Is mainland China the hottest country for investment? Not really. The Global Competitiveness Index 2014-1015 Rankings of the World Economic Forum have ranked mainland China 28th out of 144 economies, a position falling behind those who have large social expenditure like Switzerland, Singapore, Finland, Germany, Japan, Qatar, Norway, and Luxembourg.

It shows mainland China’s lessening productivity and prosperity. This economy draws less interest from foreign investors than those who have big welfare states or welfare state systems, according to Prof Christian Aspalter from UIC’s Social Work and Social Administration Programme, at a lecture on 22 October.

“Most CEOs prefer to invest their money in large welfare states,” says Prof Aspalter.

He goes on to explain what the welfare state does for the economy: “The welfare state acts as an automatic stabiliser enabling and maintaining social harmony, and provides stable and favourable investment conditions.

“It produces the human resources needed for economic growth, attracts investment in the human capital of workers and entrepreneurs, and increases the purchasing power of consumers.”

Through a case study Prof Aspalter points out that the economy is not harmed by proper welfare state expenditure. “Consumption is simply shifted from the upper and upper middle classes to the lower and lower- and middle-middle classes. Welfare state spending is part of the economy, a part of GDP.”

“We have to choose the most effective and efficient welfare state programmes, policies, and institutions, avoiding administrative costs at all times,” he concludes.

Reporter: Deen He

Photographer: Vivi Xie

(from MPRO, with special thanks to the ELC)