SWOT Analysis of China and Its Growing Economy

PESTLEanalysis Team
PESTLEanalysis Team
Table of Contents
Table of Contents

A review of China’s strengths, weaknesses, opportunities, and threats in this SWOT analysis of China and its growing economy.

Did you know China is one of the fastest growing economies in the world? For its size and impressive population, that may not be a surprise. And yet, the country faces perils related to unemployment rates, declining industries, and negative impressions.

How does China overcome these issues to remain a monumental economic force? You may have seen a glimpse of the answer in this PEST analysis of China, but I explain more of China’s strengths, weaknesses, opportunities, and threats in this SWOT analysis of China.

Strengths: A boost in GDP

In just one year, China’s GDP growth exceeded the government’s expectation of 6.5% — it blasted through that number and hit nearly 7%. The GDP of China hasn’t reached these heights since 2010, although the GDP has been steadily increasing over the last few years consistently. This GDP boost is well received after China registered for over $3 trillion USD in foreign cash reserves.

The country is known for cheap labor — it’s why so many international businesses have products manufactured in China. Although the quality of the products may be questionable, the cost-effectiveness of hiring cheap labor outweighs potential problems to countless companies. The cheap labor also benefits local businesses and the Chinese economy because it provides more jobs to Chinese citizens.

Another strength is the increasing mobile use in both rural and populated parts of the country. With the Chinese telecom sector booming, and more citizens requesting subscriptions for their phones, even the networks have grown to accommodate this new growth.

The country is home to more than a billion people. The government, comprised of four political parties, is tasked to oversee the decision making for the entire country. The population may be vast, but with the government sanctioned, it makes it easier to deliver changes in policies and regulations to the citizens.

Weaknesses: The all-seeing government

Despite China offering cheap labor which provides jobs to the public, much of the population is still unemployed. The rural areas of China are beginning to fade and, along with it, is the agricultural industry. These occupants will need to move towards the populated sectors and search for service-type jobs. Unfortunately, these are few and far between, especially for the older generation.

Then there’s trouble with governmental control.

The Chinese government is known to be restrictive. It won’t allow Netflix to offer content to Chinese citizens unless the content is heavily edited. Since they offer hundreds of shows and television, manually editing each episode of every show and movie wouldn’t be in Netflix’s interest. And so, China goes without.

The government also doesn’t allow social media — like Facebook, Twitter, and Snapchat — to be used by the people. The local governments have put restrictions on property selling and mortgage lending recently too.

The price restrictions have led to a decrease in residential home sales. And construction businesses are slowing down. With no homes to build and sell, the construction industry is left to twiddle their thumbs. Now with nothing to do, workers have smaller paychecks, and may end up leaving the industry to find work elsewhere.

Opportunities: New industries and migration

China has two major opportunities to focus on: improving the service sector and urban migration.

Because the agricultural industry is on a downturn, and more people are needing to move from rural areas to populated regions, the country can emphasis service-based businesses. This is necessary since agriculture and manufacturing were the two leading industries for the Chinese industry until recently.

Firstly though, the citizens need to move to urban areas. With no agriculture to focus on, populations are migrating to urban areas to search for new work. Both the elderly and young are moving; 55 percent of people migrating to urban areas are 40 years old and younger. And nearly 18 percent are people aged 50 and over.

Threats: Negative implications are on the rise

The Chinesesuffer because of negative perceptions. The citizens of other countries view China as a restrictive land where the government controls all. Regulations like the one-child policy, where families are allowed only one child, doesn’t improve perceptions.

There’s also the problem of smog and air quality in China; many Chinese wear masks whenever they go out because the air quality is depressing. And although the cheap labor China offers is a strength for the country, it adds to the negative perceptions — people from other countries worry about the exploitation of factory workers and wonder how anyone can survive on such low hourly wages.

Online, many people are given access to accidents captured by Chinese security cameras. From failing elevators to hit-and-runs, commenters worry about the safety regulations in China.

Some note that when it comes to accidents, it’s best to run rather than help a person in China, because the Chinese citizen at fault may have to take care of the injured party for the rest of their lives.

Although these are just whispers and rumors on internet forums, it leaves a bad taste in many people’s mouths. It seems China isn’t concerned about how other countries perceive them, however, and show no signs of responding to bad press.

This isn’t too surprising since China barely responds to troubles with its neighboring countries, Japan and South Korea. The countries bicker over maintaining economic control of the East China Sea, leading to trouble regarding trades between these three countries.

SWOT analysis of China: Conclusion

China maintains a population of more than 1.4 billion. The government rules the people with an iron fist, restricting the use of products, services, and media. Although the employment rate is over 70 percent, the unemployment rate is steadily rising as the manufacturing and agricultural industries decline. People in rural areas are forced to move in-land, to populated cities, in an attempt to find new work.

This means China has the opportunity to offer more service-based business to locals as well as international companies. If they focus on this, they may see a steady rise in the Chinese GDP — higher than it already is. But first, the country must focus on helping urban migration of the young and old who can take on positions in the service sector. Regardless of negative impressions from neighboring and international countries, China shows no sign of changing, and it remains an intense force and required ally for countries like the United States.

Image by Free-Photos

Great! Next, complete checkout for full access to PESTLE Analysis
Welcome back! You've successfully signed in
You've successfully subscribed to PESTLE Analysis
Success! Your account is fully activated, you now have access to all content
Success! Your billing info has been updated
Your billing was not updated