Preview

Innovation and Economic Growth in China

Best Essays
Open Document
Open Document
6905 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Innovation and Economic Growth in China
ECONOMICS

INNOVATION AND ECONOMIC GROWTH IN CHINA

by

Yanrui Wu Business School The University of Western Australia

DISCUSSION PAPER 10.10

Innovation and Economic Growth in China

Yanrui Wu ( ) Economics UWA Business School University of Western Australia Australia yanrui.wu@uwa.edu.au

Abstract China has enjoyed high economic growth for three decades since the initiative of economic reform in 1978. This growth has however been driven mainly by labour-intensive, export-oriented manufacturing activities. Has innovation played a role in China’s economic growth? What are the determinants of innovation in the Chinese economy? These are some of the questions which are to be explored in this study. Answers to these questions have important policy implications for China’s economic development in the future as innovation is vital for the transformation of the country’s growth model.

Key words Innovation, economic growth, Chinese economy JEL codes O33, O53

延延吴

Innovation and Economic Growth in China

1. Introduction

Since the initiative of economic reform in 1978, China has enjoyed high economic growth for three decades. This growth has however been driven mainly by exportoriented, labour-intensive manufacturing activities. In 2008 the total value of China’s export accounted for 32% of the country’s GDP.1 In the mean time, tens of millions of workers were employed in the export sector. As a result the Chinese economy is very vulnerable to external shocks such as the 2008 US sub-prime credit crisis and the resultant recession and decline in demand for Chinese exports. To sustain economic growth in the future, China’s policy makers are keen to boost the role of innovation in the country’s economic development so that the economy will eventually be transformed into a knowledge-intensive one which is less dependent upon external markets (Schaaper 2009, Zhang et al. 2009). This goal is clearly envisaged in the country’s “Medium-to-Long Term Plan



References: Calculated using information from the 2008 Statistical Communiqué of National Economy and Social Development, National Bureau of Statistics of China (released on February 26, 2009, www.stats.gov.cn).

You May Also Find These Documents Helpful

  • Good Essays

    Economics Hsc China Essay

    • 637 Words
    • 3 Pages

    Economic growth and development in China is heavily dependent on two of the three engines in the “tiger” economy – exports and investment. In 2009, China’s exports suffered as the nation’s largest markets fell into recession. China’s subsequent stall in…

    • 637 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    The international economic landscape has and is dominated by the United States. However a new player is emerging. China over the past couple of years has sprung onto the national scene. These two countries are the top exporters and importers in the world with around $7.5 trillion in goods traded, according to a 2012 WTO study. They are also some of the largest import or export partners between each other trading approximately $536 billion being exchanged between the two countries. As the United States and China move forward into the next couple of years analyzing the past trends will allow for smarter decisions to be made. The research included will be drawn from data around the last 15 years with more accurate data regarding sectors being added in the closer to present we present. Topics covered will be:…

    • 409 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Economics & the Rest

    • 1458 Words
    • 6 Pages

    Since the market orientated economic reforms were introduced in 1978 (Khan, Hu (1997, P103) China’s economy has seen a 10% increase in Gross Domestic Product (GDP) Per year (Vincellete, Manoel, Hansson, Kuijs, (2010, P 4) which is extremely impressive considering all other developing countries have experienced a 4% increase annually (Vincellete, Manoel, Hansson, Kuijs, (2010, P 4). Prior to the global financial crisis in 2005, the economic growth had averaged 9.5% over the past 2 decades (Economic Surveys: China 2005, (September 2005, P2) During the global financial crisis in 2008-2009, exports shifted from 20 percent annual growth to an annualized contraction of more than 25 percent in early 2009 (Vincellete, Manoel, Hansson, Kuijs, (2010, P 4) However, prompt and vigorous policy actions, as well as swift adjustment in the labour market, helped growth pick up by the second quarter of 2009, putting China in the lead of the global recovery (Economic Survey of China 2010: Achievements, prospects and further challenges, ( February 2, 2010) The success of the Chinese Economy recently, especially during the economic , crisis has been speculated to be the cause of the popular government owned companies. Registered private businesses grew at a rate of 30% annually from 2000 to 2009 affecting different industry sectors from oil to banking (Entrepreneurship in China: Let a million flowers boom (March 10, 2011) and has been the…

    • 1458 Words
    • 6 Pages
    Best Essays
  • Powerful Essays

    China’s influence in the world economy was minimal until the late 1980’s but we are now seeing China being one of the most independent countries and leading the manufacturing producing market. China started with a fragile economy with minimal infrastructure from frequent revolutions and invasions in 1949. In the early 1980’s, China’s economy was still extremely weak as a result of its inward looking government system of a socialist planned economy under the Mao government. This resulted in living standards below world averages and economic growth at nearly zero. China has risen from the edge of economic obscurity to lead the world in terms of economic growth, and this is done is just over a quarter of a decade. The People’s Republic of China has transformed from a planned economy into a socialist market economy and is now the world’s second largest economy to the USA being number one, by nominal GDP at $7.3 trillion and by purchasing power parity (PPP). “Pay attention to what’s going on in China. “ – Jeff Mbanga – The Observer.…

    • 2351 Words
    • 10 Pages
    Powerful Essays
  • Best Essays

    Nowadays, China has become the second largest economy in the world. The GDP (gross domestic product) of china was growing at 9.7% per year in average since 1978, which the year of Chinese “open door” politic founded. China also has become the biggest producer and consumer in many key agricultural and industrial markets and the largest FDI recipient among the developing countries. The performance of china in developing of economy is called “china’s economic miracle”, which be studied by many economists. However, there are also bad results with the development of economy in china such as environment disruption, corruption and income inequality, which have been seen as important issues to Chinese society and its future economic growth.…

    • 2207 Words
    • 9 Pages
    Best Essays
  • Powerful Essays

    Huawei, e. a., & expertise, b. (n.d.). Economy; China technology and innovation. INSEAD Knowledge - Best of business research. Retrieved January 30, 2012, from http://knowledge.insead.edu/economy-china-technology-and-innovation-100527.cfm…

    • 1185 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    By 2004, the combined value of China’s exports and imports rose to 67% of its GDP, making China’s growth relied heavily on its international trading. The excess foreign exchange reserves resulting from the fixed yuan exchange rate was used as collateral to attract FDI inflows and support China’s development strategy – FDI brings useful technical and management skills as well as jobs to China. A sharp depreciation of renminbi will certainly reduce exports, increase unemployment, and force multinational companies with factories in China to shift production to other low-cost countries. However, the fixed exchange rate was expensive to sustain, and it also limited China’s flexibility in responding to a potentially overheating economy.…

    • 1839 Words
    • 8 Pages
    Good Essays
  • Good Essays

    The biggest problem with China’s growth is its challenge to the US’s economic sectors, mainly in manufacturing. Although we, as Americans, love less expensive items, importing those goods from China is removing those jobs to make the imports in the US. In fact, “between 2001 and 2008, the U.S. lost 2.4 million jobs as a result of increased trade with China” (Estrin). Low-cost labor in China is the major reason for this, and it is “blamed for bankruptcies and/or plant relocation to China, job losses, and stagnant U.S. wages” (Congressional Research Service, 2007). These jobs may not have an overall effect on employment, but “likely does have some negative effect on employment in particular trade-sensitive sectors of the economy,” such as in manufacturing (Congressional Research Service, 2007). Another job problem is that the labor force outside of the US has “all of a sudden doubled with the entry of India, China and former Soviet bloc countries into the liberalized global market in the recent period” (Izurieta, Singh). More people are available for the same jobs that Americans are doing, but other countries are willing and able to do them for fewer wages. As technology changes, China is growing faster than ever, and exporting many more electronic goods, and the US is falling behind in this innovation. Chinese workers have adapted to these new technologies much more quickly, but “Americans who can adapt and…

    • 863 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Chinas Economic Miracle

    • 4633 Words
    • 19 Pages

    Open up virtually any major newspaper and you'd likely to find an article about chines economy. Now this might take the form of the article about America's trade deficit with china, or maybe it's an article about how chines demand for oil is driving up prices of gasoline in United States. But if you keep reading in those articles and you get a little bit further into it, you'd likely to read a line this says something like, "China has been grown up in remarkable fast rate for the last thirty years." It makes stop and wonder; how is it the china is growing so fast? Where is the Fundamental underlying this growth and is this stainable into the future? That's gonna to be topic of our discussion today.…

    • 4633 Words
    • 19 Pages
    Better Essays
  • Good Essays

    Along with the change in ownership forms, the Chinese economy has grown rapidly over the last twenty years. China's status in the international economic and trading system is also steadily advancing. These achievements have gained international recognition.…

    • 1173 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Honglin Zhang, Kevin (2009). Capital Markets, Industrial Development, and the Role of China in the World Economy: Guest Editor's Introduction. Chinese Economy; Nov/Dec2009, Vol. 42 Issue 6, p3-6, 4p; retrieved July 19, 2011 from EBSCO host.…

    • 856 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    China's Industrialization

    • 2955 Words
    • 12 Pages

    The pace of economic change in China has been exceptionally rapid since the start of its economic reform in 1978 under the influence of Deng Xiaoping. Since then its Gross Domestic Product (GDP) has grown at an unprecedented 9.5 percent a year, making China’s the longest and most sustained growth experienced by any country within modern history. Such growth has been a result of various aspects, including a profound change within China’s economic policies, reform of the state-owned sector, and rapid growth of physical and human capitol. China also has the advantage of a good infrastructure, an educated workforce, and most importantly an extremely open economy. However, as the country’s economy rushes forward, so does the pile of social and economic contradictions threatening the future growth of China. To begin, China lacks a stable macroeconomic environment necessary for a strong medium-term growth, resultant of China’s fixed foreign exchange rate. China also runs the risk of political and social instability caused by the widening of geographic income inequalities. Environmentally speaking, the country is also the world’s largest consumer of raw materials and leads the way in emissions of carbon dioxide. This paper will address these issues with respect to their causes, the impact they have on China (and where applicable globally), as well as discussing the issues involved within resolving them.…

    • 2955 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    Business Manger of the IPR Working Group and R&D Forum at the European Union Chamber of Commerce in China (European Chamber), based in the Shanghai Office. Contact information: dprudhomme@europeanchamber.com.cn Acknowledgements: The author would especially like to thank the following members of the European Chamber’s IPR Working Group (WG) for their comments on this study: Dr. Oliver Lutze, Co-Chair of the IPR WG; Elliot Papageorgiou, Rouse Shanghai; Lin Xu, Vice Chair of the IPR WG; and Qu Xiaoyang, Vice Chair of IPR WG. Thanks to Dr. Ioana Kraft, GM of the European Chambers’ Shanghai Office, for her comments; and thanks to Doris Wang, Working Group Assistant at the European Chamber, for revising English translations of many Chinese provisions flagged by the author for inclusion in this study, and certain other fact-checking.…

    • 112232 Words
    • 449 Pages
    Powerful Essays
  • Good Essays

    One way industrialization affects China is economic. First, China became the third-largest economy in the world. Chinese GDP increased 777.6 billion a yuan to be 25.731 trillion yuan in 2007, which means grew 13% (Wu). Second, more and more jobs are provided to people, which mean they increase their income and living standard. For example, people spend money on recreational business and services. Also, people buy clothes not only for need and warm, but also they are dress up themselves. Third, government spends money to improve their children's education, employment, and medical care. For instance, the government tried to create more jobs and a good situation for people to work. The cities and towns have 10 million people was employed annually from 2003 to 2006 (BBC Monitoring Asia Pacific). In addition, the government tried to pay the tuition and provide books for rural area students (BBC Monitoring Asia Pacific). So that children can have a good opportunity to…

    • 949 Words
    • 4 Pages
    Good Essays
  • Good Essays

    It is somewhat ironic to think that the first two world economic powers have divergent political institutions (in the US are inclusive while in China are extractive). The defense of the authors' argument is that China's growth is not sustainable over time. The main reason is that the extractive institutions can not generate sustained technological change because of (1) the lack of economic incentives and (2) the resistance from the…

    • 2059 Words
    • 9 Pages
    Good Essays

Related Topics