as in the
developed countries, is relatively higher and more even than in most developing
countries. Further, efforts are being made to spread more education to the rural
areas, women, and ethnic minorities who are usually more deprived of education.
Yet more efforts concentrate on better primary education, a more uniform system of
education and more quality education. It appears that in little time Chinas
education system will be at par with that of Western countries.

Gender Gap in Education:

Gender disparities have reduced by a considerable amount in the urban areas of
China in terms of education. Once a strongly male-oriented, hierarchical society,
these trends are shifting in urban China, as compared to other developing
countries. However, the rural regions still remain deprived of much change in the
gender gap. And discriminatory attitude towards women in the employment sector
even higher education still remains high and accepted.

21 | P a g e

Internal & International Migration:

Rural-urban migration is high in China because of the focus of the government on
the urban areas and the subsequent economic expansion and job creation. Most of
the migrating rural workforce tends to find employment in the urban industry.
International migration is also very high.

Health:
In China, health is measured through fertility rate and infant mortality rate.

Cited from: Chinese Health Care Improves, But More Reforms Needed. August 2012.
Cited From: The Impact of Chinas One-Child Policy. January 2012.
According to the above two graphs, China has reduced both the rates by raising
health expenditure to 5.2% of the GDP as of 2011 as well as with its one child
policy.

Agriculture: Then and Now

The Past:
Resources endowment: Little more than 10% of all land in China can be
cultivated. Wheat is the main crop in northern China. Much of the northwest and
southwest regions consist of uncultivable land. The rural labor force, though
involved in other small-scale industries as well, is largely concentrated in
agricultural labor.
Early history: For over 4000 years, farming has been the main profession of the
population of China. In fact, Chinas agricultural history dates back even further to
7500 BC when the earliest attested domestication of rice is said to have taken
place.

22 | P a g e
1949 to 1980: The Peoples Republic of China was formed in 1949. At that time all
arable land was under cultivation. During the 1950s, the government made a
considerable effort to distribute land more equitably to upgrade lives of poor
peasants. Agricultural science suffered from changes in policy and emphasis after
the 1950s. The Cultural Revolution disrupted agricultural science training and
research programs, but since the mid-1970s training and research programs have
been restored. Mao Zedong imposed some very strong policies to attempt to
increase yield to the maximum. Up until the 1980s, 63% of the national labor force
worked in agriculture.
The 1980s and onwards: In 1985, 4% of the farmland was cultivated by state
farms employing over 4.9 million people. The state made strenuous efforts in this
sector by controlling credit, lowering fertilizer prices and providing other sorts of
incentives to farmers.

The Present:
Agriculture employs over 300 million people in China. China produces rice, wheat,
potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed, pork, and fish. It
produces food for 20% of the worlds population. In 2010 China became the largest
exporter in the world.
75% of the cultivable land in China is used for food crops. About one third of the
worlds fish is provided by China. China also has a large livestock population.
Due to China's status as a developing country and its severe shortage of arable
land, farming in China has always been very labor-intensive. Although some
mechanization of the process of rice production has occurred over the centuries,
the production of paddy rice continues to involve the intensive use of human labor.
The major challenges China aims to overcome are market inefficiencies, nonliberalized markets, food health and safety and increasing international trade.

Rural Development:
Although its share in GPD is falling, agriculture plays a very important role in
China especially for the rural poor. In this regard, the state has made efforts to
improve and upgrade the lives of those poor peasants. It has implemented a
household responsibility system, liberalized agricultural product markets and

23 | P a g e
prices and encouraged the development of operational systems and township
enterprises.

Women and Rural Development:

In 2006, maternity deaths in rural areas were twice as many as in urban areas.
Although women have equal rights to health facilities as men, factual data shows
different practices. As in all developing countries, women suffer the brunt of
poverty, education and health inequality, and other injustices.
Women play a vital role especially in the agricultural sector where they work all day
while the productivity of men is much lower and their working hours more relaxed.
Yet the share of women in the income does not reflect these facts. The poor
investment in women causes a sizable loss to GDP every year. Empowering and
improving lives of women can add a lot to rural growth and development, both
economic and social. Hence efforts are now being made to target that area.
Healthcare services are being set up with the aim that by 2015 all women will give
birth in hospitals. In the words of Chinas health minister, womens health today is
the countrys health tomorrow.

Some Important Policies:

Target Areas for Reform

Upgrade womens health (decrease infant mortality, death in childbirth,

STDs, etc)

Improve availability of microcredit and rural banks

Reform rural life insurance rules

Expand rural road networks (build 270,000 km of rural highway)

Boost education and health in rural areas by increasing the number of

schools and libraries, availability of textbooks and awareness of importance
of education.

Policies in Action:
China is planning to build 270,000 km of rural highway. The plans for the near
future include boosting farmers income growth, increasing agricultural output and
improving the lives of farmers. A series of policies have been implemented to that
effect. Emphasis on health, education and culture is being increased as is the
budgetary expenditure on agriculture. Policies to guard farmers rights, regulate
taxes and improve market efficiency have been put in place.

24 | P a g e

Policies That Can Be Implemented:

Build modernized agriculture by placing emphasis on water conservation

and technology

Speed up adjustment of rural economic structure and develop second and

third industries

Improve rural infrastructure and living conditions by improving quality of

drinking water, increasing diverse energy resources such as solar power,
biogas etc and building infrastructure

Enhance social services to improve rural economy and living conditions

Trade In China:
Until 1980s, Chinas exports and imports were carried out in a planned system.
When the Chinese economy started liberalizing its trade, the planned system was
replaced by trade policies like tariffs,
quotas, limiting trading rights etc. Soon
with the incentives provided the export
industry flourished.
Source: Chinas Fare Share? The Growth of
Chinese Exports in World Trade$
The graph shows the trends exhibited
by countries occupying greater shares
of the world export. After the World War
2, China witnessed growth in exports. Soon after 1995, their share expanded and
by the end of 2010 highest regional share was in Asia and the lowest in Europe.
Hence, showing that it penetrated more quickly in the low- income countries.
(Steven Husted, 2012)
As of today, Chinas exports, which constitute 30% of the GDP, experienced an
increase of about 12.7% from 1854.06 to 2022.05 hundred million dollars in
November 2013. The sudden rise resulted from the growing demand of the
developed countries namely European Union and United States.
Economics)

(Trading

25 | P a g e

Trade Partners:
The graph shows the two major trading
partners
States.

European
The

Union

economies

of

and

United

the

trading

partners and China are linked in a way

that if something happens in anyone of the
countries, there would be an impact on
Chinas growth rate since both contribute towards its GDP. (Economics and
Finance Fanatic)
Moreover, China also exports its goods and services to other countries like Hong
Kong, ASEAN, Japan, South Korea, India, Russia and Taiwan.

Export Goods:
As the table shows, Chinas major
exports

were

miscellaneous

manufactured articles which included

apparel and toys. All in all its exports
are manufactured goods. They include
electromechanical and labor intensive
products.

Imports:
There were huge import tariffs on goods at first but incentives introduced during
the reforms for improving the export market during 1979 changed the attitude of
the Chinese government towards imports. In 1987, duty free imports of goods
which helped in preparing export goods were allowed and gradually with the rising
foreign investments, the trade barriers that previously haunted the import markets
reduced.
Source: www.tradingeconomics.com
As the graph shows, imports increased
after the trade barriers were reduced.
Recently the imports increased from
1542.99 to 1684.04 hundred million

26 | P a g e
dollars in November 2013. (Trading economics )

Trading Partners:
Source: Economic Complexity Observatory,
MIT Media Lab and the Center for International
Development at Harvard University.

As

the

picture

shows,

Chinas

imports goods from Japan, South

Korea, United States, Germany,
Australia etc.

Imported Goods:
US has been the biggest consumer
of oil but recently it was seen that
China with its 6.3 million of barrels
being imported per day, broke the trend due to its growing middle class. Among
other imports iron ore, aluminum, optical and medical equipment, soya beans are
included. (Durden)
Source: Chinas Fare Share? The Growth of Chinese
Exports in World Trade$

The table above shows import trends of

China from 1005 to 2010 both from
developed and developing countries.

Cross-country analysis: China with Malaysia

and Thailand:
A Comparison with Malaysia:
Malaysia, just like China, started its development process in the 1970s, blooming
into a multi-sector economy. Trade between Malaysia and China is slow, but is
being targeted by the governments as a potential area of development. The health

27 | P a g e
index of Malaysia is 0.802, whereas the health index of China is 0.485. This shows
that average health is better in Malaysia than China. The total expenditure on
health is also greater in Malaysia.
The GDP of Malaysia was $492 billion in 2012, GDP growth rate 4.4%,
unemployment rate 3%, and exports $239.8 billion. While these figures are
significantly lower than those of China, they must be viewed in the context of a
smaller population. Population is much greater in China but the population growth
rates are higher in Malaysia (0.48% in China vs. 1.54% in Malaysia). But 13.4% of
the people live below poverty line in China opposed to just 3.8% in Malaysia.
Literacy in Malaysia is 88.7%.

Brief Introduction to the Malaysian Economy:

The whole Malaysian economy is based upon

main goods
1) Manufacturing Products
Goods

2)Mining

3)Agricultural Products

Economic Trends of Trade:

The Malaysian economy statistic for the year 2012-2013 can be seen in the
following graphs
What we observe is all the
three commodities show a
similar

trend

in

their

production analysis as the

manufacturing goods seem
high as ever i.e. the whole
economy
trade

relies
of

upon

the

manufactured

goods whereas the mining

and specially the agricultural goods are low i.e. ranging between 13.5 RM Billion to
5.00 RM billion range .

28 | P a g e
Thus one can infer that Malaysia has progressed into an industrial economy with
major emphasis upon manufacturing products than agricultural ones and
agriculture plays a very minor role in its trade and commerce environment.

Major exports of Malaysian Economy:

Electrical

and

electronic

products,

refined

petroleum

products,

LNG

and

chemical

produces form the major chunk

of Malaysian exports as evident
from the graph.

Barriers to Both the

Economies:
Customs and Duties:
The Free Industrial Zones make
it

conceivable

for

fare

organizations to profit from insignificant traditions conventions and obligation free

import of crude materials, parts and segments, apparatus and gear obliged
straightforwardly in the creation handle.

Patents, Brands and Rights:

Patents: Patent applications may be filed directly by local citizens or residents in
Malaysia. A foreign application can only be filed via a registered local patent agent
acting on behalf of the applicant. The Malaysian Patent Act of 1983 ensures a
protection period of 20 years from the date of filing a patent application.
Trademarks: Once a trademark has been registered, it is unlawful for individuals
or corporations except the owner or authorized users to make use of it. The initial
protection runs for a period of ten years, after which time it is eligible for renewal
for periods of ten years at a time.
Copyrights: The Copyright Act of 1987 gives far reaching security for copyrightable
items. The gesture traces the sort of works and items that fit the bill for copyright
insurance and the extension about. Workstation programming and also music and
artistic works succumb to this class, and there is no enrolment of copyright lives
up to expectations.

29 | P a g e
One can easily observe from the statistics that china has outgrown itself in a
capacity that Malaysia or any other country would long for as by 2029 china would
become the largest economy of the world. With great emphasis by upon trade
liberalization and positive aspects of globalization china has outnumbered any
economy in its way for progress and prosperity. However Malaysian economy has
concentrated its efforts upon the more capital intensive products and agricultural
commodities account for only 12% of the GDP. It has achieved a greater technology
based economy with little emphasis upon the agricultural commodities. I.e. only
sufficed for the self use of the economy. However china emphasis upon the
agricultural side seems a little different. Despite of catering to the most populous
country of the world it has always recognized the benefits of self fulfilling economy
means of agricultural products. So much to the fact that they are exporters of the
agricultural products to more than 17 countries. China employees more than 300
million people in agriculture.
Chinas, 1 only about 15% of its total land area can be cultivated. China's arable
land, which represents 10% of the total arable land in the world, supports over
20% of the world's population. Of these approximately 1.4 million square
kilometres

of

arable

land,

only

about 1.2%

(116,580

square

kilometres)

permanently supports crops and 525,800 square kilometres are irrigated. Whereas
these simple statistics of Malaysian economy that nearly twenty four percent of
Malaysia's land area is composed of land dedicated to agriculture alone. There are
around 43,000 different agricultural machines and tractors. Malaysia contains
7,605,000 hectares of arable and permanent cropland. Malaysia produces 535,000
metric tons of bananas per year. Only about five percent of Malaysia's cropland is
actually irrigated shows the contrast between the two countries and their relative
emphasis upon agriculture.

A Comparison with Thailand:

The GDP of Thailand in 2012 was $646.1 billion, the real GDP growth rate 5.6%,
GDP per capita $10,000, population below poverty line 8.1% and unemployment
rate 0.9%. Thailand spends 4.3% of its GDP on health where China spends 4.6%.
Literacy in China is 92.2% and that it Thailand is 92.6%. These figures show that
on average, China seems to be in the same stage of development as Thailand. Some
major differences such as population numbers and the structure of economy exist,
but on the whole the levels of growth appear close.

30 | P a g e
In conclusion, we see that in most dimensions, China is at par with Malaysia and
Thailand. In the areas that it lags behind, it makes up for in some other areas.
However, the progress China has made in some areas such as population control is
astounding. Literacy rates are high, and government regulation in the economy is
decreasing. While China is still classified as a developing country (though in the
higher income group), it shows all signs of a country moving speedily towards
becoming a developing country. Some areas still need to be touched upon: the
elimination of absolute poverty, more development in the rural sector to match that
of the urban sector, and more gender parity. While Chinas excess population poses
some challenges to development, it can, on the other hand, be seen as productive
labor force contributing to a growing GDP. Given these growth rates, and Chinas
constructive policies, it can safely be predicted that China will soon find its way out
of poverty.

Conclusion:

In spite of the fact that China possesses an extraordinary specialty on the planet's
political economy- -its immeasurable masses and huge physical size alone check it
as an influential worldwide vicinity -it is still conceivable to take a gander at the
Chinese experience and draw some general lessons for other improving nations.
Most paramount, while capital investment is essential to development, it comes to
be much more intense when joined by business sector turned changes that
acquaint

benefit

motivations

with

country

endeavors

and

little

private

organizations. That mixture can unleash a profit blast that will move total
development.

For

nations

with

substantial

fragment

of

the

populace

underemployed in farming, the Chinese illustration may be especially enlightening.

By empowering the development of rustic ventures and not centering solely on the
urban mechanical part, China has adequately moved a large number of specialists
off homesteads and into manufacturing plants without making a urban emergency.
At last, China's open-entryway strategy has prodded remote run speculation in the
nation, making still more occupations and connecting the Chinese economy with
worldwide markets.
China's solid benefit development, impelled by the 1978 business turned changes,
is the heading reason for China's remarkable monetary execution. Regardless of
huge obstructions identifying with the estimation of investment variables in China,
these discoveries hold up after different tests for power. In that capacity, they offer
an astounding bouncing off focus for future research about on the potential parts
for productivity measures in other developing nations.

31 | P a g e

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