The Dragon’s Tale Begins
Behold the Dragon
Analyzing the Progress
Bar Charts! (Feel the excitement)
The Protagonist faces Adversity
The Hero doesn’t fight back
The End of the Road
Explanations for the explainable
The Dragon’s Tale Begins
*Once upon a time in a galaxy far far away from Khaleesi”
There are two faces to any place on earth and China is no
different. You can appreciate the country for giving us Jackie Chan
or you can hate it for the (numerous) human rights violations. But
the undeniable truth is that China has come a long way from being
under the British to practical y owning USA (If you don’t know what
I’m talking about then you need to read the news more often). You
don’t have to take my word for it, I’ve come prepared with some
visuals (because I don’t sleep and must pass the time somehow).
Behold The Dragon!
Let’s look at the GDP per capita trend of China.
You might think this doesn’t look impressive and you are right in
thinking so. It doesn’t look so impressive because you don’t have
anything else to compare it with. To show you how impressive this
is, let’s compare it with a similar Country.
India is China’s neighbor and has similar population and
geographic setting. It is also one of the fastest growing economies
in the world. I can go on describing India’s economy but that’s not
real y the focus of this issue. So, let’s see the chart
If this stil doesn’t look impressive to you then I can assume that
pretty much nothing impresses you anymore and you are a
For those of you who are impressed with this contrast, let’s go
explore it further.
As you might’ve noticed from the visuals, China’s explosive
growth started somewhere in the mid-90s. If you didn’t notice it,
please go back to the chart, I’l wait…
*Analyzing the *
We’l look at some of the economic changes and geo-political
conditions that led to this growth. But first let’s start with the Chinese
Some major advantages (kind of?) that China has going for it is its
government. Yes, I know people don’t real y like Communism and
China’s Government but hear me out…. Unlike other economies, the
Government al ocates resources and has a large control over the
national assets. Because China is not a democracy, it doesn’t have
problems with making unpopular decisions. Chinese Government
doesn’t have to think about increasing tax rates, but can you imagine
the uproar that would ensue if any other government wanted to do
Also, Get this! Chinese Government doesn’t al ow people to own land
in China. Yes, you can buy a house from some developer or build your
own house and Yes, that house does belong to you. But, the land on
which the house is built does not. The land is just leased to the person
thereby al owing the Government to stop leasing it after the lease
period has expired. This al ows the government to develop
infrastructure without worrying about Private properties.
Now, let’s talk about …
In the 1950s and 1960s China, the Government control ed everything . One more time
for emphasis, Everything. So, it comes as no surprise that the Government also control ed
the entire production of the country. It al ocated resources and set production targets as it
owns most of the land. The Governments also barred foreign firms to do business with
China. The only foreign trade they had was to get materials that they didn’t get in China.
The main goal of the Government was to make China self-sufficient. But, as the primary
goal was to meet production targets, there was no incentive for the workers to become
more productive or improve the quality of the produced goods. So, what do you get when
you don’t provide incentives for better performance? You get workers who half-ass their
way through work. I know I would. Hence the stereotype that Chinese products don’t last
But from 1980s there were some changes in the Chinese economy. They decided to
move away from the Soviet-style economic policies (like the entire world was doing) and
welcomed free market policies and started trading with the United States. This change is
significant as it led to USA and China being trade partners and USA being the major
importer of Chinese products. Basical y, they are BFFs, okay, that might not be true, but
they are definitely frenemies  (I hate myself for even knowing the word).
China also introduced other major economic reforms. One of which al ows the farmers to
sel a part of their crops on the free market. Basical y, they are giving partial ownership to
the people who deserve complete ownership. Hey, no one said it is fair. Although, it is stil
better than getting nothing.
Another major reform was to create some special economic zones. Their main purpose
was to increase foreign investments by providing tax benefits. This gave a boost to
Chinese exports and led to an increase in the imports of foreign machinery (which helped
The policies were implemented slowly so that the government can determine which policy
is working and which is not. This trial-and-error method may seem risk averse, because it
is, but it helped to bring the much-needed foreign investments into China.
But this is not cal ed “Just Words Comic” (that would be a stupid name), so let us look at
some bar charts that show the GDP growth in China (I know it’s a bad transition to charts
but I have some bar charts that deserve to be seen).
There. This chart shows how the policies helped the Chinese
economy. Don’t believe me? I’l show the entire picture then
There. Do you believe me now? If you ignore the growth rates of
1989 and 1990, China has been growing at a phenomenal rate.
Even with those years included, China has achieved an average
growth rate of about 10% (Yes, I did the math). This means that
China has been doubling its GDP within every decade.
The Economic Crisis of 2008 also affected China. It’s GDP started
slowing from 14.2% in 2007 to 9.2% in 2009. But China is not the kind
of country that succumbs to adversity. It is the kind of country that
faces it and kicks it in the nuts. So, that’s exactly what it did. While the
entire world was struggling, the Chinese government came up with an
economic stimulus package  that increased foreign investment and
(kind of) domestic consumption. This led to China averaging about
9.7% between 2009 and 2011.
But al good things must end (I would have gone with some GOT
reference but I can’t do that because I don’t watch GOT). China has
positioned itself as the exporter of goods. China is the only country in
the world whose GDP is measured based on its exports. But during
recent times it is facing a lot of pressure from some other developing
countries in Asia and South America. As these countries are
providing the same benefits at (sometimes) cheaper prices, there is
an increase in diversion of Foreign investments into these countries.
Hero doesnot fight back
You might ask yourself why China didn’t retaliate (it did) or come up
with measures to stop. The reason is that the Chinese Government
has come to understand that their current economic model doesn’t
help to obtain a balanced economic growth. They decided to move
towards a new economic model that doesn’t rely on energy-intensive
and high pol uting industries but rather relies on Green energy and
services (yay for the activists).
One of the major reason for this decision is the imbalance between the
rural and urban population. Most of the revenue comes from a few A-
list cities like Hong Kong, Shanghai, Beijing and most of the
infrastructure was also developed in these places. China wants to
bridge this gap.Another major reason is the wage rates in China. Yes, I
know you al heard stories about how the working conditions were in
Chinese factories and how low the wages were. This is in fact one of
the major reasons for the global enterprises to prefer China for manual
labor. But al that is in the past. Compared to 2005, the average wage
rates rose over 300% in China. The average wages went from
185$/month in 2005 to almost 381$/month in 2014. This is comparably
very expensive to the Asian and South American countries mentioned
To compare these values, I went over to the Economist Intel igence
Unit and got this chart (I like charts, sue me).
As you can clearly see, China is clearly the more expensive option
compared to the other countries.
These factors forced the Chinese Government to boost the
country’s innovation and Productivity levels
Now, you might ask me “If the Chinese Government is so powerful, can’t
they force their nation to do as they bid?”. The answer to that question is
“Yes, they can”. But they don’t want to. No, it’s not because they are
afraid of the activists. As I mentioned earlier, they want to move away
from their current economic model. Not just because of the sustainability
issue (though it is a reason) but also because of the United States.
The United States has constantly been hounding China about their
undervalued Renminbi (currency of China). If you don’t know how
undervaluation of their currency helps China, you need an economics
class. But the gist is that an undervalued currency helps increase
demand for Chinese exports and since China is an export dependent
country…, you can connect the dots (There are literal dots after country
End of the road
This not the only reason. As I mentioned earlier the US
and China are *shudders* frenemies. There is a US Navy
presence across most of the Chinese trade routes. China
has asked US to remove their Navy from these routes but
as you know, US being the bul y it is, decided not to listen
to China. Now, if the relations between China and US
worsen then China wil lose out on most of its exports as
the US Navy wil not al ow their trade ships to pass and
China knows that it can’t take the US in an al -out war (at
least not yet) so it decided to play along for the time being
while slowing working on reducing their dependence on
US. (This is starting to feel more and more like a game of
It is yet to be seen if China’s gambit pays off but as of now
China seems to be doing wel .
Explaining the Explainable
 GDP per capita: Per capita GDP is a measure of the total output
of a country that takes gross domestic product (GDP) and divides it
by the number of people in the country. The per capita GDP is
especial y useful when comparing one country to another, because it
shows the relative performance of the countries. A rise in per capita
GDP signals growth in the economy and tends to reflect an increase
 Source: China, under the leadership of Chairman
Mao Zedong, maintained a central y planned, or command,
economy. A large share of the country’s economic output was
directed and control ed by the state, which set production goals,
control ed prices, and al ocated resources throughout most of the
economy. During the 1950s, al of China’s individual household
farms were col ectivized into large communes.
 Chinese products are usual y associated with cheap price and
sub-par quality. There are also a lot of memes about this. You can
find some of them here.
 Frenemies: Consider yourself lucky if
you don’t know the word. It basical y means an enemy disguised as
a friend. It was also made popular by teenage girls (I think so, I’m
just assuming at this point)
 Stimulus Package: A stimulus
package is a package of economic measures put together by the
government to stimulate a floundering economy. The objective of a
stimulus package is to reinvigorate the economy and prevent or
reverse a recession by boosting employment and spending.
*World Bank *