• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13
  14. 14
    14
  15. 15
    15
  16. 16
    16
  17. 17
    17

To what extent has globalisation been benefical to China's economic growth?

Extracts from this document...

Introduction

To what extend has globalisation (through trade and Foreign Direct Investment) been beneficial to China's economic growth? Introduction China's economic transformation is one of the most dramatic economic developments of recent decades. Indeed, during the period 1979-2005, China's growth rate has averaged 9.7% per annum, and its integration into the world trading system has been as remarkable: its share in world trade has increased from less than 1% in 1979 to 6.4% in 2005. China became the third largest trading nation after the United States and Germany in 2005. China's major trading partners are the European Union followed by the United States and Japan. Together, they provided markets for over 51% of China's total exports in 2005, and made up almost 34% of China's import bill. During the past 50 years, China's industrial structure has evolved in three phases. Firstly, there was a period of heavy industrial development during 1952-78. The government prioritised the development of heavy industries such as steel, machinery and chemicals. Secondly, in 1979-94, China diversified its industrial structure by emphasising on lighter manufacturing industries, such as food and textiles. However, since 1995, the Chinese industry had suffered from massive over-capacity resulting from extensive industrial investment. To rectify structural weaknesses, China entered its third period of industrial development, which was focused on expanding technology-intensive sectors and upgrading the technological level of all industries. Today, China is a major driver of growth in the world economy boosting both global supply and demand with many of its industries completely integrated into the world supply chain. As one of the largest global production platform and emerging market, China is contributing to the emergence of a truly globalised world economy. With the largest population and one of the world's fastest growing economies, China has the largest potential market of any WTO member. In this investigation, I aim to identify to what extent, has globalisation through trade and FDI been beneficial to China's economic growth? ...read more.

Middle

This could be one explanation for the link between China and economic growth. Already establish in the investigation, China specialises in exporting manufactured goods rather than services, so we can assume that China has a comparative advantage in trading manufactured goods, meaning they can obtain other goods and services they cannot produce efficiently themselves, and increase their international trade. The extent to which China has opened to foreign trade can be illustrated by the share of total trade in GDP over time. According to the World Bank Development Indicators10, in 1970, trade contributed 5.3 to GDP climbing to 34.8% in 1990, 44.2% in 2000 and rising sharply after WTO accession to reach a massive 65.4% in 2004 China: Share of Trade in GDP (Percentage) 1970 1975 1980 1985 1990 1995 2000 2003 2004 5.3 9.2 21.8 24.1 34.8 43.9 44.2 56.9 65.4 Theoretically, opening up domestic markets to international trade would increase the level of competitiveness in the market place, making businesses find better ways of producing goods more efficiently (at a lower cost). This is because trade encourages greater specialisation, which dramatically lowers costs and more intense competition, which is central to innovation. The graph below shows the correlation of trade and china's economic growth. As you can see there is a positive correlation between trade and GDP, suggesting that trade is an important factor for the economic growth in China. However, China's trade surplus (the value of exports net of imports) is a better measure of the contribution of international trade to the economy. Since 1990, the trade surplus has averaged about 2 to 3% of GDP, exports have grown faster than imports and China has had trade surpluses in all but 1 year from 1990 to 2003. The trade surplus peaked at 4.5% in 1997-98. China's trade surplus of $25 billion amounted to 1.8% of GDP in 2003. China's trade liberalisation has created an attractive business environment and therefore has had a significant impact on FDI inflows. ...read more.

Conclusion

All factors including industrial output, increased productivity and efficiently within the industry, high level of consumer saving, early consumption and Government policies have all had an impact on the outcome of economic growth. China has the potential to continue its rapid growth in the foreseeable future. The factors that have propelled growth over the past 30 years are still in place. China's economy is still a long way from "mature" status where growth rates tail off. If the Chinese Government wishes to keep their economic growth at such a high rate, they must face challenges such as exchange rates, structural imbalances and a troubled banking system, in order for them to continue to grow As long as China maintains an open attitude toward foreign investment and invests heavily in infrastructure and other capital, it will continue to grow rapidly. 1 Table 1- source/information from internet site: www.uscbc.org - The US-China business council 2 Table 2 - source/information from internet site: www.imf.org - The International Monetary Fund 3 As stated by, "China: A study of dynamic Growth"...www.ers.usda.gov 4 Data from www.imf.org 5 Source/information - World Bank and UN Commodity Trade Statistics as reported in World Bank (2004), Table 13.2 6 Graph - UN Commodity Trade Statistics Database (COMTRADE) 7 Source: China's Customs Statistics 8 Source/information - IMF Balance of Payments Statistics (2006) 9 Source/information - IMF Balance of Payments Statistics (2006) 10 Source - World Bank World Development Indicators Database 11 Data from http://www.uschina.org/ 12 OECD (2003) op. cit., pp. 37-40 13 http://www.uschina.org/statistics/2004foreigninvestment.html 14 OECD - China's industrial linkages: Trends and policy implications.p7 15 OECD - China's industrial linkages: Trends and policy implications.p.7 16 Information - http://www.index-china.com/index-english/agr-reform-s.html 17 Source - China national Bureau of Statistics 18 In comparison, the U.S. savings rate was 10.7% in 2004. Savings defined as aggregate national savings by the public and private sector as a percentage of nominal GDP- Economist Intelligence Unit database ?? ?? ?? ?? ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    Discuss the extent to which globalisation has been beneficial to Africa, China, America or ...

    5 star(s)

    the lower cost per unit of output as an industry or firm expands. Britain and the USA have benefited from this tremendously, as it has allowed them to produce pharmaceutical and aeronautical products very cheaply compared to what they would have had to pay if they were unable to sell abroad.

  2. Marked by a teacher

    Discuss the extent to which the fast economic growth of China and growth of ...

    5 star(s)

    Moreover, the increased competition from China will force American and European firms to become more efficient, dynamically and productively, in fear of losing market share and having to leave the market outright. This may encourage innovation, as firms will develop new techniques to lower costs and increase output.

  1. The Impact of Globalisation upon the Japanese Economy

    Globalisation in this instance does not help as it makes it harder to compete and restructure the economy. Economic growth has slowed with the indication from the Real GDP growth as shown in Figure 3. Figure 3 Source: Department of Foreign Affairs and Trade Australia.

  2. Economic Growth HSC Notes

    In 2008, at the peak of the commodities boom, the TOT was at its highest level in the past 50 years, fuelled by the soaring commodity prices as a result of the growing resource demands from rapidly industrialising economies such as China.

  1. 'Critically assess the role of the World Trade Organisation (WTO) as a means of ...

    The aim of this is to provide knowledge, so they may implement steps to instigate further progress and development in each individual country.6 In the run up to the 2001 ministerial conference, a number of proposals for framework agreement on special and differential treatment were recommended.

  2. Compare and contrast the levels of economic development in the regions of Europe and ...

    Almost all European countries maintain national airlines, and several, such as Air France, British Airways, Swissair, Germany, and Netherlands are major worldwide carriers.13 Looking at both economies and trade, it is unquestionably obvious that Europe conducts substantial international trade compared to Africa.

  1. The value of world trade has been growing at a faster rate than world ...

    A reduction in protectionism creates increased ability to make use of comparative advantage, which is synonymous with greater trade flows. Comparative advantage is where the internal opportunity cost of producing one good in terms of another is lower in one country.

  2. Comprehensive Anatomy of China

    Significant mineral deposits also play a large role in Northeast China's economy, with petroleum, coal and iron being noteworthy. In 1984, Dalian was the first state approved economic and technical development zone in China. Since then it has become the regions principal seaport due to its numerous berths and booming industrial structure.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work