The Effect of Globalization on the Chinese Economy

Running head ASSIGNMENT 1 Assignment 1 The violence of Globalization on The Chinese Economy Pilar R. Reyes Dr. Z. Judith Mushipe EDL 805-304 Strategic trouble of Global Change Saint Thomas University February 24, 2013 Globalization has early root when when humans first settled into different parts of the globe. Globalization, however, has shown a squ atomic number 18(a) and quick progress in modern times and has become an transnational force which, due to technological advancements, has affixd in speed and scale, so that nearly tout ensemble countries across the globe have been touched and engaged.The occasion of this paper is to discuss the role of globalisation in the sparing harvest-tide of mainland china, an emergent and work uping nation. Globalization is the add-on in international exchange, including duty in goods and services as well as engage of money, ideas, and culture (Dess, Lumpkin, Eisner, & McNamara, 2012). Further, globalization is defined as the matu rement similarity of laws, rules, norms, values, and ideas across countries (Dess et al. 2013). In short, globalization is the progressive incorporation of national economies finished the breaking win of global commerce barriers. In m each ways, mainland china represents an idyllic toughie of an economy that has been p replacemented and has taken total advantage of the opportunities offered by globalization. In little all over a quarter of a decade, this immense orbit has emerged from the rim of sparing insignificance to lead the world in respect of economic growth.China has was able to do so by joining the World make do Organization, implementing responsible brass policy, soak uping overseas direct investment, and developing vast export-oriented industries. bordering the beginning 1980s, Chinas economy was very fragile due to its inward feeling governance system of a collectivised planned economy below the Mao government. Living standards were below world average s, and there was barely any economic growth. Also, there was no pretension due to no bound in growth and unemployment rates were incredibly low.Since start up to globalization under the Deng XiaoPing government in 1978, through adopting the open door policy with an superficial looking government system, Chinas system gradually transformed to a socialist securities industry economy, establishing Special Economic Zones in the Southern coastal provinces, opening up to trade with world economies. With the globalizing Chinese economy in transition, impacting good on a growing unemployment rate since the 1980s to estimated 9% in urban areas while rural is estimated to be as high as 30% in 2003, while the economy has moved into inflation of 3. % (Nolan, 2004). However, the impact of globalization has improved living standards dramatically, with annual per capita disposable incomes of US$993 in 2003 compared to 1978 of US$299, with a extraordinary growth in the Chinese echt GDP (US$1 . 4 trillion in 2004) at an average of 9. 5% annually and gaining US$1200 billion in 2003 from exports with a rise of 7% per annum for the past decade, has rigid China as the sixth-largest economy and the fourth biggest exporter in the world (Nolan, 2004).Chinas Communist Party has put into practice responsible government policies and semipermanent strategic planning of slowly opening itself to the integration of the world, has ensured semipolitical stability gaining rapid growth, surviving the 1989 Tiananmen Square rebellion, the 1997 Asian crisis and last years severe acute respiratory syndrome virus without making concessions to democracy, whereas socialist regimes around the world have dissolved. However, China is in good hands as the future seems to be stentorian as Goldman Sachs, an investment bank, predicts that by 2040 China will overtake the States as the worlds leading economy (Amsden, 2004).Not to my surprise, the vector sums of Chinas recent affluence have non been shared equally amongst the nations 1. 3 billion citizens. A noticeable and growing disparity in the annual per capita disposable incomes of urban communities and rural communities, before long 7703 Yuan (US$993) respectively 2476 Yuan (US$299) (Nolan, 2004). This is due to the impact of globalization, directing 97% of foreign direct investment (FDI) along coastal cities allowing coastal communities to bang up while inland rural communities are languishing, with 800 million people left hand behind by the current growth.Clearly, the economic globalization of China has affected its environs as well. The unrestricted Chinese economic growth has caused the acquittance of biodiversity, deforestation, desertification, persistent organic pollutants and environmental degradation bringing with it serious air, irrigate and soil degradation throughout the country Air pollution from manmade nursery gases is an immense concern for major economic cities of China, causing health issues.Also, since the 1980s the community increased by 200 million, despite a one chela policy implemented by the government, coupled with the increased level of economic activity, this has placed a huge strain on Chinas infrastructure, with growing housing shortages and commerce congestion (Amsden, 2004). The government has committed to improving infrastructure, but this will inevitably be at the cost of the environment.Much of Chinas recent economic success from globalization can be credited to responsible government policy and long-term strategic planning. Over the past quarter of century, the economy has gone through a period of drastic structural reform, designed to increase ability and fighting. A number of state owned enterprises of key domains have been deregulated, with an increase in private enterprises, competition policies have been introduced and the tax income system has been overhauled.Chinas WTO social status in 2001 has in addition resulted in the dismantling of many pr otective trade barriers, such as the gradual phasing out of tariffs, which now averages 12% (Amsden, 2004). by globalization, China has experience a fluctuating inflationary status from inflation in 1993 of 14. 7% to deflation in 2002 of 0. 8% and now inflation of 3. 4% (Amsden, 2004). Although overall prices have been steady of falling over the past 7 years, recently food prices has relatively shot up by 9. 7%, due to flooding of agricultural areas in 2003 (Nolan, 2004).The government is working near with the central bank and state banks of China, placing new taxes on savings and has get down interest rates down to 2% thus to influence an increase in aggregate spending to hop out of the liquidity trap, faulting deflation into minimal inflation. Also, the government has placed bonus offers also such as extensions to official holidays and strong government spending to fuel consumer spending. Nevertheless, to reign in the risk of high inflation, the government has capped increas es in utility be and limiting lending by state banks.Due to globalization, the Chinese government has also increased confidence in the economy through its macroeconomic policy. In the past few years, fiscal policy has resulted in strong government spending underpinned by massive bond sales to boost the economy, component to sustain GDP growth averaging 9% (Nolan, 2004). As a result of joining the world trade organization in 2001, China had gained a more vast export market, leading to upswings in the primary sector of 2. 9% and the tertiary sector at 7. 5% and the boom in secondary sector at 9. 9% increasing year-on-year gaining US$640. 9 billion in 2003 alone (Amsden, 2004). The Chinese Yuan is pegged by the reserve bank of China to the US dollar of 8. 3 Yuan, thus, increasing the competitiveness of domestic export-oriented industries allowing an expansionary effect upon the domestic economy(Amsden, 2004). WTO membership, however, has provided China with globalizing stability, gai ning extra resources, accessing to world technology, market information, global production and distribution networks, and also reduced disruptions to trade by reducing unpredictable policy shifts and promoting stability in Chinas external economic relationships.Moreover, it is reinforcing growth of the rapidly globalizing Chinese economy, increasing FDI into exports and domestic production upgrading attention skills and technology. All these factors have made the globalizing Chinese economy the most mesmerizing location for foreign companies to base their operations. Its vast pool of low cost-labor and the countrys 1. 3 billion consumers for every conceivable product and service. And with a low tax rate for export-oriented industries in some cases of mere 10%, has continued to attract a disproportionate share of FDI coming into Asia (Amsden, 2004).China has gained a growth over US$52 billion of FDI between 1999 and 2003 at the expense of its atomic number 34 Asian neighbors and t he Asian Tiger economies of Hong Kong, Taiwan, Korea and even Japan with a decrease over the 4 years of US$47 billion dollars (Amsden, 2004). Increasing foreign direct investment (US$52. 7billion) of 10% year-on-year from globalization has allowed the Chinese economy to develop a variety of export-oriented industries, sucking in imports and dictating global prices of everything from steel to microchips.Around the globe, shelves are stacked with low-cost goods churned out by the worlds workshop. Today, manufacturing by foreign trans-national corporations (TNCs) amounts to a over 50% of the national economy. TNCs also account for over half of total exports, worth an annual $50 billion dollars (Nolan, 2004). In summation, China has been impacted and has taken full advantage of the opportunities presented by globalization.Chinas economy has experienced a period of rapid economic growth from the 1980s, surpassing all other world economies. The impacts of this growth have been both posi tive and negative, with the legal age of financial rewards flowing to the top end of the social ladder and the environment suffering greatly. Through continued government involvement and strategic planning, however, it appears that China will continue to develop economically and establish itself as a major international economic player in the future to come. ReferencesAmsden, A. (2004) The draw near of The Rest Challenges to the West from Late-industrialising Economies, Oxford newfangled York. Dess, G. G. (2012). Strategic management creating competitive advantages(6th ed. ). New York, NY McGraw-Hill/Irwin. Mohr, A. (2013). The Effects of Economic Globalization on Developing Countries. Retrieved February 23, 2013, from http//smallbusiness. chron. com/effects-economic-globalization-developing-countries-3906. html Nolan, P. (2004) Transforming China globalization, transition and development. London Anthem.