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,
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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
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
Is the lifestyle of people in Europe and the USA a major cause of China’s environmental problems?
Sitting close to the edge of being a “developing” and a “developed” country, China is a difficult country to define neatly. It is a country with an ancient and traditional culture trying to position itself higher within the international community. Plus it is also a communist country that has come to embrace its own form of capitalism to fuel its economy. China’s economic boon has been beneficial to many people within the country. But not to all people within China evenly.
China’s economy is one very large indicator of its role in globalization. “In 2010 China became the world’s largest exporter” (CIA World Factbook). Without China many places such as the United States of America would be without billions of goods imported from China annually. An influx of companies moving their manufacturing to China has allowed people to flock to cities and find jobs. China’s economy has grown exponentially over the last few decades. In the last three years China’s economy has grown by nearly ten percent every year. Despite this influx of money to China it has also resulted in many drawbacks. For example, China’s environment has been obliterated. China burns more coal than every country in the world combined. Beijing has been so badly polluted that there are actually companies that sell cans of fresh air to people, and gas masks are a common sight. On January 12th 2013 Beijing’s air pollution reached a record setting 775 PPM. To put that into perspective, the scale for measuring pollution is 0-500 PPM. This set an all-time recorded high. In Los Angeles a high ...
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 1978, China was positioned 32nd on the planet in export volume, yet it had multiplied its reality exchange and got thirteenth biggest exporter in 1989. Between 1978 and 1990, the normal yearly rate of exchange extension was over 15 percent,[11] and a high rate of development proceeded for the one decade from now. In 1978 its exported on the in the world of the overall industry was insignificant, in 1998 regardless it had short of what 2%, however by 2010, it had a world piece of the overall industry of 10.4% as stated by the World Trade Organization (WTO), with stock fare offers of more than $1.5 trillion, the most astounding in the world.
With the development of China, the economy of China has become the World’s second largest after the US. On the other hand, the ...
With a population of 1.357 billion (2013)3, China is the most populated country in the world. Along with the huge population comes a market that is unmatched by any other country of the world. Both domestic companies and foreign companies want to tap into this large market that just recently embraced capitalism and entered into the World Trade Organization.
The current trade imbalance is caused in large part by intrinsic features of China's labor market and consumer base. The vast majority of China's 1.3 billion people still live in rural areas. China has, by some estimates, a surplus rural labor force of 120 million people, many of whom migrate to industrial centers to look for factory work, and drive down wages. As long as wages are low, the United States will continue to gobble up products made in China, while Chinese consumers will prefer to buy cheaper, homespun alternatives to American products. The rise in trade deficit with China has come at a cost to jobs in the United States, accordin...
And as China transforms its economy into a ‘socialist market economy’ it is held that the attendant social, economic, and political transformations necessitate that its state controlled IRs system is decentralized and more so, it should be converge with international best practice IR standards (Zhu, Warner, & Feng, 2011). Although the Chinese government has endeavored to reform its labor market, the “deep-rooted national culture and its long history of centralized state power” as exhibited by the tenets of the all-powerful All-China Federation of Trade Unions1925 (ACFTU), has meant that any initiated IRs reform should be “with Chinese Characteristics” (p.128). It is important to note in the 1980/90s most countries in the Western hemisphere and Asia restructured their IRs systems. This episode can be attributed to factors specific to these countries; but owing to the fact that most of Asia’s economies are linked to the global economy, it is posited that this process may not have been coincidental but it was occasioned by competitive pressures in the global labor market (Kuruvilla & Erickson,
When the new Chinese Government was set up in 1949, the new government faced a lot of problems. First on their agenda was how to re-build the country. As Communist Party of China (CPC) is a socialist party, their policies at the time were similar to that of the Soviet Union’s. Consequently, the CPC used a centrally planned strategy as its economic strategy when it first began. For a long time, the Chinese economy was a centrally planned economy in which none other than the state owned all companies. In fact, there were absolutely no entrepreneurs. As time went on, the problems of a centrally planned economy started to appear, such as low productivity, which was the key reason for restricting the development of China. With the population growing, the limitations of the centrally planned economy were clear. In 1978 China started its economic reform whose goal was to generate sufficient surplus value to finance the modernization of the Chinese economy. In the beginning, in the late 1970s and early 19...
Finally, the United States political system has a strong structural structure but in China their people always work together to be the best and stand out in the world. It is predicted that China will one day be the largest economy-growing country in the world. They continually grow and rebalance their world to be the best. The growth of the economy will depend on the Chinese government's comprehensive economic reforms that more quickly accelerate China's transition to a free market economy. Consumer demand, rather than exporting, is the main engine of economic growth; boost productivity and innovation; address growing income disparities; and enhance environmental protection.
A country’s struggle to power is much like that of two rivalling siblings. They are locked in a constant competition as they attempt to one-up the other. Countries do the same as they race against each other to produce better exports, and to attract more money into their economy. They are constantly vying against each other for the center of attention so that they are the main focal point of the international world. This competition continues until one finally relents, or blatantly falls, and allows the other to shine; much like how China is slowly managing to overtake the U.S. in terms of international influence. The success of one individual cannot remain forever, and eventually they will begin to fall. This is the current situation where the U.S. and China stand today as China is beginning to overtake the U.S. in terms of economic capability. With a superior economy, it is possible for China to overcome the challenges it faces as it moves into position as the next world power. Though, just like the pair of siblings, despite China’s recent successes, the other won’t disappear completely. The U.S. will not disappear into the background and allow China to take complete control as hegemon, or world power, and establish something akin to a uni-mulipolar system. A system where there is one main power and many already established rising powers. This uni-multipolar system allows for other countries to continuously compete for the position at the top.
The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades.