China’s has exhibited a phenomenal economic development in at least the last 3.5 decades, with the average year-on-year Gross Domestic Product (GDP) growth rate, between 1980 and 2015, practically amounting to 10% (9.74% to be exact). The government’s initiatives for the restructuring of the domestic economy and the resulting efficiency gains, have led to a more than 57-fold increase in terms of the country’s GDP, in current US $, since 1980 (see following figures).
China’s abundance in terms of energy and mineral resources has greatly aided this phenomenal economic development. Specifically, a total of 171 kinds of minerals have been discovered so far in the country, of which 158 have proven reserves. Most notably, 10 kinds of energy mineral resources, such as petroleum, natural gas, coal and uranium have been discovered. In addition, a further 54 kinds of metallic mineral resources such as iron, manganese, copper, aluminium, lead and zinc and 91 kinds of non-metallic mineral resources such as graphite, phosphorus, sulphur and sylvine have been recorded. Consequently, over 92% of domestic energy demand, 80% of raw materials used by the local industry and more than 70% of means used in agricultural activities, are sourced from the country’s rich mineral resources.
More specifically, China’s proven reserves of tungsten, tin, antimony, rare earth, tantalum and the particularly important for aerospace applications titanium, rank 1st in the world. Further, those of vanadium, molybdenum, niobium, beryllium and lithium (particularly important for cell phone, laptop and other modern equipment batteries), rank 2nd worldwide, those of zinc rank 4th, and those of iron, lead, gold and silver rank 5th worldwide. This high availability of highly sought after materials, provides a major competitive advantage to the local industry, particularly when competing on the international market scene.
China’s trade balance has also improved dramatically over the last few decades, going from a deficit of some 1.14 Billion US $ in 1978, to a surplus of 383.6 Billion in 2014. This tremendous improvement reflects the extremely rapid growth of the country’s exports, which have almost grown tenfold over the period 2000-2014. Imports have also arguably increased greatly, however the sheer magnitude of the exports is such that the country’s trade balance figures have been constantly improving over the period 1978-2014, with few minor exceptions (e.g. the year 2010).
In fact in 2010, China became the largest exporter of goods and services worldwide, surpassing Germany. Before that, in 2004, China surpassed Japan as the top Asian exporter and in 2007 it overtook the US, to rank as No.2 worldwide at that time.
Further, the unemployment rate officially reported by China to the World Bank on an annual basis, is practically negligible, since between the year 2000 and 2014 (last year for which data was available), unemployment, as a % of the total labour force, did not exceed the 4.3% mark, with a lowest value of some 2.9%, in the year 2010.
Nevertheless, there is much dispute if this data is actually representative of the reality in the labour market in China, since it stems from a very narrow statistical basis. Specifically, only workers with an urban household registration (which amounts to about half the total workforce) are accounted for in the data, and furthermore the unemployment figures derived, only refer to the proportion of officially registered urban job-seekers, with respect to the total number of employed urban workers. Rural workers, migrant/foreign workers, and uninsured, part-time or casual workers, are not taken into account in the related figures.
On the other hand, after several years of relying on low-wages which aided the country in gaining a high competitive advantage in the manufacturing sector, in recent years, hourly manufacturing wages have been increasing significantly, at an average rate of some 12%, since 2001. This is only natural, as the working class of the country aspires to achieve a more ‘comfortable’ lifestyle and greater consumer purchasing power. In this direction, as also other countries in global value chains which previously relied on low-wage employment models, China now faces labour ‘shortages’, which in turn lead to workers having greater bargaining power. To address this issue, the Chinese government has enacted several laws that foresee improved worker rights, greater employment security, a tighter grip on informal employment and broader access to social security benefits. Such laws include the Labour Contract Law (of 2008), the Labour Dispute Mediation and Arbitration Law (also of 2008), the Employment Promotion Law (again enacted in 2008) and the Social Security Law (of 2011).