Global Economy Case Study China

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The Global Economy Case Study China Questions 1. Explain why China is classified as an emerging economy. (3 marks) max 200 words The term emerging economy was created by the International Finance Corporation of the World Bank in 1981 and there are three factors that distinguish emerging economies from developed economies. The first factor is rapid economic growth which is evident in China as GDP Annual Growth Rate has averaged 9.79% between 1989 and 2016. The second defining feature is emerging economies as emerging competitors. According to the IMF, China is now the first or second largest trading partner of 78 countries, accounting for 55% of global GDP. The third characteristic is transitioning from a closed economy to an open market economy,…show more content…
Since implementing majority of its WTO commitments in 2007 and through the ‘open door policy’, globalisation has allowed China to attract high levels of foreign direct investment, as transnational corporations have established production facilities in major cities. The impact of this can be seen as total FDI was valued at US$116b in 2001. Additionally, this has improved QOL by created substantial employment opportunities particularly in China’s manufacturing sector; 2,500,000 people migrated from Eastern to Western China between 1995 and 2000 to improve their QOL. Individuals have also received increases in real wages, appreciating 300% from 2001 to…show more content…
Foreign investment from transnational corporations has been attracted through a variety of related incentives including low tax rates, cheap labour and less regulations which helped to create employment opportunities within China, thus stimulating economic growth. Further effects of this policy in promoting economic growth can be seen through China’s GDP. In 1980 China’s GDP was $189.65 billion which increased to $562.26 billion by the early 1990s, showing substantial economic growth. However, the ‘open door policy’ has made the Chinese economy highly dependent upon SEZs, creating a dualistic economy with inequality in the distribution of income and employment opportunities between the urban southern/eastern provinces and the rural northern/western

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