Reading: COMPETING IN THE GLOBAL ECONOMY

Read the reports on the UK economy and the Chinese economy, and fill in the blanks.

THE UK ECONOMY

In the UK, the primary sector is made up of farming and energy-related activities. Farming is very mechanized
and uses a lot of machinery, producing about 60% of food needs although it employs only 1% of workforce. But
many small farms are no longer profitable on global markets with low-cost world producers. Primary energy
accounts for about 10% of GDP, one of the highest figures for a developed economy. The UK also has important
reserves of oil, gas, and coal. However, this sector is now declining and oil and gas production will fall sharply
in the next ten years, making the economy dependent on foreign imports of energy.

The secondary sector has continued to suffer from the decline of old heavy industries, like steel, and the
closing of mass manufacturing like the car industry. This has created big job losses especially in the north. In the
last few years, these old industries have been replaced by new specialist engineering companies with high
added-value products and niche markets. However, despite government support, the sector has decreased from
20% to 15% of GDP over the past twenty years.

By contrast, the service sector is booming, benefiting from its highly qualified workforce and the
concentration of expertise in the south east. It now represents over 70% of the total economy with financial
services, computing and marketing contributing 30% to GDP. But the success is very dependent on financial
markets, and the recent growth has put great pressure on road and rail infrastructure in the south east. All this
means that future growth will be limited in the short to medium-term.

THE CHINESE ECONOMY

In the primary sector of the Chinese economy, agriculture has benefited from the move to private or village
farms, creating new specializations, especially in the coastal regions near Hong Kong. Farming is very
intensive, more productive per acre than the US, and produces significant exports of rice, wheat, and meat.
However, productivity is achieved by human labour and small farms lack machinery and capital for investment
and often suffer from the effects of pollution and problems of water.

In the secondary sector, the opening of the country to foreign investment and technology has played a
big part in modernizing Chinese industries. China is now a leader in electronics, textiles, and consumer
products. Manufacturers still enjoy the benefit of a huge low cost workforce and relatively cheap land.
However, a lot of the country's capital is invested in old state sector industries, often with great waste and
inefficiency. The whole sector suffers from poor infrastructure, bureaucracy, and shortages of electric power
and raw materials.

The service sector in China includes marketing, software, and customer services but it is still
underdeveloped and businesses lack finance and technical knowledge. However, with the rise in living
standards and a huge boom in Internet use, demand for services has increased dramatically. Private companies
have used their own capital to develop, giving these companies great flexibility and independence from
government control.
UK Examples Strengths Weaknesses
Primary  Farming Mechanized Employs only 1% of workforce
sector Produces 60% of food needs Not profitable on global markets
 Energy-related Accounts for 10% of GDP Sector declining
activities High reserves of oil, gas, and coal Production will fall in next 10
years
Secondary  ______________ a Decline of ______________ f
sector industries
 ______________ b Closure of ______________ g
Big ______________ h losses
 ______________ c  Higher ______________ d
products
 ______________ e markets
Service  ______________ i ______________ l workforce Dependent on ______________ n
sector  ______________ j concentration of ______________ Infrastructure problems, e.g.
 ______________ k m
______________ o

CHINA Examples Strengths Weaknesses

Primary  Agriculture New specializations following move Human labour used
sector to private / village farms Lack of ______________ d and
Farming more intensive and more investment capital
productive than US Pollution and ______________ e
Significant food exports of problems
______________ a, ______________
b
, and ______________ c
Secondary  Electronics Modernization caused by Still investing in old
sector  ______________ f ______________ h ______________ j
 ______________ g Low-cost workforce Poor ______________ k
Cheap ______________ i Bureaucracy
Shortages of ______________ l
and ______________ m
Service  Marketing Demand for services dramatically Business lack ______________ s
n
sector  ______________ increased because of ______________ and
 ______________ o p and ______________ q ______________ t knowledge
Private companies use
______________ r for investment,
making them more flexible and
independent