Discuss the effects of globalisation on economic growth and the quality of life in the Chinese economy.
Globalisation is the progression towards a growing assimilation between different countries in order to gain a single world market. It strongly encourages overseas trade, the removal or the reduction of trade barriers to increase economic growth and development. Globalisation ultimately presents to everyone a world which is increasingly liberalized and market-orientated. Associated with globalisation there is increased and intensified competition and greater interdependence among countries. In numerous ways China has taken this opportunity and used it to its full advantage which has enhanced economic growth and significantly improved the quality of life.
China’s influence in the world economy was minimal until the late 1980’s but we are now seeing China being one of the most independent countries and leading the manufacturing producing market. China started with a fragile economy with minimal infrastructure from frequent revolutions and invasions in 1949. In the early 1980’s, China’s economy was still extremely weak as a result of its inward looking government system of a socialist planned economy under the Mao government. This resulted in living standards below world averages and economic growth at nearly zero. China has risen from the edge of economic obscurity to lead the world in terms of economic growth, and this is done is just over a quarter of a decade. The People’s Republic of China has transformed from a planned economy into a socialist market economy and is now the world’s second largest economy to the USA being number one, by nominal GDP at $7.3 trillion and by purchasing power parity (PPP). “Pay attention to what’s going on in China. “ – Jeff Mbanga – The Observer.
China is the world’s most rapidly growing economy with their growth rates averaging 10% in the past 30 years. In the past decades there has been a significant increase in international trading and investments flows due to globalisation. This has led to high levels of economic growth. It was unusual in the 2007-08 Global Financial crisis how an industry was maintaining an average economic growth rate of 8.5% per year. In addition to this China’s trade with other nations has expanded 16 times more. This is occurring due to their extremely low prices which are highly competitive and pleasing to the developed western world. Although with the recent European Sovereign debt crisis “Growth in China has slowed, but to a rate that remains the envy of the world, while Chinese industry continues its march onto the world stage.”- Time magazine. China’s financial system which is often regulated has promptly expanded due to monetary policy becoming increasingly fundamental to its complete economic policy as a result of globalisation. The outcome of this has resulted in banks distributing an increase in finance to its enterprises for investment, deposits for liquidity and also loaning money to the government which maybe then reallocated in providing infrastructure. The most significant result of globalisation has been the development of China’s import sector and has allowed the nation to become the second largest exporting economy in the world. The large export sector of extremely low cost goods and services has manipulated the trade currents of the world. Through China’s growth it has developed a stable-body of trading partnerships with raw material producers. An example of this is with Australia where 40% value of all products exported is worth around $40 billion. China is buying these raw materials to accommodate its largely growing urban-mega-cities and industries to produce new goods and create more low-cost goods and a more intensifying complex form of trade. Through constant trading globally, this has increased the aggregate demand. As of 2011 foreign direct investment (FDI) has exceeded from $US.100 billion in 2010 to $US.116.10 billion. This has...
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