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I would explain the Chinese phenomenon by several factors. First, it is the case when the saying “size matters” hits the mark. Abundance of manpower, along with affluent raw materials in the vast stretches of China allows keeping production costs low. Once hired, a Chinese employee will do his/her best to keep the job and please the employer, because he/she is well aware that there is a billion-strong pool of candidates to choose from. In terms of physics, the Brown’s movement keeps the steam hot.
Second, before liberalization China was a strictly planned economy with shortage of technical equipment and factories and undeveloped industries. Therefore, it is not surprising that after a flood of investment in the mid 80s, Chinese economy just took off. It is logical that someday China’s economic growth will slow down and come to halt eventually. Surely, that is a far prospect. Some economists predict that by 2020 China will reach the level of GNP USA has today. Yet, per capita income will be about 4 times lower than that in US, so there will be a large room for growth, still.
The China we will face a decade later will be a serious power, equalling America in its economy, political influence and military power. Already China has become the low-cost manufacturing center of the world. The Asian countries should take advantage of being close to such a strong neighbour instead of feeling doomed to misery. Already many Japanese and Korean businesses have shifted their manufacturing facilities to the mainland and concentrated on hi-end services and hi-tech research. Other countries in the Eastern Asia should find their own niches and supply China with other services or simply sell raw materials.
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Chingiz Maatkerimov
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