Raising The Standard: Economic Issues In China

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      The globe is controlled by economics, every nation fighting for the top spot. Countries with larger economies possess a higher level of leadership and power. However, the fight for a peak position can come at several costs. Most air pollution has come from countries within the eastern hemisphere who are now being held accountable. China, being the largest and most populated of these eastern nations, is seen as a major contributor to poor air quality. In China’s quest to become a leading economic powerhouse it has focused solely on economic growth and neglected its shortcomings. For 25 years China’s economy has been booming, greatly admired on the world stage for its growth and consistency; however, the development has not been without a cost: pollution, overpopulation and poor working conditions have generated a significant problem not only for China, but also for the rest of the world.

       China’s pollution problems date back to the start of their economic boom in the early 1980’s. However, in the last few years China’s pollution rates have reached record breaking numbers. As more factories are built the amount of air pollution continues to increase. Only 1% of China’s urban population breathes air which is considered safe by European standards. Beijing’s air is 16x worse than New York City and in Shanghai the ground is not visible from a 5th floor window. This has gotten to a point where the Chinese government should get involved. The smog has even been linked to 1.2 million premature deaths. The pollution does not only affect China; one third of San Francisco and Los Angeles air pollution comes from China. The smog is picked up by the jet stream and heads right over to America. If China cannot find a way to lower its pollution, it will eventually become an uninhabitable. Here is a chart showing air pollution numbers and what is safe and not safe:

 

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My home town of Concord Massachusetts is in the green zone. Boston is in the yellow zone and New York City is in the orange. Shanghai and Beijing are in the maroon. China’s cities have the worst air of any place on earth. You can even see the smog from space. To make matters worse 52% percent of men and 2% of women smoke.

          China has been the center of manufacturing for many years now. The low cost of labor, weak labor laws, and a weak currency appeared beneficial to many companies which began to outsource their manufacturing to China. Companies immediately switched to manufacturing products in China once they found the simple benefit of paying workers less and working them more. The Foxconn/Apple factories in Shenzhen and Chengdu employ more than 1.2 million. They even need to go as far as to put nets around the building in order to keep workers from jumping to their death. Apple and Foxconn pay their employees an average of $450 a month. The workers take 12 hour shifts and many have dorms in the factory allowing them to sleep there and therefore, work more. The dining facility cooks over 12 tons of rice a day and gives the employees a meager $.65 to spend on food a day. When the new iPhone was released a reporter put a camera on a worker and sent him into the heart of the factory. The footage shows workers eating their lunch in less than 5 minutes, then proceed to sleep because they do not get enough at night. In 2010 a man worked for 34 hours before he collapsed and died. There are also many riots at the factory. Workers will protest on the roof and in the streets. In past years workers have threatened to kill themselves, overall a terrible place to work. The Foxconn factory has over 70 psychiatrists on duty every day and from 2007-2011 there were 17 suicides. This is only one of thousands of factories in China.

China’s population has been growing just as fast as its economy. With over 1.357 billion people, population poses a major threat. Unemployment has not always been a major issue in China, though it has grown to 4.1%. The U.S. rate is higher at 5.4%, though China’s population is 1.357 billion vs. U.S. population of 315 million. Therefore, about 55 million people are out of work. China’s population is also very young: 17.1% is under 14 years old, 15.7% is between 15-24 years old and 47.2% is 25-54 years old. This means many jobs can be filled and with a young and active population showing its potential for growth. China seems to be using this to their advantage by bringing people into urban areas which promote work and innovation. If China can bring its unemployment rate to 2% they will be much better off. They have a large and young population, so they might as well use it to their advantage.

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Since 1980 China’s economy has grown at an annual rate of 10.4% (GDP). Though in the last couple years it has dropped to 7.7%, this is mainly because China has cut its growth target to 7% for 2015-2020. This decrease is out of concern, since China is aware of their large population and inability to sustain such a high growth rate with that many people. China would rather grow at a steady yet, stable rate rather than push to the max and crash. In recent years investment has been a large driver in China’s growth, this however is slowly fading. China has surpassed their goals for 30 years and they do not want to mess up now.    

China’s economic history is comprised of many dynasties. It has mainly been an agricultural nation since its beginning, only now in the modern era has China started to branch off and work with other countries to grow the global economy. In 1949 communists came into rule, and since then China has initiated many plans to grow and expand its economy. China’s first communist ruler was Mao Zedong, and his first plan was named the “Great Leap Forward”. This plan was intended to be five years long and was meant to bring industrial work to China, slowly replacing the agricultural economy. The plan flourished and now China is home of industrial work.

In 1976 Mao passed away and Deng Xiaoping came into power. This is when the one child policy was implemented to control population, affecting many families. The one child policy brought unemployment rates down and allowed China to grow.

In 1990 China declared upon their open door policy which meant anyone could trade with them. This meant big things for the U.S. Trading started to boom and China had opened themselves up to a whole other level of economic growth. Immediately U.S. manufacturers moved their factories to China since goods could now be built for much cheaper and shipped to the U.S. in bulk for a low price and then sold. This meant economic growth for both China and the U.S. However, the U.S. lost many job opportunities after companies shut down U.S. factories and moved to China. Around the same time, stock markets opened in both Shanghai and Shenzhen. This meant Americans could buy Chinese stock, making China more wealthy, especially because many Chinese companies are owned or controlled by the government.

In 2001 China joined the World Trade Organization. This organization manages the rules of trade among different nations. In 2003 China launched its first manned spacecraft. This shows how far behind China was from the U.S., yet recently they have bridged the gap. In 2007 a new labor law was released after hundreds of men and boys were found as slaves in brick factories. It was called the Chinese Slave Scandal. China still has many issues with slavery and poor working conditions; they have made laws against it but do not seem to enforce them. In 2008 Beijing hosted the Olympics which brought people from all over the world into China. This same year a global financial crisis hit and China spent a mere $600 billion to avoid their economy from slowing. Since then China’s economy has continued to grow.

Transportation and energy is another way greenhouse gases are released into the atmosphere and with a population of 1.357 billion, there are many vehicles to power and even more houses. In China there are 101 cars per every 1000 people, meaning that there are about 150 million motor vehicles on China’s roads. If China can research hydroelectric and solar powered cars, it would eliminate fossil fuel usage and decrease pollution. Powering dwellings is another problem China faces when it comes to pollution; even though they have recently started researching and implementing renewable energy, they still burn 4 billion tons of coal every year, while the U.S. only burns 1 billion. If China can reduce that number to 1 billion like the U.S., they would be in much better shape. China has miles of land in rural areas in which they could set up solar panels and wind farms. Pollution in China is a growing issue and they need to take action and stop the smog from entering the atmosphere because it does not only affect them, but the rest of the world.

 

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As China’s economy continues growing, child labor is a prominent issue. It is unethical and immoral. No child should be forced to work long hours for next to nothing. China has laws against child labor, but it still emerges as a major issue. These laws are not enforced to the degree they should be. Factories can easily get away with child labor by hiding them in the crowd of workers. They say the minimum age of work is 16, though if approval from the government is given, children younger than 16 can work. If approval is not given and the company is caught, the fine is only $660 per child per month. A company like Apple can make that back on one or two products they sell, making this easy for them to get away with.

Labor is not only an issue for children, it continues to be a pressing matter for the general public. Factories are rarely checked on and suicides continue to be an issue. The workers of these factories get paid almost nothing and receive no benefits. Without health care, money and working 12or more hours a day, factory workers are in need of major help. In Apple’s Foxconn factory there are many suicides, riots and unhappy people. China’s government does not inspect these factories as often as they should. If inspected, factories would be forced to improve conditions and workers would live a higher quality life. If China required monthly inspections and set laws on factory conditions, the issue would decrease. In some ways it seems China does not care about the factory conditions, as long as its economy continues to grow at a fast rate. Laws which are made do not get enforced and companies are very smart about hiding their factory conditions. Many of these workers do not have a choice, with a substandard education and nowhere to go, so they are stuck working in misery. China has the power to do something about it, though they chose not to act. This issue could be resolved, but it just needs someone to take initiative.

Population is another issue China faces. China has more people than it knows what to do with and in the past have resorted to the one child policy. While citizens continue to find loopholes and as the law phases out,China has to find ways to manage their population of 1.357 billion. China has started to implement some new ways: one is to move rural populations to urban areas. Most of China’s unemployed live in rural areas so by moving them to cities, the unemployment rate should go down. China’s urban to rural income ratio is 3.33:1. This means someone working in a city is making more than 3 times more than a farmer or someone working in a rural area. China believes if they bring the rural population to cities, they can even out income. As a communist country this sounds like a good plan. Though by bringing the people to an urban environment it means more factories which result in labor issues and more pollution, two things China needs to fix. If China can do it correctly it could result in better pay and lead them to a better place to grow economically.

 

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China is on track to someday surpass the U.S. and become the world’s largest economy. With a young, colossal population, thousands of factories and constant development, China is the ultimate factory for a large economy. However, that growth has not come without sacrifice. The issues China faces today can be resolved, nevertheless China’s economy will continue to grow.

 

About the author

Reid Monahan is a 17 year old from Concord, Massachusetts. He is a member of the St. Mark’s Class of 2019. He plans on pursuing a career in venture capital, software development and other investments. He intends on a major in economics and a minor in computer science. Some other interests include: squash, golf and computer science.

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