Made in China

Economic Globalization in the

Formerly Socialist State

Sam Reynolds

Global History IV Term Paper

February 27, 2008
 I. Introduction
China has long been on the cutting edge, a leading world power in
militarily, political, and economic forces. Today the rising challenges of
globalization have brought opportunity to the country, however much of the
major economic opportunity is seen by relative few. After a series of reforms
in the last half of the twentieth century, the People’s Republic of China has
moved to a kind of state-capitalism over its highly socialist past, and large
multinational corporations have both formed domestically and have moved
in from abroad. Though corporate globalization has brought an enormous
economic boom to China, the majority of this wealth is consolidated to the
politically powerful and economically affluent elite class, leaving a large
portion of China’s 1.3 billion residents a poor, peasant proletariat, exploited
by the worst of both socialism and state-capitalism.

II. Causes
After WWII, China’s government and economy came to be controlled
by the communist party. The promotion of socialist ideals to the people was
somewhat intended to create a sense of community and induce sharing
among neighbors. However through greedy government officials and other
corruption, the people began to loose the resources they were entitled to,
until they had become as poor or poorer that they had been under imperial
reign. (Riskin) Under such dire conditions some will share what they have like
good communists, while others learn of greed, self-survival, and economic
Darwinism. As mentioned the country underwent a series of reforms in the
late 1970s and early 1980s that resulted in the Chinese economy taking on
capitalist characteristics, such as stock markets, corporations (though in
some cases state-owned), and international “free trade.” (Gabriel) Those who
learned how to best survive under the socialist system, typically those with
political power, could now legally use the tactics and habits of self-service
that they had developed. (Nanto)
Governmental corruption is well known to exist in socialist states; this
corruption does not vanish overnight with the appearance of commercialism
and enterprise. (Gabriel) It should be noted that many who benefited in the
socialist system now continue to hold political power, and many additionally
now have corporate interests, through stock or otherwise. (“Still in Mao’s
Shadow”) Officials and politicians have pushed for privatization not only
domestically but have aggressively pursued international trade for
profit−globalization. (Wu)
The push to privatization in comes not only internally, but from
Washington, Tokyo, as well as the general international voice of capitalism.
The major motivating factor in pressuring China to become capitalist was no
doubt the conclusion that the nation of over one billion people was a largely
untapped treasure house of goods and services to be profited from, were it
not for those pesky, ideological communists. And so the foreign political

Page | 2
capitalist giants, backed by their own corporations, added pressure to
China’s leaders to open up to trade. Trade agreements were solidified when
the nation became a member of the World Trade Organization (WTO) in
2001. (“Member information: China and the WTO”)
The WTO has received both praise and criticism around the world for
its work, which particularly focuses in developing nations. The stated goal of
the WTO is “to help producers of goods and services, exporters, and
importers conduct their business” in international markets, by way of
creating and enforcing agreements between its members, such as reducing
tariffs or other barriers to trade. (wto.org) The one of the main criticisms of
the WTO is that it favors large multinational Western-based, profit-oriented
corporations, which through WTO regulations often gain a great deal of
access to a much less developed economy, which in many cases accusations
of exploitation are prominent. (Larn, Street)
The World Bank is also a large international financial organization that
works in developing nations, and again has drawn much criticism. (Uvin) It
works by loaning nations large sums of money−in the amount of often
millions or even billions of US dollars−that are theoretically used to spur
growth and development, and through the “trickle-down theory” promote
poverty reduction and increased living standards for all. (worldbank.org)
Criticism for the Bank comes in the form that loans are used as leverage to
impose policies or other political ends that favor Western interests, as it is a
largely US directed institution. (Uvin)
It is not in dispute then that China’s accession to the WTO and the
World Bank has created a new conduit through which multinationals much
more easily reach its rapidly growing economy; whether or not it is beneficial
or harmful is subjective to one’s viewpoint, and this will next be discussed.

III. Effects
Environmental concerns should not be regarded as ‘special’ concerns,
because changes in this area will ultimately directly or indirectly affect us as
well, as we ourselves have proven to be a force in the ecosystem and
climate; China then, accounting for approximately a sixth of the human
population will have a dramatic effect on the environment for better or
worse. The country’s environmental standards are much lower than many
Western countries’ and what regulations exist are commonly overlooked, not
necessarily out of ignorance but in an attempt to not hamper economic
development. As a result China has become an attractor for polluting
factories, as multinationals have intentionally relocated their polluting
operations to the nation. (Li)
Additionally, energy has been called the key to development,
especially in industry. The majority of China’s energy production, as in the
United States, relies on either coal or petroleum, both fossil fuels. The
damage the burning of these readily abundant products cause include
carbon dioxide, a primary contributor to global warming, and acid rain, a

Page | 3
toxic threat to agriculture, water supply, and the natural ecosystem.
(“China”)
The political implications of globalization are extensive, as political
forces nearly always follow the economic. As mentioned, institutions such as
the World Bank and the WTO may to some extent influence policy decisions,
and specifically those related to business. (Larn, Wu) Further, it can be
expected that corporations that have traveled half way around the world to
make a profit will yield whatever political muscle they have, through lobbying
in their home country or otherwise, to promote that end. (Street) As China
becomes evermore privatized, it should be expected that more and more
policy will be linked to commercial interests.
A growing class inequality has been an issue since the economy was
reformed thirty years ago, and today still concerns some Chinese protesters,
whose demonstrations occasionally even turn violent. And despite promises
of wealth and democracy, much of the rural interior sees little if any of the
benefit that some on the more urban eastern coast do. (Riskin)
As happens in societies throughout history−both socialist and
capitalist−the poor are left behind as the most powerful of society grow
wealthier. As a result of the denying the poor adequate resources, the poor
are struck with a great array of issues, often including a lack of or insufficient
nutrition, healthcare, and education, and thus in many ways the quality of
life is reduced. As mentioned above much of China’s poverty is found in the
rural interior, where many are considered at or below the “poverty line.”
(“Country Brief”)
There is great discrepancy among estimates for the exact number as
there is a great variety of definitions of what constitutes poverty in China.
Most experts agree that the number of Chinese living in “extreme
poverty”−less than US$1 per day−has fallen since the early 1980s. However
it is possible to make the argument that because one is living above $1 per
day does not necessarily mean they have come out of poverty, nor does it in
itself prove that the trend is typical of the entire economic strata.
Additionally, the accuracy of the figure (originally put out by the Chinese
government and published by the World Bank) has been called into question
over if it properly reflects inflation figures, nutritional data, and income
versus expenditure ratios. While estimates are disputed, poverty rates
(again, people living on less than $1 a day) tend to fall around 12 to 15
percent, with estimates as high as 25 percent of the rural population. Poverty
in urban areas (supposedly where the economic boom is occurring), though
apparently lower than rural rates, seems to be on a steady rise. (Riskin)
Labor issues are often brought about in poorer communities, where the
destitute are more desperate to work regardless the nature or conditions of
the labor. Though some small progress has been made in the last decade,
child labor has long been an issue. Workers must show identification cards
showing that they are at least 16 years old, the legal working age, when
applying for a job. Many desperate parents, unable to pay school tuition,
must send their children to work at a much younger age in order to

Page | 4
supplement their insufficient incomes just to feed themselves. Education
foregone, many children forge identification cards in order to be hired and
support their family; thus it is difficult to get an estimate of child labor
occurrence, though some estimates are as high as ten percent of those
under the age of 16 hold fulltime jobs. (Carroll) It is common for underage
workers to be employed for toiling, unhealthy, or hazardous work for
industrial factories, cheaply producing products that are to be sold for
hundreds of times the production cost though multinational corporations
from abroad. (“As China’s Economy Grows…”)

IV. Possible Solutions

For some, a solution to economic globalization may seem not at all
warranted, for perhaps ideological reasons or contentment with the present
hegemony. However for others, there may be a questioning of motives of
those who exploit the poor for personal and nationalistic gains. And if those
actions are found to be in contempt, then the question is raised, what are
we, or rather the Chinese people, to do about it?
Option 1: Continue reform process. China may perhaps be going
through transitional issues, but given enough time a true democratic system
will prevail, and the Chinese people through the ballot and reform will decide
what to do about economic globalization. After all, it has only been a
relatively short time−30 years−since the first reforms were implemented,
and many of the leaders from before this period are still in power, so once
their time is up perhaps the country may see change all on its own.
Option 2: Encourage China’s leaders to discontinue WTO and World
Bank membership. Trade should be decided on China’s own terms, not by
international deliberation, perhaps biased toward corporate interests. If some
honest leaders truly have their people’s interests at heart, then perhaps they
will realize what privatization is doing and will implement measures to
counter this. Perhaps, contrary to WTO regulations, if China were to tax to
foreign multinationals operating in their country, the income could be used
to fund ‘safety nets’ for the poor.
Option 3: Revolution. The people cannot wait for delayed, bureaucratic
intervention governed by corrupt officials who may have their own personal
gains at heart, if they act at all. As the corporate towers rise up, they watch
the people fall.

V. Best Possible Solution

Though drastic, the quickest, most thorough solution to stop the
people’s exploitation would be to take control of matters for themselves
through a seizure of the elite class. This solution offers the chance to
effectively remove the institutionalized exploitation through both profit-
based corporations as well as the corrupt state. Though it would ultimately
be decided by the Chinese people, the revolution could be anarchist or
anarcho-communist in nature, which would not necessarily allow for the
return of corrupt officials. A revolution however has at least two challenges

Page | 5
worthy of consideration; to remove such an extensive and powerful ruling
class, a revolution may become violent, and such a geographically large
country could have issues with reunification.
However, it is unlikely that any good number of China’s leaders will act
decisively for the people’s true interests in the foreseeable future, thus
waiting for a result from them while tens of millions of people waste away in
squalor is most likely a futile effort. It would not be wise though to
completely rule out reform, as it seems any revolution would be sometime in
the future; reform measures may save the country from violent overhaul, or
make a revolution more peacefully transitional. In any case, with a ‘clean
slate,’ a more democratic system could create the existence of a power “of
and by the people.”

VI. Conclusion
It must be realized that any given policy implemented, including
continuing the current trend, in the most populous country on the planet
may affect the lives of tens or even hundreds of millions of individuals for
better or worse. Although there is sure to be plenty of controversy and
disagreement upon economic globalization in China, hopefully the
implementers of any policy will remember that the Chinese people are as
human as they themselves are.

Page | 6
 Works Cited

Carroll, Jessica, Kristen Jo Eby, Daniel Gonzales, and Matt Rigberg."Child Labor in
China." Child Labor in China. 7 Dec. 1999. Tulane University. 3 Feb. 2008
<http://homeport.tcs.tulane.edu/~rouxbee/kids99/china2.html>.

Davis, Mike. "Corporate Globalization: Overseas Sweatshops Destroy U.S. Garment

Industry." Corporate Globalization: Overseas Sweatshops Destroy U.S. Garment
Industry. 25 Aug. 2004. Organic Consumers Association. 31 Jan. 2008
<http://www.organicconsumers.org/corp/sweatshops8272004.cfm>.

Gabriel , Satya J. "The Transition from State to Private Capitalism in China: The
Network of Distributive Class Payments, Modernization, and Growth of the " New
Social Strata": Is Capitalism in China to Stay?." The Transition from State to Private
Capitalism in China: Is Capitalism in China to Stay?. 1 June 2003. Mount Holyoke
College. 20 Jan. 2008
<http://www.mtholyoke.edu/courses/sgabriel/economics/china-essays/18.htm>.

Jintao, Hu. "Why China Loves Globalization." Why China Loves Globalization by Hu
Jintao - The Globalist. 7 June 2005. The Globalist. 18 Jan. 2008
<http://www.theglobalist.com/storyid.aspx?StoryId=4606>.

Kurtenbach, Elaine. "Monsanto Soybean Patent." Monsanto Soybean Patent . 13 Dec.

2001. Organic Consumers Association. 25 Jan. 2008
<http://www.organicconsumers.org/monsanto/chinapatent121701.cfm>.

Larn, Willy Wo-Lap . "China's WTO membership -- now the hard part begins."
CNN.com - China's WTO membership -- now the hard part begins. 13 Nov. 2001.
CNN. 31 Jan. 2008
<http://archives.cnn.com/2001/WORLD/asiapcf/east/11/13/willy.column/index.html>
.

Li, Zijun. "Report: Multinational Corporations in China Lag on Environmental

Protection." Report: Multinational Corporations in China Lag on Environmental
Protection. 12 Dec. 2005. World Watch Institute. 25 Jan. 2008
<http://www.worldwatch.org/node/3858>.

Min, Shi. "Economic Globalization and China ." Economic Globalization and China . 1
The Chinese Center for Third World. 4 Jan. 2008
<http://www.china.org.cn/english/OP-e/2271.htm>.

Nanto, Dick K. "East Asian regional architecture: new economic and security
arrangements and U.S. policy. (Report)." Congressional Research Service (CRS)
Reports and Issue Briefs. Congressional Research Service (CRS) Reports and Issue
Briefs, 2006. NA. Student Resource Center - Gold. Gale. K12 Trial Site. 25 Jan. 2008.
<http://find.galegroup.com/srcx/infomark.do?&contentSet=IAC-
Documents&type=retrieve&tabID=T001&prodId=SRC-
1&docId=A158525625&source=gale&userGroupName=k12_srcg&version=1.0>.

Page | 7
Peixin , Zha . "China and Globalization." China and Globalization . 10 Oct. 2003.
Chinese Embasy. 18 Jan. 2008 <http://www.chinese-
embassy.org.uk/eng/dsjh/t27161.htm>.

Riskin, Carl. "The Fall in Chinese Poverty: Issues of Measurement, Incidence and
Cause." 1 Mar. 2004. Queens College and Columbia University. 25 Jan. 2008
<http://www.peri.umass.edu/fileadmin/pdf/conference_papers/Riskin_paperA.pdf>.

Street, Paul. "Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony."
ZNet - Corporate Globalization - Bush, China, Two Deficits, and the Ongoing Decline
of U.S. Hegemony. 27 July 2005. Z Communications. 31 Jan. 2008
<http://www.zmag.org/content/showarticle.cfm?ItemID=8384>.

Uvin, Peter. “On High Moral Ground: The Incorporation of Human Rights by the
Development Enterprise.” 1 Jan. 2002. The Fletcher Journal of Development Studies.
2 Feb. 2008 <http://fletcher.tufts.edu/praxis/archives/xvii/Uvin.pdf>.

Wu, Friedrich. "NBR Analysis: The Globalization of Corporate China." 1 Jan. 2005.
NBR. 31 Jan. 2008 <http://www.nbr.org/publications/analysis/pdf/vol16no3.pdf>.

Yahuda, Michael. "China's Win-Win Globalization." China's Win-Win Globalization. 19

Feb. 2003. Yale Center for the Study of Globalization. 4 Jan. 2008
<http://yaleglobal.yale.edu/index.jsp>.

"A workers' manifesto for China." The Economist 13 Oct. 2007: 90.

"As China's Economy Grows, So does China's Child Labour Problem." As China's
Economy Grows, So does China's Child Labour Problem | CLB. 1 Jan. 2008. China
Labour Bulletin . 3 Feb. 2008 <http://www.china-labour.org.hk/en/node/100001>.

"China." CIA - The World Factbook -- China. 12 Jan. 2008. United States Central
Intelligence Agency. 18 Jan. 2008 <https://www.cia.gov/library/publications/the-
world-factbook/geos/ch.html>.

"Country Brief." China - Country Brief. 1 Jan. 2007. The World Bank. 8 Jan. 2008
<http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/EASTASIAPACIFICEXT/CHI
NAEXTN/0,,menuPK:318960~pagePK:141132~piPK:141107~theSitePK:318950,00.h
tml>.

"Economics in China." Economics in China. 1 Jan. 2002. essortment.com. 28 Dec.

2007 <http://www.essortment.com/economicschina_rjns.htm>.

"Member Information: China and the WTO." WTO│China - Member information.World

Trade Organization. 4 Jan. 2008
<http://www.wto.org/English/thewto_e/countries_e/china_e.htm>.

"Still in Mao's Shadow." The Economist 13 Oct. 2007: 43.

Page | 8