VJC econs 2022 Promo QP and SAMS

2022 Promo QP 160 H2 ECONOMICS – PROMOTIONAL EXAM 2022 QP China’s quest for inclusive economic growth Figure 1: China’s Gross Domestic Product (at current prices) per capita, 2017 - 2021 Source: World Bank, 2022 Extract 1: China's income inequality grows despite village modernisation The Chinese government's push to modernise rural areas of China has improved lives and reduced poverty, but villagers nationwide face an even wider gap in income inequality against their urban counterparts as economic opportunity in the countryside remains sparse. China has an urban population of roughly 900 million while another 500 million live in rural areas. Urbanites earned US$6,321 annually on average in 2020, while rural residents averaged US$2,470, government data shows. China's rural areas have few work options outside agriculture, and t he farming field lacks business growth. Growing crops like grains, oil crops, and cotton yields low returns. Many villagers leave for big cities to be migrant workers, whose average earnings reached about US$577 a month in 2020 – a pay far better than that for farmers. But they remain far behind office workers, such as those working in the finance sector. White-collar employees in Beijing, Shanghai and other cities that host booming industries make US$1,442 to US$4,326 a month, resulting in a clear divide with villagers and migrant workers. Adapted from Nikkei Asia, 13 Jun 2021 Extract 2: Minimum wage hikes sweep China in 'common prosperity' push Chinese provinces have responded to President Xi Jinping's "common prosperity" campaign by hiking minimum wages, but higher labo ur costs could prompt manufacturers to shift production elsewhere. Twenty out of China's 31 provincial -level regions have incre ased their minimum wages so far in 2021. Guangdong Province, China's largest province by economic size, lifted its monthly minimum wages Wednesday to between US$234 and US$340 from between US$203 and US$317. This is likely to benefit migrant workers from rural areas to cities the most. Many overseas companies, including Toyota Motor, Honda Motor and Nissan Motor, operate in Guangdong. Larger offices and factories already pay above minimum wage, so "the increase will

2022 Promo QP 161 have no direct impact at all," as an executive at a Japanese automaker puts it. But the contractors in charge of cleaning or food service for these companies may need to increase wages, possibly leading the contractors to raise rates and indirectly add to the big corporations' costs. This may drive foreign firms away. Labour costs are already higher in China than in many Southeast Asian countries. Nearly one in four European companies in China are considering shifting their investments out of the country. Samsung Electronics shifted smartphone production to Vietnam from China in 2019. Further wage increases could pressure more businesses to follow suit. Adapted from Nikkei Asia