Why is China's economy growing so fast ?

 

There are many reasons as to why the economy of China has grown so large in such a short space of time. The catch up effect has played a big role in helping China's economy growing larger, this is where a country has a very low GDP and they can therefore grow and expand faster then countries of a high GDP, for example the United States of America. Another reason as to why China has had a rapid growth in their economy is because of the fact that they are a massive exporting country, this is because of the extremely cheap labour that they provide, yet this is only achievable in very poor working conditions and lack of care towards their workers. Unlike many other countries China is able to use a huge amount of their own resources for example coal, this lowers the countires total spending on importing goods, so now allows them to grow their own economy. Also another reason as to why China's economy is growing fast is because of the fact that they are a Socialist country, this means that China will therefore have a Command economy, meaning that the state deciede what gets produced. But yet now China are tending to swing towards a more Transitional economy, meaning that the state has began to liberalise some sectors and there are begining to be more privately owned businesses allowing people to make decisions based on supply and demand.

This picture is showing China's 'Outbound Foreign Direct Investment' from the years 1982 - 2008. As you can see from this image China's foreign investment has increased a considerable amount in the last 10 years. Foreign investment allows China's economy to grow because of the returns on successful investments. Although this could take years to reap the rewards of these investment, it still shows us how China's economy is growing fast.