Impact Of Globalization On The Chinese Economy Essay

Impact Of Globalization On The Chinese Economy Essay

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The rapid integration of the world’s economic systems through the breaking down of barriers to trade, finance, investment, technology and labour around the world has had profound effects on the Chinese economy. The world ’s largest economy has embraced the process of globalisation through trade liberalisation, financial market reform and the ‘open door policy’ therefore enabling China to receive the benefits of globalisation. This process has stimulated economic growth leading to sustained increases in per capita incomes, improvements in quality of life and significant reductions in poverty and unemployment. However, the effects of globalisation and rapid economic growth have come at a cost, resulting in significant environmental degradation and large disparities in the distribution of income. Nevertheless, China, through the process of globalisation, has been able to move from a closed agrarian economy to a major world economic power, who has and will continue to contribute substantially to global output, economic growth and trade and investment.
Rapid and consistent economic growth has had a significant effect on the Chinese economy. In the period between 1995 and 2004, as a result of globalisation, the average annual growth rate in real GDP was 9.2% in China, compared to the world average of approximately 4.5%. A major cause for such high growth was the implementation of the ‘open door policy’ with the establishment of Special Economic Zones in 1980. This policy encouraged export orientated growth and attracted foreign investment by TNC’s through low tax rates, exemption from import duties, cheap labour and less stringent government regulations. Further to this, China’s membership of the World Trade Organisation in 2001, ensur...

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... that globalisation has had a profound impact on China. Overall, globalisation has been a positive change for both the people of China as well as the economy. It has improved education, health and social security whilst maintaining high levels of economic growth. China through the transition from a communist to a market-based economy has allowed for the freeing up of cheap labour to multinational corporations creating a comparative advantage, this encouraging high efficiency and productivity and ultimately advancing the citizens of China. However, these benefits are not equally enjoyed across the population with increasing inequality across both class systems and geographically. As well as this, large scale economic growth caused by the processes of globalisation has caused significant environmental degradation, which the government is only now beginning to correct.

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