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1 post from April 2010

Is China's Growth Sustainable?

My answer is positive. First of all, let’s look back 20 years to see where the growth mostly came from.There have been many drivers that contributed to the fast growth of China’s GDP in the past two decades. If you want me to pick some, three of them stand out – they are exports, infrastructure development, and the private sector. By January 2010, China overtook Germany to become the largest exporter and its share of world’s exports was almost 10% vs. 3% in 1999. China’s export has seen a growth rate of 20-25% for years. In 2007 the net exports in China has represented 3% of China’s GDP growth. The second factor behind the fast growth was China’s increased investment in its infrastructure, including energy, transportation (including rail & airports), highways and telecommunication. In 1980s, the poor infrastructure became the bottle- neck to China’s growth. Starting in 90s, China invested 30-40% of its total domestic investment each year into infrastructure. Another remarkable driver of China’s economy is the private sector. In 1992, China was dominated by the State-owned enterprises with only 140,000 private companies. By the end of 2009, the number of private companies reached 8 million. Over 61% of... Read more →