Only recently, I came across an article, eliciting how China’s one-child per household policy has promulgated its economy assiduously. The thought, without any disbelief, is subtle with knotty implications but we all, with consensus, have to agree that it was a winning stroke by Chinese government, during the times when their fortunes were darting in a wrong direction. This made me spent a few hours to find a rationale on how China made its path to the top. And here are my findings:
First, lets look into the not-so-good factors:
1) Working population: Population, generally, is divided into three groups: young age, working age and old age. With one-child per household policy, the old age group held (still hold) a larger portion in Chinese population, which saddled China due to:
a) Decrement in the % of population involved in any productive work.
b) Distribution of large chunk of Chinese money as pensions.
c) Shortage of funds for investments in various avenues.
2) Supply-Demand ratio: In a large population, like China, demand for basic necessities was relatively higher. But supply too, due to low % of working class people, was low. Hence, there always a disruption in the supply-demand ratio from time to time, which lead to raise in prices, and shambles the economy.
3) Dearth of natural resources: To satiate the needs of a rampant population, and with attenuation of resources, China forced itself to increase imports. This again put Chinese government on back foot.
Inspite of many caveats down the road, China is now able to compete with the USA and other top economies because of following upheaval:
1) Foreign Investments: China was (and still is) a humongous consumer market and interests from abroad were thus quite imminent. In return, it bolstered infrastructure, and valorises copious job opportunities to Chinese masses. With more and more people now earning healthy income, stirred the demand for better life quality, and lead them to technological renaissance.
2) Education: Plentiful job opportunities, urged Chinese government to invest heavily on education to produce skillful work force. With educated employees and technological support, China’s productivity quadrupled, and its growth became inevitable.
3) Decentralization: With the backing of a huge labor force, it became easier for firms to decentralize labor. This division of labor caused a greater increase in production than any other factor and lead to universal opulence in China.
4) One-child policy: Single child parents, with a huge pile of money [as they only had one child to spend on] under their beds, created a gemutlich environment for all market segments.
Along with, all the above discussed factors, behavior too helped them to achieve a great success. And I hope they could see back on what they were and help others achieving big without any rancorous. Now, as usual, I would leave you with a quipped quotation.
When I was growing up, my parents told me, ‘Finish your dinner. People in China and India are starving.’ I tell my daughters, ‘Finish your homework. People in India and China are starving for your job. – Thomas Friedman