The 21st century has been defined by rapid development and refinement of technology, and few countries have been as quick to embrace new technology as China. Self-reliant in technological advancement and burgeoning in economic strength, China’s innovation and growth has been astounding.
In the past few decades, China has seen the number of Internet users skyrocket, and has become a leader in e-commerce transactions. Government allocation of resources for technological development and greater access to the Internet for its people have made modern technology more ubiquitous in China than in any other country.
This rise of technology and its utilization in society has not only revolutionized how people live their day-to-day lives but has also had a vital impact on the Chinese economy. In this article, we will discuss how technology has shaped the Chinese economy and the wide range of positive and negative effects it has had on the country.
Current State of China’s Economy
Currently, China’s economy is the second largest in the world after that of the United States. In 2019, the country registered a GDP of $13.61 trillion and a nominal GDP growth rate of 6.1%. China’s economy is driven by four main components: services (including technology), manufacturing, construction, and agriculture.
As of 2018, services accounted for 53.6% of the GDP, with the majority of the services stemming from technology. China’s remarkable growth has been attributed to high rates of investment in human and physical capital, infused with the spur of modern technologies. This respect for technological development is paired with the citizens’ growing access to the Internet. Broadband services are now accessible in 97% of all urban areas in the country and mobile internet penetration has reached 77.4%.
The Contribution of Technology to the Chinese Economy
The contribution of modern technologies can be seen in the daily life of the average Chinese person, from the way businesses are conducted to how citizens communicate. The growth of China’s economy over the last few decades has been inextricably linked with the country’s ability to embrace and utilize advancements in technology.
The utilization of technology can be seen in almost all aspects of the economy, and has had several positive effects. Technology has increased productivity, facilitated international trade, and made communication easier between businesses and citizens.
Affects on Productivity
Productivity is an integral part of economic growth and China has made significant advances in this area. Automation in factories and industrial machinery have replaced a lot of manual labor, with robots replacing millions of jobs in China. This has improved the speed of production and has been especially helpful since China is the world’s largest producer of goods.
Robots, AI and automation have also made operations faster and more cost-effective, making Chinese products competitive in the international market. Chinese companies have been able to rapidly increase their profits from exports, resulting in considerable gains to overall GDP.
International Trade
Technology has been essential in helping to increase international trade by making it easier for businesses to facilitate deals and investments between different countries, and for them to build global partnerships. Businesses can now access a global pool of potential clients and customers, leveraging big data and marketing analytics to understand their customer base in different regions.
Technological advancements have also made cross-border investments easier and safer, allowing investors to access different markets and expanding the opportunities available to them.
Communication
The rise of technology and the internet has enabled more efficient and effective communication between businesses and consumers. Companies can now engage directly with their customers, increasing customer engagement and sales.
Online services and platforms like social media, e-commerce, and travel booking sites have improved customer service and satisfaction. Consumers can now make decisions based on customer reviews, ratings, and feedback, and digital payment systems have made transactions faster and more secure than ever before.
The Impact of Technology in China
Technology has had a huge positive impact on the Chinese economy, from increased productivity to improved international trade. However, there has been some concern that technological advancements are leading to reducing job opportunities and wage stagnation, especially in rural areas.
The Development Gap
One of the biggest concerns is the development gap between rural and urban areas. While tech-driven cities like Beijing and Shanghai benefit from high wage jobs and tourism revenue, rural areas are lagging in development and are often left behind in terms of access to modern technology. This development gap is causing a growing level of inequality, with the wealthy getting richer while lower income households struggle.
The Unemployment Rate
Another concern is the growing unemployment rate due to automation and artificial intelligence. As robots and AI become increasingly commonplace, manual labor jobs are becoming obsolete, resulting in a nationwide employment crisis. The unemployment rate rose above 6% in the first quarter of 2018, with an estimated 13 million jobs being lost in the following year.
Technology has revolutionized the Chinese economy and played a pivotal role in its impressive growth over the last few decades. Despite the positive effects of technology, like increased productivity, communication and international trade, there are still some issues that need to be addressed. Technology can often exclude certain groups, especially those in rural areas, leading to a furthering of the development gap. Technology can also lead to job displacement and reduced wages, which can be a source of frustration for many individuals. It is important to understand the implications of technological advancements, and to ensure that everyone is able to share in the fruits of economic growth.
