Effects of globalisation case study- China Essay

mainland china is the worlds ordinal extensivest economy and the immensest country in terms of world size. It has in any case perish the 8th largest world exporter of manufactured goods and the second largest economy in the world, aft(prenominal) the United States, on the basis of purchasing power parity. The impact of globalization on chinaw be has been profound, having an impact in a number of assorted argonas.Government Strategies to promote economic growth and developmentBetween 1978 to 1994 mainland China abandoned agricultural collectivisation, replacing it with a system of household responsibility, allowing individuals to start out their own issue decisions. Individuals could sell their surplus output in publish markets after the state quota was met. This lead to dramatic increases in food production and incomes. Surplus income was invested into privately run town and village enterprises responsible for elucidation manufacturing. The judicature also increased t he authority of topical anaesthetic officials and plant managers in industry and permitted a wide variety of small-scale enterprises in go designed to increase productivity with the profit incentive. Today, non-state economies account for 40% of Chinas gross domestic product (GDP).In 1980 special Economic Zones were established in the southern coastal provinces of China as a result of its Open Door policy, adopted towards abroad job and investment. These zones attracted foreign investment by dint of incentives offered much(prenominal) as low evaluate judge, exemption from import duties, cheap labour and power, and less(prenominal) stringent regulations. This resulted in an increase in trade from 10% of Gross National result (GNP) in 1978 to 36% of GNP by 1996. In 1992 tariff rates were reduced from 32% to 19%, supporting Chinas require for foreign investment.Economic growth, development and tint of breedingChina has been experiencing a high rate of economic growth abov e 10% per annum. It uses foreign investment funds to finance export industries, enabling it to maintain large foreign currency reserves and receivetechnology transfers from industrial countries. high productivity and the increased flow of money entering China as a result of globalisation wee-wee been increasing development and the quality of life, reducing the number of people below the poverty line. Although incomes in China are very low, the poverty line reflects absolute poverty ground on the minimum subsistence necessary to maintain life. Higher incomes nonplus allowed for more(prenominal) investment for further development in the country and subsisting standards. The life forethought at birth has also dramatically increased from 35 in 1950 to 72 in 2002.The Human Development Index is a number less than 1 (1 being the highest) calculated to enable the likeness of standards of living across different countries. It is based on life expectancy at birth, directs of education al attainment and gross domestic product per capita. China has a Human Development Index of .721, making it a intermediate developed country.Global Trade, Investment and Transnational CorporationsGlobalisation and trade have had a great impact on China.. Nearly 400 of the leave 500 Transnational Corporations (TNCs) have opened business or invested in China. By July 1999, China had 334000 abroad-invested enterprises with actual investment of US$288.94 billion.China ranks as the top exporter of many labour intensive products such(prenominal) as garments, shoes, pin grass and bicycles and over the past few years many TNCs such as Streets ice cream have moved their operations to China to take advantage of low production costs. These low costs are due to the tens of millions of young job seekers ready to work for even less than the official minimum monthly wage of 700 yuan. Although they provide vocation, workers are practically forced to do long shifts often under poor conditions in narrate to support themselves and their families.TNCs have moved(p) the development of local businesses that are unable to update their technology as often as large, foreign companies. Outdatedtechnology means that their resources are not apply as efficiently, reducing productivity and forcing wages to remain low. Unable to make out with large multinational firms and wealthy nations, small businesses have been forced to do business locally, never growing and reaching their full potential. Larger businesses that have been able to keep up with changing technology, however, have greatly benefited through increased productivity as a result of the increased level of technology brought about by globalisation.Distribution of Income and WealthDespite fair(a) incomes cost increase, income and social dissimilarity in China have grown amidst rural and urban populations. Chinas growth and development are very dependent on the Special Economic Zones in the southern provinces which ar e dominated by foreign investment and technology. People living in these areas earn approximately 20000 yuan a year. In contrast, the Federal provinces that rely more on agricultural production for the generation of income and employment opportunities earn an average of less than 6000 yuan per year. This is the study cause for inequality in the distribution of income. The top 20% of income earners receive 42.5% of the countries GDP. By internationalist standards, China has entered a zone of income distribution inequity.Environmental ConsequencesGlobalisation has contributed to the decline in quality of the environment in China due to a loss of arable land as a result of economic development. An increased population growth in urban areas as people move to be closer to factories results in the clearing of large areas of land and a turn over on resources. China, unlike many developed countries does not have passing strict standards on the disposal of shove off. Factories set up by overseas companies often create a lot of pollution and dangerous waste product not always properly disposed of in order to cut production costs. Persistent organic pollutants and the exploitation of fisheries pose major threats to the environment. High levels of energy use bear a large responsibility for man made greenhouse gasses in the atmosphere. These factors contribute tolarger problems such as global warming and ozone depletion. The integration of pecuniary markets and trade relationships has also increased the risk of contagion.Global Financial Markets and The global subscriber line CycleWith more large businesses moving to China, there was a large demand on funds from the financial markets. China, however, does not have a financial market competitive with overseas markets. Many Chinese financial institutions are also required to lend money, under government policy, to government businesses, which are often inefficient, depleting the supply of funds. For this reason, m ost of the money is generally borrowed from overseas institutions.Like all economies, China acts as a part of the International Business Cycle, moving through booms and recessions. This connection to global movements is heightened as a result of globalisation. The Asian Crisis of 1997 is an example of this. As people lost self-reliance in Asian economies and withdrew money from investments affecting economies through lost output, rising unemployment, higher inflation and poverty. China was not as badly affected in this crisis as other Asian countries. This was because foreign investment was in the form of assets rather than shares. This meant that investors were not able to withdraw their money speedily as they were in other Asian countries.