China Case Study

Reasons for China's rapid growth

Whilst parts of Europe have experienced deindustrialisation, China has seen a significant growth. China has now been dubbed 'the new workshop of the world' a phrase that was first used to describe Britain during the 19th century. 

• During 1985-2005, around 20-25% of high tech manufacturing was produced in the EU. Below 5% of high tech manufacturing was produced in China between 1985-2001. China then started to grow and 5-11% was produced during 2001-2005. 
• 60% of the world's bicycles are produced in China
• 72% of the world's shoes are produced in China
• In 2013 China overtook the USA to generate the world's largest industrial output. 
• China is the world's largest exporter

Reasons for China's growth

Government legislation

• In 1977 Deng Xiaoping sought foreign investment to help end China's isolation land stimulate economic growth. 
• Between 1980 and 1994 Special Economic Zones were set up to encourage businesses into China. They often had advanced factories set up in the zones and tax incentives such as reduced tax rates were used to attract more businesses. 
• The One Child Policy, which was introduced in 1979, meant that the population level was much lower than it would have been and people's desires changed. There was an increased demand for electrical household goods, air conditioning, cars and computers. 

The home market

• China's large and increasingly wealthy population (per capita income in urban households was about £600 in 2001, having rise to just below £200 in 1993) offer much potential, as do other asian pacific areas. China's urban population is around 500 million people. 
• Increasing numbers of people with more money means they can buy more things. This creates a greater demand for chinese products, the the industry produces more as a result. 
• China's massive home market will continue to grow.

The Olympics factor

• The 2008 olympics were held in Beijing. This provided China the perfect opportunity to showcase the nation.
• The opening ceremony, based on the theme 'One world, One dream' was important in an attempt to convey China as an open, friendly country and important, integrated, positive part of the world in the 21st century.
• The prestige of hosting the games and the image portrayed was immensely important in stimulating further foreign investment. 

Energy

• Industrial development on a large scale demands large resources of energy. China currently generates two thirds of its electricity at coal fired power stations. 
• Many new plants are being built.
• Hydroelectric power accounted for 7% of electricity in 2006. China produces more HEP than any other country in the world and is keen to develop new sources of energy. 
• The Three Gorges Dam - biggest dam in the world, generating 22,500 MW when fully operational. 

Labour

• Cheap labour is a key reason why the economy has been thriving. Wages are 95% lower than in the USA. This means TNC's will have lower costs and therefore greater profits, which makes China a more attractive place to locate a factory in.