The impact of the World Trade Organisation accession 6. Future Solutions 6. Conclusion 7.
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Bibliography 8. In the midth century a Lancashire mill-owner said that "if only the Chinese could be persuaded to lengthen their shirts by a foot, the cotton mills of Lancashire would run for ever.
In the s, with Deng Xiaoping's proclamation "to get rich is glorious- ringing in their ears, western corporations, politicians and businessmen flocked to China with the promise of huge returns on their investments. Completely ignoring the fact that the Chinese economy was still in the tight grip of the communist bureaucratic central planners, the West poured hundreds of billions of dollars into joint ventures which never, ultimately, bore fruit. The facts that at least million of the supposed 1. Chang, This dossier will first examine the economic history and the current situation and problems of China and will then explore whether China, with the capitalist Hu Jintao as the new leader and many economic reforms in the past, present and future, is on its way to claiming the title of the world's next economic super power.
The economic history of China.
Essay on Impact of Globalisation on The Chinese Economy
China's success over the past two decades created a true economic miracle, the China miracle. There were four key turning points in economic policymaking from to China has been a remarkably successful economy since its adaptation of market-oriented reforms in The transition strategy undertaken by China is termed a 'dual track'' reform path because there is both a planned and a market part of the economy. The shock-therapy approach was not desired by China, because of its radical reform programs, therefore the gradualist approach was more likely to be successful, due to China's under-developed and under-industrialized economy with a large rural surplus of labor force.
Centrally planned economy was no longer viabl Both the planned economy and the market economy are economic means. Deng Xiaoping, The building of the "market-socialist economy- in China, is understood to be one of many great Chinese experiments, a continuation of the "permanent revolution- that Mao upheld.
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Restructuring the state owned enterprises is essential to the health of the Chinese econ China today offers a new look and its transformation into a high performing economy is affecting its population. In spite of it all, China's economy is thriving and many are determined to seize the opportunity. Introduction beginning in late the Chinese leadership has been trying to move the economy from a sluggish Soviet-style centrally planned economy to a more market-oriented economy but still within a rigid political framework of Communist Party control.
It depends on the where the economy is standing and what they are aiming for. Unemployment is usually used to measure the health of the economy.
Nonetheless, compared to foreign economies, the growth rate of China during the crisis was seen as approvingly competitive. So how did China maintain a high growth rate during the financial crisis?
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In contrast, the financial systems in the Western economies, such as the UK, exposed its flaws through lack of government control. When crisis hit the UK economy, the government tried to mitigate the effect by encouraging banks to lend and borrowers to borrow for investment and consumption, but lacking confidence both banks and consumers were reluctant to follow government suggestions. The situation demonstrates the lack of government control over the financial system, though this promotes democracy to an extent, economic activities cannot be managed in effective ways in situational changes such as during the crisis, this had led to the fall in economic growth between to using GDP indicator as illustrated in figure 2 7.
However, gradual improvements in government understanding and interventions in relevant sectors of the economy have led to the increased FDI in China, for example amendments were made to the Equity Joint Venture Law of in and the Interim Provisions on Guiding Foreign Investment issued which provided guidance for FDI has also been revised, the latest catalogue is in effective use from Figure 3 10 shows us that FDI in China has increased dramatically from the beginning of the s, and it seems rational to suggest that government laws played a major role in generating the FDI inflow, by building business confidence.
The implication of this on the Chinese economy is extreme because it dismisses the threat of foreign monopolies in the market which could be damaging to the economy. The majority capital from FDI will therefore stay within the economy, reducing potential leakages in the long run. We have seen that the government is in favour of protecting the domestic market, i. However, certain policies are bound to discourage potential foreign investors. It has already been mentioned that the Chinese party within any joint venture will hold the majority of shares.
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Policies such as this one, some would argue, discriminate against foreign investors and discourages them from operating in China, creating a loss of potential FDI and consequent economic growth. Nevertheless, you could argue that the strength of the Chinese economy provides more incentive to invest which overshadows its more undesirable policies. Although economic freedom has weaved its way into China, Chinese politics has by no means improved to the same extent as its economy and corruption is certainly a theme. Corruption of the Chinese government leads to the distortion of market allocation mechanisms and in the long term impacts economic development.
As mentioned before, government spending, a component of aggregate demand can be effective in generating a multiplier effect but this is restricted because of political corruption. Bribery scandals in China are endless. According to the Financial Times, GSK has admitted bribing government officials back in , in order to boost drug sales in China. Such news had made its appearance on global media, creating a disincentive for firms to invest in China.
In general corruption leads to the suppression of economic growth by creating uncertainties in economic actions.
Levels of corruption are often difficult to monitor, but nevertheless cause damage to the economy of China by dividing the nation with power, restricting the economy to grow in the most efficient way in the long term, i. The global use of technology, including the internet, has undoubtedly risen in the last few decades, following innovative ideas which play an essential role in the modernisation of the world, in particular for developing countries such as China.
The internet unleashes the types of opportunities which in the history would be classified as near impossible: providing access to mass information, e-commerce etc. There exists even more potentials for both businesses and consumers, but a difficulty that agents face is the media censorship in China. However, this behaviour causes imperfect knowledge of markets and sometimes acts as a barrier to innovation and trade.
An example of government intervention is demonstrated through the inaccessible Google search engine in China, and under the policy of internet censorship, more than websites are blocked in mainland China This stifling of freedom of expression may be unsettling, but does it have any meaningful impact on economic growth? Very few of the websites targeted by the Chinese government have expressly commercial purposes but rather are channels of political dissent. Their culling may not be particularly palatable, but this does not mean there will be an impact in terms of GDP per capita.
On the other hand, it is undeniable that a sense of creativity and experimentation has been central to the growth of the most successful internet and technology-based companies of the last two decades.