Is China going to be the next largest economy in the world?
At this point it is difficult to tell. If they can increase their standard of living, based on population numbers, they should be able to grow to the largest economy. There are number of challenges that China must face in order to stimulate continued economic growth. These challenges include:
- Changing demographics. A large aging population in China will soon reach retirement, which means China will have to pay out unprecedented healthcare and pension costs.
- A labour force that is becoming more expensive. With an expensive labour force, outsourcing manufacturing and production duties to China is becoming less attractive. Neighbouring countries like Thailand have a more cost-efficient labour force and countries like Japan are more efficient and have a reputation for higher-quality products.
- With no rule of law, ample corruption and a lot of red tape to get through, making reforms to continue economic growth is extremely complex.
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