Why has the chinese economy growing so rapidly in recent years?
Answers
The world’s two fastest growing major economies are China and India.
Both countries demonstrate a common pattern of development different from that of the slowly growing West. Rapidly growing state investment plays a significant role in China and India’s economic expansion, while private investment is either growing very slowly or declining. In contrast, the slowly growing Western economies rely on private investment with no rapid growth of state investment.
This economic reality is crucial for China’s practical economic policy as the country seeks to achieve its goal of a “moderately prosperous society“ by 2020 and a “high income economy” by World Bank standards shortly thereafter.
But the facts of this global economic trend are also crucial for economic theory and analysis. According to the dogmas of “neo-liberalism” and the “Washington Consensus,” private investment is supposed to be “good” while state investment is supposed to be “bad.” The facts show the exact opposite trend is occurring.
Rapidly rising state investment is associated with high economic growth.
Rapidly rising state investment is associated with high economic growth (China and India); over-reliance on private investment is associated with low growth (U.S., EU and Japan).