China Rise: A race to the top or bottom and the impact on the world’s players

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Chinas rise: A race to the top or bottom and the impact on the world’s players Introduction Chinas open reform period is characterized as one without a blueprint but by ‘groping for stones to cross the river’, based on an incremental, gradualist approach to reformation. China is still a developing country, with pockets of industrialized regions. While China relishes in the fruits of its labour, there is an increasing disparity between the urban and rural areas due to this disequilibrium of development. China’s presence on the world stage has drastically increased and has left many researchers perplexed about the consequences of its rise. There exists a plethora of studies, debating whether Chinas current path is one that is headed to the top, or whether China is at the precipice of its development with looming declines in the near future, plagued by weak institutional reforms. While there are many features that characterize Chinas direction, this paper will primarily analyze Chinas wages and regional disparities and how this as impacted the world. The Effects of Chinas Wage Increases Chinas cheap labour has been a prominent economic advantage since opening its market. However, according to government published data, average annual real wages have tripled from 1997 to 2007 from 3,285 to 24,932 Yuan. The Institute of Population and Labour Economics at the Chinese Academy of Social Science (CASS), reported that the rural surplus labour is decreasing to a level that continued industrialization cannot be supported cheaply (Cai, 2007). Additionally there has been increasing reports about China losing its appeal as a manufacturing base for exports (Yang, Chen, Monarch, 2010). Chinas US foreign direct investments (FDI) have ... ... middle of paper ... ...has by no means leveled. Conclusion Explanation for Chinas rise is one that is usually polarized between profound optimism and an impending doomsday tale for the global economy. The research suggests that China’s rise embodies characteristics of both a race to the top and bottom. Additionally, as examined in this paper its integration has varying effects across regions. However both scenarios are not solely dependent on China but how countries like the United States adjust. Aborting the transition due to fear by introducing trade barriers will not beneficial economically in the long run due to an already interdependent relationship between China and the world. China’s transition is a path-dependent based journey unfolding in the present, therefore an analysis on Chinas rise is speculative at best, but serves as a looking glass to capitalism, Chinese style.

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