Examine the significance of the effect of the Chinese economy to the
future prosperity of developed and developing countries
There is much speculation as to China's economic future, underlined of
late by their entry into the World Trade Organization (WTO). There is
no doubt that China has the potential to become one of the most
economically powerful nations in the world as it has access to vast
numbers of employees in the labour pool. China's population now
exceeds the one billion mark. In fact, it is predicted by the WTO's
next director-general, Supachai Panitchpakdi, that if all goes well in
the subsequent period after China's entry into the WTO, the country
will become one of the two or three biggest economies in half a
century.
There has been a rapid rise and erratic movement on the part of the
Japanese following the Second World War, in which the Japanese economy
had to rebuild itself 'from scratch' so to speak, but generally a
fairly strong positive correlation is evident from the graph, the
Chinese line moving at a much more gradual rate, peaking in 2001 at
just over 4%.
This has unsurprisingly lead to widespread alarm, and even panic,
around the Western developed World. Some see it as an economic
disaster for them; after all, how can they possibly compete with China
with such phenomenally low costs in China as far as labour is
concerned? We need only look at the Chinese exports over the period
1948-2001 to see how the Chinese economy has changed in comparison
with that of post-war Japan.
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.
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[1] 'The Economist' Feb. 15th-21st '03 p.12
[2] The Economist Feb. 15th-21st '03 p.13
Fan, G., and X. Zhang. "How Can Developing Countries Benefit from Globalization: The Case of China." Eldis. N.p., n.d. Web. 20 Apr. 2014.
In 2001 China entered the WTO it has made major stride in the world economy especially with trade agreements with the biggest capitalist economy and the biggest GDP and most developed country in the world the United States of America which has nearly 2.3 trillion of exported goods and service in 2013 (President, n.d.) When China entered in the WTO it had become the sixth largest economy and the largest market trade and was slightly ahead of Italy and just behind France. “China is third largest trading partner with the U.S and its trade surplus with the U.S. has increased to $201 billion around 2005 and by 2014 the total China-U.S. trade deals was 591 billion”. (Morrison, 2015) It had a global current account of $160 billion around 2005 (Hufbauer, Wong, & Sheth, 2006). As of 2015 “China is the U. S’s second largest trading company and the third largest export company and its biggest source of import”. (Morrison, 2015) Sales from a foreign affiliated U.S. firms in China totaled at 364 billion by 2013. (Morrison, 2015). What is also amazing is that China has the biggest U.S. treasury bonds and that keeps U.S interest rate low. Between 2010 to 2014 General Motor sold more cars in the Chine’s market than in the U.S. market and many U.S. firms participate in Chinese market to stay globally competitive. (Morrison, 2015). This kind of
Globalization has caused the world to change. Our country, China has been dramatically changed by globalization. Our people have moved to cities, and our industry has exploded. We have had huge advances in technology along with education improvement. Despite the fact that China has changed so much, there are still many issues that plague it. China faces serious environmental concerns. New diseases and viruses that are not indigenous to China can cause a wide range of sickness in the new area. Despite some of the the improvements in China that are a result of globalization, the negatives that globalization has brought to China are more than the benefits.
Morrison, Wayne M. "China and the World Trade Organization." Congressional Research Service (CRS) Reports and Issue Briefs. Congressional Research Service (CRS) Reports and Issue Briefs, 2002. Academic OneFile. Web. 3 Oct. 2011.
The cost advantages related to raw materials may be explained by better negotiated agreements with suppliers (perhaps due to the larger volumes of purchases – comp. Fig. 5) and possibly less shipping and distribution costs that stem from the fact that Samsung’s fab facilities are geographically collocated (while competitors’ facilities are spread world-wide). In terms of labour productivity only Chinese SMIC outperformed Samsung, but that came hardly unexpectedly: low labour costs in China had been and were to remain unbeatable for some time yet.
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