International Business -China

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1.0 Introduction of Economics in China

Before the Chinese Communists Party (CCP) came to China to gain the power control of the country, the economics of China was mainly based on agriculture for many centuries. The economy of China could not be separated from Mao. Mao was the chairman of CCP in China from the year 1943 to 1976. Mao was calles as Chairman Mao or The Great Leader Chairman Mao. During the Mao period, most of the Chinese citizens were poor people except for the political elite people in China. During the Mao era, China economics was mainly emphasized on the heavy industry. The success of the heavy industries in china was measured on the quantity of the steels that have been produced and the barrel of the oil that was pumped from the ground. The first Five Year Plan in China was developed from the year 1953. The Five Year Plans was developed to help sustaining the economics of China initially. Mao then continued to sustain the economy with ‘The Hundred Flowers Campaign’ during the year 1957. During the Hundred Flowers Campaign, Mao indicated to received and considered different opinions on how China should be governed. Many liberal and intellectual Chinese began to questioning and opposing the leadership of Mao. After the Hundred Flowers Campaign, it then moved on to the ‘Great Leap Forward” from 1958 to 1959’ which was the Second Five Year Plan. Great Leap Forward Plan was created to increase the production of the industrial and agricultural industries. Great Leap Forward Plan was an alternative plan for economic growth focusing on the heavy industries. Great Leap Forward Plan has not proved to be a successful as planned. The number of starvation of the citizens has increased. However, the plan then changed again at the year 1966, to the new plan that was called as ‘Great Proletarian Cultural Revolution’ that only lasts until the year 1976. These plans were unrealistic as it brings the economics of China to the disaster.

The reforming of the China’s economy was initially started by Deng Xiaoping in the late 1970s. During 1978, the reforming of China’s economics has began and China has generate important and steady growth in investment, consumption and the standards of living of the China citizens, which was very poor before the year 1978 or before the reforming of China’s economics process occurred. But, China is now still the second country with the most number of poor citizens after India.

Before this, government has the full control over the economies of China. The government’s control in the economics of China started to decrease gradually, but in the same time, government were still the backbone of the China’s economics. The economics of China was emerging as a market with more oriented economy with many foreign direct investment in China which contributed to the improvement in the China’s market or economies.

China is the fourth largest country in the world with the most number of populations. Due to the huge number of populations in China, the government has fixed a policy which said that one family are only allowed to have only one kid, with the allowances for the second child in the rural areas. China nowadays has become the second largest economy in the world by the nominal GDP and the purchasing power. The largest economy in the world is leading by the United States. Over the past 30 years, China is the fastest growing major economy in the world with the average growth rates of 10%. China is now leading as the largest exporter in the world and the second importer of goods all around the world. For example, many souvenirs and products sold in Malaysia or many other countries are made from China. China is the main importer of raw materials and the main manufacturer for goods which is then exported to the other countries.

2.0 The emergence factor of China – factor of endowment

China government's decision to permit China to be used by multinational corporations as...
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