Economics Hsc China Essay

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For an economy other than Australia, explain how government development strategies have responded to the process of globalisation.

Globalisation refers to the process of increased integration between different countries and economies and the increased impact of international influences on all aspects of life and economic activity. Since 1978, the Chinese “tiger” economy has embarked on a process of social and economic reform designed to improve the quality of life of the population and open the economy to global integration. These strategies designed to promote economic growth and development include the Five Year Plan, FDI and trade policy, microeconomic reforms, welfare policy, environmental policies and macroeconomic policies.

China’s Five Year Plan forms the basis of the government’s economic and social development efforts in the short and medium term. The plan is essentially the Government’s acknowledgement of the importance of having a prosperous society in an all-around manner. The GFC revealed the inherent structural weakness in Chinese domestic consumption and thus, the FYP is the focus shift from export-led sectors to increasing domestic consumer demand through raising nation-wide incomes to promote growth. This process has already begun, with over 300 000 people lifted out of the ‘$1 a day’ income level, ensuring development improves by reducing the income inequality between the developed east and the rural west. These increasing incomes will contribute to greater levels of domestic consumption and thus growth, however, there is a risk of cost push inflation. Therefore, China must find a balance between inflationary threats and increasing domestic demand whilst maintaining export-led sectors.

Economic growth and development in China is heavily dependent on two of the three engines in the “tiger” economy – exports and investment. In 2009, China’s exports suffered as the nation’s largest markets fell into recession. China’s subsequent stall...
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