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The impact of Globalisation on China and strategies used to promote economic growth

and development.
Brayden Kelly

Introduction
Globalisation is the process of increased integration between different economies, Globalisation
encourages international trading and economic growth, and China has benefited greatly from this. China
is the world’s fourth largest economy in the world, and has been the fastest growing economy in the world
with an average rate of growth in real GDP of 10% per annum and poverty has been reduced dramatically.

Over the past 30 years the average export levels have increased by 20% annually. This shows that
China’s international trade levels have increased due to Globalisation and there has been an increase in
employment opportunities. Other impacts of Globalisation include:

Impacts
The first impact of globalisation in China is increased Foreign Direct Investment. In 1984, China
introduced the "Open Door Policy" that allowed Globalisation into designated Special Economic Zones.
This increased Capital Expenditure is a result of foreign investors believing that with capital formation
and China’s cost effective labour force, an advantage in labour intensive manufacturing could be created.

The second impact of globalisation that has created economic growth in China is increased International
Trade. In 2001 China joined the World Trade Organisation which reduced Chinese trade protectionism.
This increased China’s access to foreign consumer markets which increased aggregate demand for
China, increasing Chinese exports growth of 30% of GDP from 2001-2006. This exposure to foreign
consumer markets has resulted in the international business cycle transmitting periods of economic
decline into China.

Globalisation has increased foreign trade benefits as it allows china to increase production and GDP
through exports whilst subjecting itself to global economic downturns.

The third impact of Globalisation that has generated economic growth in China is the increased
involvement of TNC’s. The growth of TNC's has created positive and noticeable economic growth as
TNC’s have increased employment opportunities resulting in a more efficient usage of China’s labour
force.

China has also joined numerous bilateral free trade agreements. Free trade agreements promote stronger
trade and commercial ties between participating countries. China has commenced a free trade agreement
with Australia to remove trade barriers and as a guarantee for sustained mineral resources.

Economic Growth
Economic growth is a measure of a nation’s output of goods and services over time measured in the
percentage rate of increase in real GDP. Economic development is the various qualitative measures of
living standards.
China is the second largest recipient of Foreign Direct Investment in the world. They were receiving $100
Billion USD in 2011, which is up 10% year-on-year. In relation to economic development, Chinas
strategies to promote globalisation have been beneficial on economic development seeing that the HDI
increased from 0.5 in 1975 to 0.7 in 2013.

Strategies
One of the strategies undertaken to promote high economic growth was the “Open Door Policy”. This
strategy was extremely beneficial for the Chinese economy as it started by setting up the Special Economic
Zones in southern coastal provinces, to attract foreign trade and investment; it offered low tax rates,
cheap labour and less regulation. Most importantly this strategy integrated China in the global economic
market and had a great impact in promoting high economic growth and development.

The government has created health care policies to increase the life expectancy of the population and this
has led to a higher standard of living for the poor. The Chinese government has spent $120 billion over
the past three years to extend insurance coverage to 95% of the population while also improving access
to hospitals and clinics.

In 2001, China gained access into the World Trade Organisation in response to the globalisation trend and
reduced its trade barriers, opening up to foreign investments and international trade. The WTO is
beneficial to the Chinese economy as it further enhanced the spirit of integration and trade
liberalisation.

This strategy has brought major beneficial changes in its economy such as having access to the world
market, attracting foreign investment, adopting new ways of management, and the access of new
technologies. In 2010, China contributed 15% to global growth and accounted for 10% of world
merchandise trade. In the same year, they became the second largest goods trading nation in the world
after the USA.

China has also pursued unsustainable practices to maximize opportunities of globalisation, they have
possibly become too absorbed in becoming the fastest growing economy with such high growth,
development and HDI levels that environmental issues are not seen as being important, therefore this issue
is just being ignored.

Environmental issues including air pollution, water contamination, land degradation, loss of habitat,
loss of grassland, as well as the spread of a lot of diseases such as lung cancer and inefficient waste
disposal will soon diminish the level of economic growth as China is depleting its natural resources.

Conclusion
Chinas various strategies such as the “One Door Policy”, health care policies, reducing their trade
barriers, international trade and new technologies used to promote and benefit from globalisation have
impacted economic growth and development substantially and positives of increases in GDP, Quality of
Life and standard of living outweigh environmental degradation, exposure to economic downturns and
income inequality.

Globalisation has also provided competition for domestic industries, encouraging high efficiency and
competitiveness. However, the growth in the economy has also caused environmental problems such as
degradation and pollution, which the government have showed interest in managing, but have so far
failed to reinforce the policies established to protect the environment.

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