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.
Exports and imports of goods and services have grown rapidly. The tremendous growth of international trade over the past several decades has been both a primary cause and effect of globalization.The volume of world trade increased twenty-seven fold from $296 billion in 1950 to $8 trillion in 2005 (WTO, 2007). In recent years China has experienced an economic slowdown along with the rest of the world, but many worry that because of its position in the world market, any downturn will have a global impact. In the years leading up to the global recession China was growing at an unprecedented pace. However, the Beijing government recently predicted a rate of seven percent growth, for the next year, a slowdown for the previously hot Chinese economy (Kurlantzick, 2013).
It has become one of the world’s fastest growing economies ever since (Wiki answers). China may have started with very little money, but it is now holding the world’s second largest economy. It is also the second largest importer and the largest exporter of merchandise (Wiki answers). Some analysts think that China will have the largest economy in a few years time (Morrison). Economic reforms were introduced in 1978 by the Communist party of China.
Furthermore, in 2008, China was the second largest U.S. trade partner, its third most principal export market... ... middle of paper ... ... producer would be also convenient for the consumer. Cooper (2006, p 11) points out that People’s bank of China which is the China´s central bank might be considered as one of the main evidences related to the risk that represents the fact of having an “undervalued” currency. PBC (People´s bank of China) is playing a high role in the foreign exchange market, in other words, PBC is managing China´s reserves and dominating them by the control of capital flows inside and out of the Chinese territory (Cooper p11). Following this concept, high savings rate in China may be determined by the limited opportunities that citizens have to invest and also by the controlled banking system. Indeed, it is believable that without capital´s control, the Chinese currency would be floating, thus can be appreciated or depreciated by economical pressures but not by bank`s policies.
However, this Chinese economic model is slowly readjusting the region back to its pre-1970’s state of over-dependence on commodity exports. In addition to becoming a major trade partner in the region, China has become a financial investor in the nations so heavily that many fear China will soon surpass the United States as the major player in the region. China is rapidly increasing its involvement in the region. Over the past few years, Chinese trade has increased around 30% each year to meet their demand/need for raw materials. In 2010, “China’s share of the regions trade has reached 20%... up from just 1% in 1995.” (Stier 259) This increase has made China the top trade partner for Brazil, Argentina, and Chile and a leading partner in many other Latin American and Caribbean nations.
Over the last two decades, the Chinese economy has experienced significant economic growth due to globalisation. Globalisation is responsible for reducing the barriers to trade and increasing the integration between different countries and economies. The reduction of trade barriers as well as the increased integration between different countries and economies resulted in an increase in foreign investment and international trading which leads to economic growth. China has experienced significant increases in international trading and investment flows. This is supported by the world bank which states that in 2010, China contributed 13.6% to global growth and was responsible for approximately 9.4% of W... ... middle of paper ... ...ountries/profiles/CHN.html>.
In the late 1970s, China was ranked twentieth in terms of trade volumes in the whole world as well as being predicted to be the world’s top nation concerning trading activities (Kaplan, 53). This further predicted the country to record the highest GDP growth in the whole world. The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially.
This is leading to tremendous changes in the global economy. China has become the second largest foreign direct investment recipient country in the world and the largest recipient among developing countries. Since 1978 the foreign direct investment has flooded into the country. In 2002 china became the first country for a very long time to attract more foreign direct investment in one year then the United States (bringing in US$53.2 billion while US$52.7 billion flowed into the United States). Foreign direct investment has played a vital role in the transformation of the Chinese economy in China, with value contracted increasing from US$ 52.1 billion (1998) to US$ 115.1 billion (2003).
China’s growth may not appear to be as sustainable when these factors are also taken into account. The Chinese economy has some of the highest saving rates in the world, it averaged 37% of GDP between 1978 and 1995 . The stable and high savings rate supports vigorous rates of investment and capital accumulation – crucial for economic growth. Households currently contribute half of total savings. The rapid rise in GDP per capita has reduced the level of subsistence consumption.