The Effect of Globalization on the Chinese Economy

Topics: Economics, Economy, Macroeconomics Pages: 6 (1663 words) Published: March 22, 2013
Running head: ASSIGNMENT 1

Assignment 1 - The Effect of Globalization on The Chinese Economy

Pilar R. Reyes

Dr. Z. Judith Mushipe

EDL 805-304 – Strategic Management of Global Change

Saint Thomas University

February 24, 2013

Globalization has early roots when  when humans first settled into different parts of the globe. Globalization, however, has shown a solid and quick progress in modern times and has become an international force which, due to technological advancements, has increased in speed and scale, so that nearly all countries across the globe have been affected and engaged. The purpose of this paper is to discuss the role of globalization in the economic growth of China, an emergent and developing nation.

Globalization is "the increase in international exchange, including trade in goods and services as well as engage of money, ideas, and information" (Dess, Lumpkin, Eisner, & McNamara, 2012). Further, globalization is defined as "the growing similarity of laws, rules, norms, values, and ideas across countries" (Dess et al., 2013). In short, globalization is the progressive incorporation of national economies through the breaking down of global trade barriers. In many ways, China represents an idyllic model of an economy that has been impacted and has taken total advantage of the opportunities offered by globalization. In little over a quarter of a decade, this immense country has emerged from the rim of economic insignificance to lead the world in respect of economic growth. China has was able to do so by joining the World Trade Organization, implementing responsible government policy, attracting foreign direct investment, and developing vast export-oriented industries.

Near the beginning 1980's, China's economy was very fragile due to its inward looking government system of a socialist planned economy under the Mao government. Living standards were below world averages, and there was barely any economic growth. Also, there was no inflation due to no extent in growth and unemployment rates were incredibly low. Since opening up to globalization under the Deng XiaoPing government in 1978, through adopting the 'open door' policy with an outward looking government system, China's system gradually transformed to a socialist market 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 substantially 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 3.4% (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 real 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 placed China as the sixth-largest economy and the fourth biggest exporter in the world (Nolan, 2004).

China's Communist Party has put into practice responsible government policies and long-term strategic planning of slowly opening itself to the integration of the world, has ensured political stability gaining rapid growth, surviving the 1989 Tiananmen Square rebellion, the 1997 Asian crisis and last year's SARS 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 prosperous as Goldman Sachs, an investment bank, predicts that by 2040 China will overtake America as the world's leading economy (Amsden, 2004).

Not to my surprise, the results of China's recent affluence have not been shared equally amongst the nation's 1.3 billion...
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