China, The World's Factory: From a Producer to a Consumer Economy: American Chronicle

Muhammad Saad Sarwar

They say that making a thing is easy, but selling it is the more difficult part. China not only makes products for the entire world but sells it too. It is no surprise that China’s economy has been growing with a double digit growth rate for the past twenty years or so and shows no sign of abating. Resultantly, China has accumulated a big pile of reserves that would reach a figure of two trillion dollars in a couple of years time. Part of this increase can be attributed to China’s pegging of its currency, the Yuan to the US dollar. United States, which is running a big deficit to its trade with China has been influencing Beijing to ease the tight peg and let its currency float according to the dictates of the market. China has so far been largely reluctant to accede to the US demands and continues to accumulate reserves. China’s huge energy and other raw materials resources demands have made China the new colonial power according to the Economist. It has been building infrastructure all across Africa and most of the world in return for the badly need raw materials to run China’s factories. The local communities in these poor countries have been benefiting from China’s dominance in the world scene as an economic power with hospitals to stadiums being built by the endowments from the People’s Republic of China. Even the stadium where the Cricket World Cup 2007 was held in the Caribbean was built with China’s help. China has a long standing friendship with Pakistan, where it has historically been part of major infrastructural and energy related initiatives. From Karakorum highway to nuclear power plants along with the collaboration in defense fields, China has been part of the major developments in Pakistan. China’s thirst for the warm waters of the Arabian sea have led it to collaborate with Pakistan for building of the Gwadar seaport which would create a corridor for Chinese goods straight from the Arabian sea to China’s frontiers. Even a railroad project through one of the highest terrains in the world is underway which would greatly speed commerce between China and Pakistan and the world, where goods from the Gwadar seaport would reach China in no time. Economists are of the view that China’s economy is in the danger of overheating. Whatever their prerogative, it is about time China looked indoors rather than outside for selling its goods. Developing a local consumer economy would not only increase the standard of living of Chinese people but it would also help China to utilize its monies more effectively for the benefit of its own people. Accumulating trillions of dollars of reserves would be to the detriment of China especially at a time when the US dollar is virtually worthless for China. The world’s factory should finally look towards alleviating the plight of its factory workers rather than sell its products to supposedly rich outsiders (US) who might not be able to pay for the products they purchase due to huge fiscal trade deficits. China should gradually move from a producer economy to a consumer economy where the average Chinese citizen is a beneficiary to the economic boom that China has enjoyed at a macro level.

Original Link: China, The World's Factory: From a Producer to a Consumer Economy: American Chronicle