Revisiting China

China is the third largest country in the world its area being 9,600,000 km to the power two where two thirds of which is mountainous or semi desert and only one tenth is cultivated.

Its population is by far the largest in the world and will reach two billion by the year 2050. At the moment China's child population comprises mostly of male children and faces a severe shortage of girls due to many parents terminating pregnancies of female children.

When the People's Republic of China was established in 1949 its economy was characterised by severe dislocations from decades of war and inflation. The then Government's immediate concerns were consolidation of power, restriction of public order and elimination of widespread unemployment and starvation.

In 1953 the Chinese decided to remould the economy using the soviet central planning method as a model by reducing investment in agriculture and had a five year plan of building up on heavy industry focusing mostly on national defence.

In spite of its economic growth there was political turmoil, poor planning and natural disasters which obstructed them of higher levels in development. In the early 1960's China entered into a depression due to withdrawal of Soviet assistance. Yet in 1975 Premier Zhou En Lai outlined a new set of economic goals, with the intention of elevating China into a front rank economic power by the year 2000.

Economic prosperity depends on the productivity with which national resources are employed. The level and growth of productivity are a function of the array of industries and industry segments in which a nation's firms can successfully compete and the nature over time of the competitive advantages achieved in them.

Economies continue to progress by upgrading their competitive advantages in existing industries as well as developing the capability to compete successfully in new high productivity segments and industries.

Chinese continued to have low cost of production while maintaining its quality standards mostly due to low wages. Without the ability to export and sustain position against imports in a range of industries that has a rising level of productivity national productivity growth will be stunted.

In 1995 provisions were made for guiding foreign investment and the industrial catalogue was promulgated to keep in line with the development scenarios. The areas that were encouraged mostly were agriculture technologies, energy resources, communications, new high technologies and foreign currency earning projects.

However regulations were also made to prohibit investments that endangered the state security and those that brought in damages to public interests and caused pollution and environmental degradation.

The State continues to revise the industrial catalogue in accordance with the development needs of the national economy and the commitment on the entry of the World Trade Organisation.

The construction industry is playing a leading role in the rapid economic expansion. The increase in economic activity has generated a heavy demand for construction. This demand cannot be satisfied by China's prevailing resources either in physical, technological or managerial. This huge emerging Chinese construction market has attracted the interest of consultants and contractors worldwide.

The construction industry has suffered for many years as a result of long construction cycles, inadequate planning and programming of projects and poor quality of workmanship.

Therefore an increasing number of projects are promoted for international tendering. From that not only can advanced technology be introduced, but also advanced management practices can be imported.

The Chinese economic growth is the highest in the world. It was one of the countries that maintained a close economy until recently. Yet the Chinese companies raise more money on overseas markets than at home and the European Union becomes Shanghai's biggest export market and import source.

Currently the gap between supply and demand is widening in the service sector. The eyes of the world will be on China to see what lessons can be learned for open market oriented developing nations governed by authoritarian regimes.

The Sri Lankan President's visit was mainly aimed at this.

- Sunethra De Silva