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The Editorial Analysis: Tackling the Persistent Growth of China


Chinese economy UPSC: Relevance

  • GS 2: India and its neighborhood- relations.


Tone of the editorial

  • The writer is a professor of economics at IIT Madras. In this article, he discusses how China has positioned itself to cause an unprecedented change in industrialisation.


Growth of Chinese economy: Key points

  • Despite trade wars and the COVID-19 crisis, China has achieved remarkable achievement when it comes to economic growth.
  • In 2020, when other economies were struggling to cope with the effects of the novel coronavirus pandemic, China’s manufacturing output increased from the previous year.
  • According to official data from China’s National Bureau of Statistics, China’s economy grew by 8.1% in 2021, aided by growth in industrial production.
  • While industrial production rose by 4.3% in December 2021 compared to 2020, fixed asset investment for 2021 grew by 4.9%, surpassing expectations of 4.8% growth.
  • In 2021, overall retail sales grew by 12.5% from the prior year’s contraction, and also bettered the levels in 2019.


The Editorial Analysis: Tackling the Persistent Growth of China_40.1


No De-factorisation

  • In 2021, experts believed that factories would move away from China—the factory of the world.
  • The reason for the above inference were the combined effects of COVID-19, geopolitical tensions and high tariffs.
  • This shift in the global supply chain would have led to significant change in the geo-political relations as China accounts for about 30% of global manufacturing.
  • However, this presumed shift could not occur as the Chinese economy seems to have recovered from a short-lived pandemic blip.


China’s advanced manufacturing

  • China is stimulating overall growth by catalysing the industrial sector, pursuing a radical shift in its approach.
  • China is using its increasingly skilled labour force and strategic raw materials to enhance its already highly developed manufacturing capabilities.
  • This is pushing industrialisation toward ‘advanced manufacturing’ and higher levels of automation, which have been boosted by its world-beating adoption of artificial intelligence (AI).
  • The effect of such a strategy is that Chinese manufacturing is moving toward a new kind of predominance in growing sectors that are less exposed to lower cost competition.
  • The recent economic recovery has been aided by a massive adoption of artificial intelligence.


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Way forward

  • It might take years for the rest of the emerging economies to shift gears to move to the present phase of industrial production in China.
  • As an early mover, ‘China is laying the groundwork for setting itself up to be a leader’.


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