The Chinese Government as a matter of policy rewards those who return to china with a new technology (David, 2009). This is a measure taken to develop the Chinese technology and hence enhance their economy. China’s central government, local governments, universities, research laboratories, and the marketplace all reward mainlanders who return to China with technology. In fact, technology helps generate today’s reverse migration, particularly among business entrepreneurs and scientists, as the rewards for bringing back technology are significant. This strategy has made China economy a threat to the US economy and many researcher are already speculating that China will soon be the no one economic giant in the world (Oded, 2005).
In the late 1980s, the Central government’s Torch Plan established New High Tech Development Zones in cities around China (David, 2009). By 1991, there were 27 such parks; by 1997, there were another 25 parks (David, 2009). These zones established incubators for returnees, which protect them from the vicissitudes of China’s bureaucracy and marketplace until their firms are ripe; but to receive special privileges, projects have to involve new technology and local Science and Technology. Bureau must certify that such projects included new technology.
The national real GDP of China has increased tremendously, giving an annual average real GDP growth rate of 9.8 percent in the past two decades (Kui-Wai, 2007). China experienced a double or close to double digit real GDP growth rate for the period of 1992 – 2004 (Kui-Wai, 2007). This growth is attributed to the development of the Chinese technology which has positively impacted the economy. In the context of the frontier production analysis, it is shown that productivity change or the growth of total factor productivity (TFP) is a composition of technical progress, technical efficiency change and scale of economy (Kumbhakar, 2000).
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The export processing zones established in China in the 1980s initiated a complete transformation of China’s coastal regions. The export processing trade, supported by a strong manufacturing base established in the 1950s and complemented by technology imported since the 1980s, progressively became a catalyst for China’s economy (Barry, 2010).
Following in the footsteps of other Asian catch-up countries, China’s exports rapidly started moving up the value chain away from low-tech products. Between 1992 and 2005, China’s medium- to high-technology exports grew 22 per cent annually, while high-technology exports grew by 32 per cent (Barry, 2010). By 2008, 43 per cent of China’s exports were directly related to machinery, mechanical appliances and electrical equipment, and China now dominates the global markets for these and other types of machinery (Barry, 2010).
Huawei Electronics, one of the major companies responsible for the global emergence of Chinese technology and innovation, has consistently spent 10 percent of its revenue on R&D every year (Barry, 2010). The firm’s credentials as an innovator are beyond question, yet its greatest achievement is that it so effectively fused two often disparate elements: good quality at low prices.
Capital accumulation, labor growth and technology progress are major factors to long-term economic growth on modern economic growth theory. China’s economy keeps sustained, rapid, healthy development and wins remarkable achievements since they began to reform and open up (MA, 2008). In summary, advancing technological innovation, increasing total factor productivity and promoting industrial restructuring and optimization are the key factors for improving the quality of economic growth and ensuring economic sustainable development (MA, 2008).
Editor’s Note: This exclusive work will be published in a PDF next week with the references.