Economic growth can be defined as the increase of Gross Domestic Product (GDP) over time, whereas economic development is a process to develop a countries infrastructure in order to improve the quality of life. In order to achieve both these objectives, governments must implement certain strategies. An instance of a country implementing this is China. China is an emerging economy whose government implements a number of strategies in order to increase both economic growth and economic development. These strategies include; China’s open door policy, agricultural reform strategy, trade policy, and investment policy. However, often these strategies can leave negative aftershocks, for example, in relation to environmental sustainability.
Economic growth refers to an increase in the real output of goods and services in the country. Its growth relates to a gradual increase in one of the components of Gross Domestic Product: consumption, government spending, investment, net exports. Its measurement is quantitative through the measure of GDP. Economic development implies changes in income, savings and investment along with progressive changes in socio-economic structure of country (institutional and technological changes). It relates to growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population's quality of life. Its measurement is qualitative and is measured through HDI (Human Development Index), gender- related index (GDI), Human poverty index (HPI), infant mortality, literacy rate etc.
In 1980, China adopted an ‘open door policy’ toward foreign trade and investment. This strategy was extremely beneficial for the Chinese economy as it started by setting up the Special Economic Zones in southern coastal provinces, to attract foreign trade and investment; it offered low tax rates, cheap labor and less regulation. Most importantly this strategy integrated China in the global economic market and had a great impact in promoting high economic growth and development. From this, China’s trade in exports and imports grew from 10% of China’s Gross National Product in 1978 to 36% of GNP by 1996.
Recent trends show that with improvements in their economic and human development, China’s Human Development Index (or HDI) has risen from 0.368 in 1975 to 0.687 in 2011. There has also been an increase in overall education level and overall reduction in poverty. Despite the improvements in human and economic development in China in recent decades, the richest 10% of the Chinese population (mostly living in coastal cities) owns 45% of the nation’s wealth, while the poorest 10% own only 1.4% of it. The coastal cities benefit more from the open door policy because of its closeness to the rest of the world. This uneven distribution of income shows that the improvements in the quality of life are not equally shared. Statistics also show that although economic development is overall improving, the gap between the richest and poorest is still widening . 28.4% of the population in 2005 was classified by the World Bank as being below the international poverty line of US$1.25 per day.
Agricultural reforms involved the abandonment of the commune system of agriculture and its replacement by the Household Responsibility System. This meant, households could make their own production decisions and sell surplus output in free markets once the state quota was met. The patterns of labor participation have dramatically changed since the 1970s. From a level of over 70% agricultural workers now compromise less than 50% while industry is 22% and services are 29% which are rapid increases in response to the generally higher levels of earnings received in these sectors. Although China, in the past, had really good employment, from 2002 until 2012, China’s unemployment rate averaged 4.15% reaching an all-time high since 3.9% in September of 2002. As a result, the government has been required to physically accommodate the huge rural to urban shift in population.
Reforming the agricultural system was a strategy used by the Chinese government to decrease unemployment. This strategy was successful as the industries not only promoted high economic growth and surplus in the rural labor force but there was a high rural growth, employment and wealth and income level. As a result, the rural poor decreased to 11% as income grew by 15% per year. There have been some substantial improvements experienced in income levels with about 400 million people lifted out of absolute poverty since the 1970s. Nevertheless, China has experienced increasing degrees of inequality on a number of levels; their impressive growth performance has not benefited all provinces completely. The Chinese income inequality rose substantially from 1985 to 2001 because of increases in inequality within urban and rural areas and the widening rural-urban income gap.
China has pursued unsustainable practices to maximize opportunities of increasing both economic growth and development, they have perhaps become too absorbed in becoming the fastest growing economy with such high growth, development and HDI levels that environmental issues are not seen as being important, therefore this issue is just being ignored. Environmental issues are the results of China’s carelessness when introducing strategies to improve economic growth and development such as the “open door” policy. This policy caused most of the environmental issues including air pollution, water contamination, land degradation, loss of habitat, loss of grassland, top soil and forest, desertification as well as the spread of a lot of diseases such as lung cancer and inefficient waste disposal.