|A centralised political system is driving the engine of economic growth in the country [EPA]|
Within a matter of weeks, China‘s economy is forecast to overtake Germany and become the third largest in the world.
Over the past three decades, China‘s GDP has surged by an average of about 10 per cent a year, fuelled in large part by a surge in export manufacturing that has earned it the title “factory of the world”.
According to recent figures, China churns out about 10 per cent of the world’s output, a figure that’s expected to double by 2015.
The most evident explanation for China’s manufacturing success is its cheap and abundant supply of labour.
But that is just one cog in China‘s vast economic machine.
Plenty of other countries, like India, can also boast a large, low-cost workforce. So what keeps China ahead of its neighbours?
The driving force is a central government with all the power – a system where politics is not bogged down by free discussion.
An executive decision made in Beijing can quickly produce new roads and railways to move products for export, or set up set up special industrial zones to attract manufacturers.
|“So many of
high-quality products and have done so for so long. You can’t condemn an entire industry because of a few bad cases”
And it can all happen very quickly.
At the Kai Jia food factory in Shandong province the managers proudly showed us what the ‘Made in China‘ label means.
The production line is modern and efficient – the model of modern Chinese industry.
Jia Shan, the factory’s manager, acknowledges that the recent string of Chinese product safety scares has caused some worry.
But he insists his factory, like most in China, abides by international standards.
“I think the media coverage has been unfair,” he says.
“So many of us produce high-quality products and have done so for so long. You can’t condemn an entire industry because of a few bad cases.”
Over the past few months, the government has made unusually public moves to allay international fears, worried that the scares would undermine global demand for Chinese products.
But Jiang Zong Liang, a Shandong food safety inspector, says that the momentum is still there, and still going strong.
“The international media coverage over product safety has certainly affected the manufacturing industry,” he told Al Jazeera. “But not in terms of export and production numbers.”
Indeed, despite widespread publicity over recent safety concerns, orders this Christmas for Chinese-made toys have actually increased.
|China will soon overtake Germany to become the
world’s third largest economy [Reuters]
In any case, as China‘s economy continues to surge ahead, the country’s manufacturing industry increasingly serves not just the export market, but also domestic consumers.
With a home market of over one billion consumers, Chinese manufacturers are sitting on a vast potential.
But as Chinese businesses manufacture for their own consumers and the outside world, made in China is fast becoming made for China.
As Chinese become wealthier, they are becoming hungry for new products.
“When we think about supplying products to those more affluent, urban consumers then there’s potential that it could be sourced from places outside of China,” says Craig Watts of the Cheung Kong Graduate School of Business.
“And what it means is that China isn’t necessarily at the bottom of the food chain anymore.”
What this translates into is a steady shift in international trade.
China may now be seen as the factory of the world – but increasingly the time will come when factories in Europe, Africa and North America hum away for the benefit of Chinese customers.