China is the largest economy due to a number of reasons -
1) Population as an advantage -
The size of an economy is calculated based on its output and production. China has a massive population of 1.3 billion people (that is more than double of all of EU! and a little more than double of the population of USA). Nearly every adult in China works, and working hard comes naturally to Chinese people (you will find very few people in China sitting in parks and relaxing).
The government considers it its responsibility to ensure that people have jobs and work to do - most economic policies of the country (including the widespread construction sector) follow this rationale.
The nation has, just 30 years ago, completed grappling with basic issues such as food security and has now moved on to the next step - developing its economy.
In other words, you have all the ingredients for a huge economy - a huge and willing local work force, a natural desire to work hard and do well, a government that wants to provide as many jobs as possible, a government that spends heavily for the same and makes it easier for foreign investment towards the same, and finally - and perhaps because of these reasons, goods produced at competitive prices. The last reason brings us to reason (2)
2) Worldwide demand for cheaper goods -
Coupled with the fact that the PRC government uses population to an advantage of the country is the fact that there is a world wide demand for cheaper goods. China manufacturers most of the cell phones and computers in the world (both of which were neither invented nor developed in this continent!). Worldwide there is a never ending demand for the same. Consumers across the world (China included) want these at lower costs, and China is able to make them at low costs - many a time without compromising on quality.
Consumers want an Apple phone, but do not wish to pay double / 3 times the cost. hence it HAS to be made with lower costing workforce in China (where the average costs of workers is not so ow either… 3000–8000 RMB per month is the average salary for an entry level worker in Shenzhen where most mobile phones are manufactured).
3) A governance system that works for the country -
Oddly enough, Chinese style communism, with its flexibility has worked for the country. You cannot have a Nigel Farrage in China - the Communist party would simply not allow a leader to run off from the consequences of his decision. this makes the political leaders highly answerable. Them knowing that their party will always be in power means they will have to face the brunt of any bad decisions made adn will have to resolve any issues that crop up on a later date.
Hence, the moment the Chinese govt finds an economic decision going awry (and many of them have - such as the ghost cities that one sees in some provinces), it tends to step in immediately to control the damage, and rectify it.
Interestingly, Chinese communism has many aspects of democracy incorporated in it.
Here is my own analogy of Chinese communism - I like to compare it to a family with a strong father, who has his children’s interests very high in his mind, but is strict at the same time, except that this father is aware that he has 10 kids, and if all 10 of them are dis-satisfied simultaneously, there will be chaos at home. The mother acts as a bridge and keeps the father informed whenever he is being too strict.
4) The ability to copy REALLY WELL -
Many enterprises copy. Or steal. Or literally steal (Many would call buying an operating platform for just 500$ and making a huge software company off it literally stealing. And I believe it was Steve Jobs who reminded Bill Gates that they had both stolen from Xerox… it was just that Apple landed there first to pinch off Xeros’s ideas!)
However, the Chinese are excellent at copying / making imitations / often improvising while making imitations. So the duplicate is sometimes as good or even better than the original!
For example, you can get Apple phones (copies, obviously) in every second street in most Chinese cities. However, many of these phones are made by the same companies that make (at least a few parts of ) the original Apple iphone. The duplicates, on the other hand, allow you to load 3rd party software. It is now wonder that Jack Ma recently commented that many copies are better than the original.
As a result of this, they have not had to invest immense amounts in R&D, yet are today able to make products such as high speed railway coaches of excellent quality.
5) A large domestic market -
China itself has a massive domestic market (similar to India), hence Chinese companies do not always have to look for other countries to sell their products. This protects it to an extent from world shocks.
For example, the world economy is in a recession, however sky scrapers continue to be built in China even now, and people (mostly Chinese citizens) are buying houses and offices in these skyscrapers. On an average, the 5 new constructions opposite my place of work add a floor every 2 weeks.
6) Low dependency on imports -
Most of the coffers of any nation tend to get drained due to their dependency on imports. For example, despite its natural resources, India is heavily dependent on oil imports, where a large chunk of its foreign exchange gets spent. Over teh past decade, China’s dependence on imports, especially related to petro chemicals has reduced. It continues to import coal (a cheap commodity) and iron ore (far cheaper than the steel that it turns it into).
A case that supports this - till 2014, China was among the largest importers of chemicals ( a raw material for many a industry including plastics), mostly from refineries in Africa and Europe. Since 2014, China has turned into a net exporter of chemicals, and today is among the largest producers of many chemicals and raw materials used worldwide for production
I guess we can add many more reasons, but I would rate the above as the main reasons
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