10 Reasons Why China is Successful and Efficient

By | March 15, 2016

“Made in China” really doesn’t mean what it used to be, quality of Chinese-made products is rising fast. In addition, China is moving very fast in technological innovation. For example, in the past five years, China saw a rapid growth in its IP (invention patent) community, reflected by its innovative companies and the whole society, according to WIPO report (wipo.int 2015). Since opening up its economy and market in the 1980s, China has been successful in growing its economy and utilizing its demographic bonus efficiently.

Following are 10 main reason explaining why China can be so successful and efficient:

1. A Powerful Government with Democratic and Authoritarian Features

Creating and extending roads, subway lines, and railways can be disruptive, particularly to those who live in their path. In a typical democratic society, infrastructure construction is regularly slowed or stopped by the opposition of the residents who will be affected. By contrast, Chinese government with authoritarian features can move more smoothly in removing obstacles and supporting the projects in the interest of the community and society as a whole (Guo 2014).

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Photo source: Online

The longest glass-bottomed bridge in the world is now situated in Zhang Jia Jie in central China’s Hunan Province, one of the most fascinating national parks in the world. The Brave Men’s Bridge is 984 feet long, and spans a 590-foot deep crevasse. The glass is 24mm in thickness (approx. one inch) with nothing underneath but air only. It has been a tradition for China to undertake some of the world’s biggest and most expensive infrastructure projects, these news projects are making the Great Wall look smaller and smaller.

2. High Personal Saving Rate
high rate of saving in china
Photo source: Online

An important factor that supports implementation of large-scale investment and economic activities in China, a developing country, is a high saving rate. Figures reported by National Bureau of Statistics show that China has a personal saving rate of 35% (or 50% according to earlier IMF data), one of the highest rate in the world. In comparison, household saving rate in the United States is around 5% for years. As a matter of fact, some believe that nearly 85% of China’s infrastructure projects are funded the bank capital because of the high saving rate among the majority of the Chinese people.

3. The Power of Models And Showcase

It’s difficult to attract foreign investors as well as talents from overseas in particular in the 1980s when China was not obviously outperforming other competitors in South East Asia in term of cheap labor and infrastructure conditions. Chinese policy makers believe that the Chinese market as a whole is judged on its presentations. Therefore, China built a number of models (or windows) to showcase its willingness as well as advantages in supporting new foreign investment activities. Since 1980, China established special economic zones in 4 cities: Shenzhen, Zhuhai and Shantou in South China’s Guangdong Province and Xiamen in Fujian Province; these cities received extra support in developing the foreign-oriented economy and foreign exchanges through exporting commodities and importing advanced technologies.
shenzhen special economic zone
Shenzhen, a Window of China’s reform and opening-up
Photo source: news.sznews.com

4. Continual And Profound Marketing

The Chinese government and national leaders have long been selling China as an emerging, fast growing and politically stable market with a population of approximate 1.4 billion that is full of business opportunities. For example, it has become a tradition that Chinese leaders lead a large Chinese business delegations in state visits to other countries to look for business chances and even reach business deals during conferences and meetings.
xi visit to us

5. Establishment of Pilot Zones & Industrial Parks

Led by the national and local governments, China is successful in building up a number of free trade zone, investment zone, high-tech parks together with the forming of various tax incentives policies favoring target investors. For instance, in recent years several Pilot Free Trade Zones have been set up as “experimental plot” in advancing reforms and raising the level of open economy.
shanghai FTZ
Map of Shanghai Free Trade Zone

6. An “Economy-Above-All” National Policy

China takes economic construction as the central task and an important national policy. Therefore, China always prioritizes investment and financing channels as well as technology development even though there may be different views and concerns.
china economy-above-all
Photo source: news.hexun.com

7. The Kindred Development Model

A special feature of China’s rapid economic growth and financial reform is a so-called “Kindred Development Model” which is defined as the direct investment and contribution of overseas Chinese to the economic reforms (Ash & Kush 1993). Oversea Chinese from outside of mainland China significantly contributed to the economic development in term of promoting trade and direct foreign investment, knowledge and management transfer and etc.
oversea chinese
Photo Source: chinaql.org

8. Strong Manufacturing Power

While being the word’s factory, China is always focusing attention on strengthening its manufacturing capabilities. In 2015, China revealed its official plan “Made in China 2025” to move up the supply chain and become a leader in manufacturing innovative technologies. What is more important is that, a strong manufacturing base is believed to be critical to spurring the technological innovation that a country needs to power its economy in the long run (Navarro & Autry 2011)
China is a Strong Manufacturing Power
Photo source: online

9. A Quick Response System

Tested by a number of major challenges (such as 1997 Asian financial crisis, 2002 SARS (Severe acute respiratory syndrome) crisis, 2008 Sichuan earthquake, 2015 Shenzhen Landslide…), the quick response system built by the Chinese government is proven to be doing a great job in term of timely media communication, immediate action with no delay, allowing social and international help to participate, mobilizing the army and state-owned enterprises to provide relevant resources. In fact, the political system of China makes sure that all efforts will be invested in achieving the same goal set by the political leaders.

shenzhen land slide

The Shenzhen Landslide

10. Ability To Focus On Big Picture

Though China is not longer a planned economy, Chinese government still keeps one of the major features of planned economy, the Five-Year Plans, which turns out to be a positive factor contributing to the stable growth of its economy over the long-term. The Five-Year Plans of China are a series of nationwide economic development initiatives. These plans are developed by a state planning committee under the Communist Party of China (CPC), which plays a leading role and is responsible for establishing the economic growth targets, development strategies and implementing economic reforms (Kwek 2012).

13th five year plan of china
China’s 13th Five-Year Plan
Source: China Daily

List of reference

Guo, S. 2014 State–Society Relations and Governance in China, London: Lexington Books.

Kwek, P. Y. 2012 Private Equity in China: Challenges and Opportunities. New York: John Wiley & Sons

Navarro, P. & Autry, G. 2011 Death by China: Confronting the Dragon – A Global Call to Action, New Jersey: Pearson Education, Inc.

wipo.int 2015. Global Patent Filings Rise in 2014 for Fifth Straight Year; China Driving Growth, accessed on 9th Mar 2016 [online] available: http://www.wipo.int/pressroom/en/articles/2015/article_0016.html

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