The Fall of The Orient.
Zhiwu Chen, a professor of Finance at Yale School of Management, had once addressed two pivotal questions to the world: “Why has China’s economy grown at such a fast rate during the last 30 years, and is this growth rate sustainable?” Over the past decades, China’s uprising as a huge economy power was undeniably prominent, first in Asia and then to the eyes of the world. The most popular answer as the world knows it is because China has “vast and cheap labors”, but that is not necessarily true. The idea of China’s development has been supported not only by huge labor force. Instead, it was also driven by all the changes that happen in the world, which allowed China to gain from its labor force, and also improvement in technological developments, and social reformations (Hayat).
China has developed at a relatively high speed as compared to the rest of the world due to the change in manufacturing order. The global textile manufacturing, which was once so synonym with the West, had moved multiple times from England to United States, due to series of events known as ‘Cotton Famine’. The textile industry then moved to Japan and China, as they were key players in the textile market (Biselli). It was this change of textile manufacturing power, combined with the huge labor force that China has that allowed dramatic growth of economy in China, as a starting point (Hayat). Industrialization, as discussed in Horan’s lecture, was a stepping stone in Japan and China’s major development as an economic prowess that breaks the international barriers in trade that they once had, which also provided some strong backbone supports to their developments.
Next, the second key aspect in why China has grown so large is that China’s government has provided an efficient service to its nation. China’s government holds a large share in the economy sector in China and notably was really effective in implementing changes and things quickly. Chen appointed that unlike in other countries, government in China places adequate resources directly or indirectly to help in the nation’s growth in economy. Since China was able to implement any law or set of rules in its country, China was able to progress at greater speed than any other countries. To support this, Chen also pointed out that the large government’s shares in economy shows that in China, the economic growth has been mainly driven by investment, rather than consumption (Hayat).
China’s great divergence has been sizably successful over the past 30 years. The rise of capital assets such as new factories and machineries, the number of Chinese workers, and hence the increase in worker’s efficiency were all the driving factors behind China’s economic boom, in addition to all the factors discussed earlier. If the trend were to be analyzed for the next couple of decades, how much faster can China continue to grow? The answer is simple; China will stop growing and eventually collapse, in accordance...