China's Future...What Path?

Foreign direct investment has played a vital role in the transformation of the Chinese economy in China, with value contracted increasing from US$ 52.1 billion (1998) to US$ 115.1 billion (2003). In geogra... ... middle of paper ... ...itten the full word Foreign direct investment and then in the brackets he has put the abbreviation (FDI). The article also give snap shot of the foreign companies who misjudge the Chinese culture, competition, size the market, and some other factors, have been badly affected by investing in china. The writer has given a name of the reference book in the article " The china dream" by Joe Studwell. He has also given an example of Dupont an American investor company in china to make the article easy to understand.

This, in my view will bring the world together as one. If all culture and tradition is changed, I presume the country will lose its identity, but slight modifications will make the country a better place, and trade is the best way to do it. To wrap up my essay, I think that trade has helped China’s economy. After the 1979 economic reforms, China has changed a lot, and trade is a supporting member. Besides its negative effects like culture, trade has helped Chinas a lot; and I, as well as other economists predict that in a few years time, China will have the world’s largest economy!

Furthermore, before the financial crisis, the Chinese economy had a record from 2006 to 2008 with the fastest-rising Gross Domestic Product (GDP) in 11 years. The effect of this enormous growth has captured world attention, due to the fact that the large trade surplus China is with U.S has been leading to several issues in both countries. Some analysts such as ARTICLE 8 PP 5 see the huge China trade surplus with U.S as a clear indicator that China’s economical trade policies are manipulated or unfair. On the other hand, some other experts in the economic field claim that China´s surplus is a synonym of high savings rate. This paper aims to argue why China’s surplus is neither good for China nor the U.S. in terms of “exchange rate manipulation” and “high savings rate”.

It allowed China to become the world number one merchandise manufacturer in these days. As their Economy grew, the China’s national power grew up as well. Now, China is one of the world’s economic leaders as well as the United States of America. Though, as the process of Chinese economic and national power grow, an intricate conflict with America has begun; as a root of trade imbalance. The trade deficit of China caused economic depression in the States and the citizens blamed China for all the accompanied issues.

Exports between countries like the United States increased at a substantial rate, starting off at an annual rate of 6 percent before WWI, dramatically rising to 27 percent after the war began (Yan, 2014). China’s top ... ... middle of paper ... ...at restricted area (Xu and Dong, 2009). China, over the years, has come to good terms with producing and exporting lesser-skilled-intensive goods for foreign nations. China’s premium in skill rose at the beginning of the 20th century, flattening out the prices of exports around 1929 (Yan, 2014). It is shown in data that if there is no change in the overall final product of workers, and imports vs. export prices become neutral, that China’s labor skill level will fall in correlation.

During pre-modern times, China’s economy was in constant growth and stable due to its high influence in commerce along trade routes that moved across the Old World. Since China was deficient in technology and innovation that would push its economy and it commercial relationships with other countries, America became an economical power and its global influence expanded which resulted in its surmount above other economies including China’s . China lost against America in the economy and America took first place. After the September 11, however, America’s economy began to fall; it was not until 2013, when the economy began to rise. Although America’s economy is growing as time goes on, China’s economy is also growing.

The data and graph above is clear indication of the trade balance in the US trade with China over a five year period- it is a negative for the US. It is notable that the trade deficit has maintained a steady surge over the period in study. This indicates that as the years progress, more imports from China are arriving into the US than the exports from the US are reaching China. The effect of this trade balance cannot be u... ... middle of paper ... ...ced from the US economy due to the trade deficit with China. Most of these jobs are taken over by China citizens through outsourcing or companies re-locating to China.

In fact for many companies it is important to participate in China’s market to stay relevant and competitive in current business scenario. For example automobile major General Motors (GM) has invested heavily in China, sold more cars in China as compared to United States for year range 2010-2013. Whereas on other hand, consumer in United States benefit greatly from the import of low-cost goods from Chinese manufacturer. Currently China is rated as the largest foreign holder of US Treasury securities (approximately $1.4 trillion as of December 2013). Another major aspect is that because of China’s purchases of US government debt has helped United States in keeping the prevailing interest rates low.

Chinas Economy China has experienced major economic growth in the past forty years, but how did it develop into the economically powerful country that it is today? China has been through many difficulties and complications to get to the place it is at today. China’s government is called the People’s Republic of China and it operates on a socialist market economy. The culture of China is very diverse, it has fifty-six minority groups and many cultures have their own languages. However, the Chinese culture is trying to transition from traditional Chinese culture to a more modernized version of Chinese culture.

Of course, if we were to examine the statistics of late, we would most likely see a continual increase in the percentage of exports that China commands, and if we were to go one step further and predict t... ... middle of paper ... ...e costs can probably double and still maintain their competitiveness, except the consumer surplus level will be reduced. Wage rates are on average in China now approx. 40¢ an hour, dramatically less than the likes of Mexico, and even India. So China can afford to let its prices rise slightly higher before people will start buying abroad, although due to the phenomenal size of the Chinese workforce, plus the recent 110,000 lay offs taken place in the last few years, there needs to be significant numbers of new businesses to absorb the superfluous labour in the market. * Chinese labour is unskilled as a rule, so there will rarely be a skills mismatch in the labour-intensive sector of the market.