China: A trade-off between industry and people

Fuelled by rapid growth, industrialisation and increased global investment, China is the second largest economy which dominates global manufacturing. This is due to an increase in international competitiveness within Chinese emerging industries such as energy and electric vehicles and the effects of globalisation which increases the interdependence and interconnectedness of global economies. However, there are still challenges to China’s economy from the challenge of inequality due to the rapidly growing middle class causing disparities to standards of living across China. Within the Chinese economy, there is a consistent trade-off between the further industrialisation of the economy and the welfare system causing widespread disparities within rural and urban regions. These challenges have only gotten worse since the start of the 21st century and is still a process of social, political and economic change today. The need for broader sustainable development is necessary in mitigating the circumstances of these challenges to allow all people to benefit as well as the industry to grow at a sustainable rate.

China’s rapid industrial growth and development has benefitted people within China despite causing challenges in the long term because of the manufacturing-led growth model which has been followed since the start of the economic reforms China adopted in 1978. This has seen rapid growth in trade, manufacturing and the energy sector throughout the decades. Despite facing tariffs from the US causing a fall in exports to the US by 29%, China’s trade surplus topped $1tn for the first time in December 2025. The increased growth potential has expanded the labour market within China, which has created millions of jobs within coastal urban regions. China’s dominance in emerging sectors such as Electric Vehicles with the growth of BYD, batteries, robotics and the manufacturing and deployment of renewable energy technologies. Driven by actively lowering production costs of its exported goods, China’s international competitive advantage, allows it to produce at a significantly lower cost than many international competitors due to the constant economies of scale allowing companies to produce high volumes of goods. Despite this, it has also generated an increase in working hours, poor conditions and job insecurity for many workers as a result of the low production costs within China. Hence, the greater need for workers’ protection is needed to reduce risks of further social disparities.

This is especially important for the world’s renewable energy sector, manufacturing the 92% of the world’s solar modules and 82% of wind turbines highlighting its pinnacle role in the global energy transition. This reduces the world’s reliance on fossil fuels, reducing greenhouse gasses and cut the annual global CO2 emissions by 1% in 2024 alone. Combined with the competitive advantage, the affordability and availability of green technology has helped to generate the global shift. In addition to global benefits, the shift has long term benefits for people, reducing long-term health risks and creating security in renewables. However, this does not come without consequences, the rapid industrial growth has created a consistent reliance on coal and fossil fuels to keep up with the manufacturing sector. This is necessary for China to consistently export manufactured goods globally leading to an increase in import of oil and gas to keep up with the emerging sectors. Rural regions are also affected as the cost to shift to green energy has significantly increased cost to workers where they are dependent on fossil fuels. Although there is a shift to global net-zero goals through investing trillions into clean energy to shift away from coal it presents a challenge to China, to continue to grow economically or to increase the welfare of its people.

The trade-off between industry and welfare has been a constant challenge for China. The rapid industrial expansion has led to an increase in pollution within the country which is responsible for 2 million deaths per year. With China having the name of the world’s largest polluter by total annual emissions making up 30% of all global emissions public health is on the line. This constant issue has led to an increase in respiratory disease with wastewater and chemical dumping have contaminated rivers and farms in rural regions further creating disparities within rural areas. China’s Gini coefficient currently at 38.2 leads to further social and economic inequality nationally. This social trade-off has contributed to the rising income inequality between large urban cities and rural areas leading to an unequal distribution among the population. The inequalities which the working-class face is prevalent in the increase in migrant workers employed in factories leading to long working hours, low wages and limited access to social welfare, as a result of industrialisation and modernisation within China.

Today, China still faces the challenge of rebalancing the trade-off between their industry and people. With growing FDI within China, to aid economic development has been essential for bringing capital, jobs and new technology to the country, which has increased efficiency within emerging sectors. However, China’s shift to strengthening social wellbeing seen through the 2025 welfare policies focusing on strengthening social safety creating employment subsidies to stabilise job creation with a 66.74 billion Yuan funding for large scale training in emerging sectors. This has also contributed to the increase in labour rights for Chinese employees, protecting workers’ rights through annual leave and unlawful overtime. However, being a socialist market economy the increase in policies can come at a cost for firms increasing the costs in the short term. Hence, leading to the constant compromise between further economic development and increasing social welfare nationally.

The constant challenge to China’s economy reflects the challenge all developed economies once faces. Dependency on fossil fuels, contributing to social challenges for the growing population has been reduced on recent years for more sustainable long-term growth for China as an emerging market economy. The transition into becoming a developed economy such as through 5-year plans can help to shift the reliance on trade and an investment-based economy to a more serviced based economy and increased domestic consumption. Hence the question lies, will China be able to sustainably develop with the constant challenges they face in manufacturing and social welfare?