Rebalancing Chinese economy: Challenges and path ahead

Abstract

Time and again we draw comparisons between India and China. China is the second largest economy in the world today, which makes it an interesting topic of research for Indians. This study examines the reasons behind China’s rapid growth, their attempt in rebalancing their economy and the challenges that lie ahead. China has seen tremendous GDP growth over the last 3 decades which is evident from the graph below. This growth can be attributed to the following reasons. 1. Increased employment generation in industry/services away from agriculture. As evident from the graph below, there was a reallocation of resources from agriculture to industry. 2. Rural to urban migration. 3. Greater participation of women in the workforce. 4. Investment driven growth. 5. Labour productivity improvements.