Scholarship Application - Current Affairs Essay
Current Affairs Essay
The Peoples’ Republic of China (PRC), which is the world’s second largest economy, is fast evolving as its
growth transits from being mostly government driven to being more consumer led. Mainland China has
since the late 1970s leapfrogged in its expansion as it adopted a hybrid economic system in which
government accounted for a more significant share of the economy than the private sector. China’s
manufacturing sector, huge public expenditure on infrastructural expansion and its large export bill
collectively served as a basis upon which such growth occurred.
Till 2015 China experienced an average growth rate of 10% but this growth was largely based in the
coastal areas, which include Shanghai, while other regions in the hinterland remain relatively
underdeveloped. Consequently, there was an uneven spread of wealth amongst the country’s
population of over 1.3 billion people and China still lags behind in terms of the Social Progress Index
(SPI) - at 92 out of 133 countries, according to a 2015 report by Deloitte. With the slow-down in the
global economy, China’s international trade activities are affected and there is an increased need for the
economy to look to its huge population as a means of reactivating its former growth rate.
Improving on consumer spending in China may require both policy and non-policy methods. For
instance, in Taiwan consumer spending was boosted by labor policies that, in particular, led to a rise in
unionization which helped raise wages while in Japan urbanization and growth in the availability of
technology (through state-supported electronics manufacturing) encouraged a consumer culture. With
the large number of past portfolio investments made in China through establishment of manufacturing
plants by foreigners, now is the time for the Chinese government to promote a relative increase in
workers’ wages while further expanding ICT infrastructure to reach other underserved areas of the
country.
Technological inclusion has proven its effectiveness in the process of economically empowering
consumers even in my home country, Nigeria, where unregulated internet access has created numerous
opportunities for a population of over 180 million by facilitating transfer of information and knowledge.
China may need to start paying attention to areas such as financial and technological inclusion to ensure
that its citizens are well positioned to serve as a reliable market of consumers for its products at this
time when international trade activities have slowed. In a case where Chinese citizens are actually
empowered China can look to them as an alternative to its trade partners.
Remittances may also be used to support consumer spending, as China remains the second largest
receiver of such funds after India. However, unlike in India where most citizens in the Diaspora remit
their monies to support family members, Chinese abroad remit monies for investment purposes. Thus,
such funds need to be redirected at empowering those at home towards also increasing their propensity
to consume goods and services within the local economy. Achieving this will require national campaigns
to encourage Chinese citizens in foreign lands to identify their family members who may require
financial assistance to subsist or as an additional source of income in an increasingly difficult economic
situation.
If China can successfully transform its economy by encouraging consumer spending the consumer base
has the potential to hit US$67 trillion over the next decade, according to The Demand Institute. Global
interest in Chinese shoppers is already high. American pop-star, Taylor Swift, has teamed up with
JD.com Inc., the second-largest e-commerce company in China, to sell a new fashion line designed
specifically for Chinese shoppers. At the movies, ticket sales are surging, with first-half box office
revenue this year rising to 20 billion yuan (US$3.2 billion), compared with just 4 billion yuan in all of
2008.
The only way for any economy to rapidly adjust to recurring negative trade cycles such as economic
recessions and depressions, is to constantly evolve economic systems to fit current conditions. This will
be difficult for China having adopted a government driven economic system for over four decades but it
is not completely impossible based on the country’s large population as a comparative advantage that
can be leveraged. Consumption spending is what has actually kept many emerging markets such as
Nigeria afloat in the last five years as Western businesses flood such economies to take advantage of
their fast growing populations with varying demographics. ICT and e-commerce service providers are
most liable to partner with the public sector in the process of spurring consumer led growth in the
modern global economy. This creates jobs and income for the populace thereby also increasing the
middle class who will serve as the mass of local spenders spurring economic growth. China needs to
further integrate more of its citizens into the middle class if it seeks to increase consumer spending.