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The Data Comic - The Year of The Dragon

p.

THE YEAR

DRAOF GTHEON

02

THE

DATA COMIC

Hemanth Mothkuri

Contents

The Dragon’s Tale Begins

Behold the Dragon

Analyzing the Progress

The Government

Economic Changes

Bar Charts! (Feel the excitement)

The Protagonist faces Adversity

The Hero doesn’t fight back

Epic(?) Flashback

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!

[1]

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

buzz-kil (Shoo!).

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 *

Progress

The Government

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

Government.

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

that.

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 …

…Analyzing the

*progress… *

Economic Changes

In the 1950s and 1960s China, the Government control ed everything [2]. 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

long [3].

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 [4] (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

in productivity).

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).

BAR

CHARTS

feel the

excitement

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

PROTAGONIST

faces adversity

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 [5] 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

earlier.

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

Epic(?)

Flashback

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

too).

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

AoE).

It is yet to be seen if China’s gambit pays off but as of now

China seems to be doing wel .

W

O

R

Explaining the Explainable

D

[1] 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

in productivity.

[2] 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.

[3] 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.

[4] 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)

[5] 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.

reference

*World Bank *

*and *

https://fas.org/sgp/crs/row/RL33534.pdf


The Data Comic - The Year of The Dragon

  • ISBN: 9781370757534
  • Author: The Data Comic
  • Published: 2017-03-07 14:50:12
  • Words: 2092
The Data Comic - The Year of The Dragon The Data Comic - The Year of The Dragon