How the Chinese Economy Grows

I want to give you a simple explanation of how the Chinese economy grows like the West never can.

If we have a country where 10 people work and 90 people take in the sunshine and live on what the ten produce, then we live this way.

If ten people stop sunning themselves and get to work, the economy doubles.  That was China in the 80’s on a bigger scale.

晒一晒, pronounced shai yi shai is a term you only hear in the countryside.  People sit around and take in the sunshine. They do subsistence agriculture on too small a piece of land and so often take in the rays and even have a term for it.

This term does not exist in the city. In the city, people work 8 or more hours a day and then go play, not shai yi shai.

Every time a peasant starts being more productive then sitting around in the sun, the country grows.  China still has at least 600 Million peasants. Each time they become more productive, the country grows. China is still 50% or more rural. The US is about 3%.  The plots in the countryside will get bigger and even the rural people will not shai yi shai like they do now. (Also inefficient state factories still exist where people watch the clock all day and they will get busy)

Once all these transistions have taken place and all peasants have become farmers or city people, then it will get harder to produce 3% growth a year, because getting that extra bit of productivity out of people who are already working pretty efficiently is not easy.

Actually, SHI Group, my business, does just that.  We help each Western business here or coming here to become more efficient and often by far.  However, the market around us is growing by 500 Million people coming year by year into the city, so we are not alone as the whole boat rises.

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Posted in: China, Chinese Culture, Market Entry

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2 Comments

  1. Kaavya November 4, 2012

    This is well-put, but I think it ignores just how difficult quickly transitioning from a rural society really is. If China is 50% rural, it cannot reach the U.S. level (3%) in a decade or less – that kind of change takes time.

    It seems like in order to even begin reaching that goal, the Chinese government needs to do more with its Western expansion policies. Nearly all of the wealth in the countryside is concentrated on the Eastern seaboard, and real growth can’t reach the countryside until the infrastructure is there.

  2. Jim November 5, 2012

    Kaavya, thanks for your clarifying my post. I personally believe that China is doing infrastructure even in the West to a fault. It is the cultural development that the Chinese government is struggling with. However, as China gets more expensive on the East coast, companies move inland like Foxcom in Zhengzhou after starting near Hong Kong. So development does come as the infrastructure is there. The Eastern seaboard is still far behind the US as well. Even basic concepts like Six Sigma are often not even touched yet. Yes, it all takes an exceedingly long time, but means the boat can rise pretty easy to at least 2025. Are you seeing something else?

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