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Discuss the characteristics of globalization (part 1) and analyses its impact on China economic development and living standards (part 2).

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Introduction

Year 12 Economic Assessment Task 1 2004 By: Ronald Pang The follow report will discuss the characteristics of globalization (part 1) and analyses its impact on China economic development and living standards (part 2). Part 1: Characteristics of Globalisation Globalization- refers to the increasing economic integration between countries leading to emergence of a global market place or single world market. There are many aspect of globalization, but it can be divided into two simple categories: * Positive * Negative Positive impact of Globalization There are four main aspect of globalization, they are: * Money * Investment * Trade * Migration Money - the effect on money due to globalization is enormous. Floating Exchange Rate to different currencies and movement of money has become very easy through banks established in different countries. One example of this is credit cards; you could buy anything in different countries with a swipe. Investment - Since money could be moving in and out of a country freely. Transnational Corporation have more confidences to invest in countries. For example, Australian investor has the opportunity to invest in American shares due to globalization. Trade- Trade has also improve over the last ten years due to globalization. Globalization has brought every country under one roof of trading. For example, tariff and trade barriers has been remove from different countries, such as, the trade agreement between Australia and China Migration - due to globalization, the rate of migration has increase dramatically since 1996. Through migration, it also leads different labour into different country. ...read more.

Middle

Import licensing and quotas on a range of agricultural goods will be converted to tariff-rate quotas and most licenses and quotas on imported industrial goods will be eliminated. As China becomes more globalized, barriers to foreign investment and trade will be reduced to encourage more international trade. Successively, China's trade flow now accounting for more than half of its GDP has been growing faster than its economy. The value of its exports has increased dramatically from $US 22,007 in 1981 to $US 226,155 in 2001. In comparison to just 72% in 1990, manufactured goods account for 88% of China's export in 2000. As more manufacturers shift their base to China, more valuable household electrical items, such as televisions and washing machine which now account for 5% of global computer and office machine exports are expected to be exported from China. As an impact of globalization, China's export base will gradually become more diversified. The subsequent increase in export to the global market will encourage economic growth to China. China's import has also soared since its protection barriers are reduced as required by the WTO agreement. The value of total import has risen from $US 22,015 to $US 243,610 in 2001, a dramatic increase of 11 folds. This reflects a rise in domestic growth and the living standard of its people. Importing goods could be inefficient for China to produce, all the country to specialize in goods it has a comparative advantage in. Due to cheaper labour cost and less stringent regulations, China has a comparative advantage in simple manufactured production, resulting in lower unit costs of production and greater output employment. ...read more.

Conclusion

HDI The establishment of Special Economic Zones in the Southern coastal province creates in equality in terms of income and economic development. The interior and northern parts of China remain far less developed and more reliant on agricultural production for the generation of income and employment opportunities. The most prosperous province, Shanghai and Beijing, score HDI of 0.85 and 0.84 respectively. This in contrast to the poorest provinces, Tibet and Guizhou, scoring 0.52 and 0.6 respectively. In Shanghai, the household income per capita is 2.5 times greater than Tibet. Per 100 households, 73 people in Shanghai own refrigerators, in comparison to only 1.16 in Guizhou. There fore, as a result of globalization, the living standards in the top end of the Chinese provinces are much higher that the lower end. Conclusion To integrate into the global economy, China has become a member of the WTO, opened up its markers and reduced tariff barriers. These successful strategic moves have been rewarded with dramatic increase in its GDP and foreign direct investment. The overall living standards of the Chinese people, as reflected by the country's HDI, have improved with 170 million people lifted out of poverty. However globalization and rapid economic growth have also resulted in a rise in short term unemployment due to structural changes. Its environment deteriorates as economic activities increase. The income gap has exacerbated between the wealthy and the poor provinces. Despite the obvious benefits, globalization has its downsides on China. In embracing globalized trade, China has to face enormous challenges ahead in ensuring sustained economic growth can be achieved in face of a weak global environment or a slowly recovering world economy in the years to come. ...read more.

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