“Growth and China: China approaching the turning point,”

The Chinese Labor Revolution and Its Impact on Global Trade

The article addresses how Chinese labor has revolutionized global trade by flooding industrialized economies with low-cost commodities. It also tackles the problem of stagnant salaries and labor shortages within China’s working-age population. According to the author, China will follow in the footsteps of Hong Kong, Singapore, Taiwan, and South Korea. Since cheap labor became scarce, these countries faced declining returns and slow growth. When sluggish growth happens, manufactured products will become more expensive, and low-skilled employment will return to the west. The author further asserts that China cannot sustain its growth rate and also predicts that social unrest will occur once the living standards stagnate. Finally, the author concludes that if China overcomes demographic issues, it will become a leader in innovation growth.

The Growth of China and Its Implications for Emerging Nations

The growth of China reminds me of the emerging countries in Africa which face similar challenges as East Asian country once did. Both China and emerging African countries have shown that they can overcome poverty despite once being considered as failures. The rapid growth of emerging nations gives hope to other poor nations that it is possible to fight poverty, secure peace and prosperity. Indeed, the growth of the Chinese economy will slow down. It will be surprising if the growth fails to slow down. The question is what can the nation do to reboot the growth after it runs out of cheap labor and completes the process of resource mobilization. As a person who is interested in looking into rebooting growth, the innovation growth addressed by the author is of great importance. The article made me want to learn more about innovation growth, a process of improving a nation’s economic performance through innovation and technological progress.

The Solow Model and the Importance of Labor, Capital, and Knowledge

Innovation growth further makes me recall the Solow model, which implies three basic sources of GDP: labor, capital, and knowledge. The Solow model offers important insights such as the need for labor and capital for a country to experience growth. Capital includes physical such as machines and humans such as education and skill.

China’s Growth and the Role of Technology and Knowledge

China was once a poor, labor-abundant country. This article reminds me of the success stories of Asian Tigers with large investments financed by domestic saving. These investments provided workers with capital that they did not have before. In the article, the author mentions that the growth of China is as a result of using foreign technology, cheap labor, and capital. I wonder if technology or knowledge, which is also a source of GDP, can further speed up growth. Will it speed up growth at a similar or a higher speed than cheap labor? Will learning foreign technology create knowledge spillover in the Chinese economy? Will the exchange ideas further stir up the technological progress? To what extent will innovation and technological progress rise to compensate for the loss of cheap labor in the future? Will China be able to compete with other superpowers after it runs out of its cheap labor? Will China become the world’s largest economy? Will China continue its commitment to peace and prosperity after it became the world’s largest economy? There are many questions to be answered and the next fifty years will be crucial.