In the previous CID lessons regarding Economics, we discussed the importance of establishing good relations, cost of living and population crisis in Singapore. In this last part of the module, we will be talking about what has made China the factory of the world and the title's consequences.
Have you seen the logo 'Made in China' on your belonging before? I'm sure you have. In fact, I bet there is at least one object made in China in the very room you are in. This has earned China the title, the factory to the world. But one may be wondering, why is 'everything made in China'?
Well, if we stand in the shoes of a businessman, whose only aim is to make more money, what factors would you look out for to fulfil that criteria? Just to name a few: Availability of local markets, Easy access to local markets, Price of land, Currency strength, et cetera. Remember touching on industrial parks in Economics Pt2.? Well, they are almost the same! And these, not surprisingly, all occur in China's lands. So let's briefly go through some.
Easily accessible resources: China has a wealth of resources, not only natural ones but also in manpower. With lakes and rivers, mountains and great spans of land, China is where resources are plenty. Not to mention, China is the most populated country in the world, so plenty of manpower! With a great supply, costs will then be cheap. Cheap materials, cheap labour; companies flock to these places in hopes of profiting more. In other words, China had the capacity to industrialise, much more than other countries.
Currency strength: China's currency has been increasing in strength throughout the years, but compared to countries like the US and UK, it is still considered weak. How does that help economy? Well, what happens when a shop goes on a 50% discount? More people purchase! It is the same theory behind a weaker currency. With lower prices, companies get an edge on those who do not have the same advantage. They are practically giving a 'discount' to consumers, and more would buy because of its lower price. As a result, exports are stronger.
Lesser compliance: Compared to the West, China do not implement many basic guidelines in regards to business, due to varying reasons. Because of that, companies do not have to worry about being fined because they are not meeting certain guidelines, so they may not even implement these guidelines. Also, with fewer compliances, factories may be able to reach their full potential as money-making machines, as companies may not need to spend extra money cleaning polluted air or water, and they do not need to control how much they can produce so that they can meet the guidelines. Companies are essentially importing their problems into China, and exporting cheap goods out. They do not need to care about the consequences of their actions as long as the problems do not affect their own countries. Human nature. In China, they can do what they cannot in the West, and that leads us to our problem.
Becuase of lack/fewer laws implemented to protect the environment, companies cut down on doing so. For example, while companies cleaned polluted water before discharging into water bodies in the West in fear of being at the receiving end of environmental laws, companies in China can do however they wish. This could be why 16 of the top 20 most polluted countries the world are in China. Environmental problems like serious smog can lead to lung diseases and illnesses, ingestion of polluted water can lead to bacteria getting into the body. Poor environment leads to poor health, and while the economy is booming, health problems can become a setback as the government may need to pour more money into health services and treatment.
There is a dilemma now: The blind pursuit of economic growth or protection of our environment?
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| Beijing, 4/5/17, Thursday |
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