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Economics Analysis of Globalisation in China

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Economics Analysis of Globalisation in China essay

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Globalization refers to the increasing economic integration and interdependence between countries across a national, regional, and local scale. The intensification of movement of goods, services, and capital across multiple borders with the reduction in trade barriers, allows all domestic economies to combine together as one global economy.  Both positive and negative impacts can arise from the introduction of globalization in an economy. Nations can benefit as they begin to see a large increase in emerging transnational corporations (TNC’s). Impacts of globalization can become detrimental to an economy as local businesses are forced to compete with new TNC’s who have lower costs of production. China’s decision to integrate and trade with other economies globally has seen them experience both positive and negative impacts as a result.

The Chinese government has implemented strategies to promote economic growth and development. One of China’s major strategies to boost economic performance was through agricultural reforms. This was achieved by adopting the Household Responsibility System (HRS) instead of the existing commune system. This enabled households to make their own production decisions as well as being able to sell any surplus in free markets once the state quota had been exceeded. As a result, industrial output raised significantly, and subsequently poverty levels decreased dramatically increasing the quality of life for most of the population.

Globalization and Manufacturing in China

Globalization has attracted numerous TNC’s to situate manufacturing plants in China. This is due to the ability to exploit China’s comparative advantage through appealing cheap labor costs. As a result of an increase in TNC’s, the unemployment rate decreases alongside poverty rates. Due to more of the population being able to work, the overall quality of life tends to increase according to the Human Development Index (HDI). The HDI of a country is an accurate and suitable way to measure various factors of a nation relating to the quality of life. The primary three dimensions HDI measures are long and healthy life, Knowledge, and a decent standard of living.

This indicates how there has been a major increase in all measures of HDI since the introduction of globalization. With unemployment rates falling, households now have more money to invest as shown through the vast increase in GNI. This is then spent on better education and health for families evident with the significant change from 1990 to 2014 as shown in Table 1.0. Ultimately increasing China’s overall HDI. The increase in China’s statistics of HDI factors, is a direct impact and clear evidence on how globalisation has boosted China’s economic growth and development.

Globalization in China has also threatened most of their labor force, in particular elder workers nearing retirement. With the introduction of new technology to produce goods much more efficiently, most of the factory workers are often finding themselves out of a job due to machinery. Many of these older workers, cannot learn new skills and in turn, find it harder to seek even temporary employment. A prime example is Li Dongsheng, aged 35, who has fallen victim to globalization. Li saying he is too old to learn new skills and therefore cannot keep up with the changes and trends in the demand for labor. With most of the labor force still being younger and stronger, workers like Li, find it even harder to compete for employment opportunities.

Globalization in China

Globalization has allowed China to achieve and maintain economic growth for the past two decades at approximately 6%-8%. As a result of this rapid economic growth, local resources have been consumed in high volumes, leading to increased levels of environmental degradation. Due to the increase in manufacturing plants and practices that do not aim to preserve the environment, China has experienced severe environmental problems such as resource depletion. Reports from the Organisation of Economic Cooperation & Development (OECD) have concluded that, unless pollution is controlled, there will be 600,000 premature deaths in urban areas and 20 million cases of respiratory illnesses per year by 2020. Other environmental issues face China, aside from carbon pollution, such as water pollution which further leads to water shortages and droughts throughout the country. Water pollution occurs due to inadequate disposal of household and industrial waste. It is estimated that only 20% of all waster is properly disposed of and only 10% of sewage correctly treated. The rest of this waste is dumped into lakes and rivers, contaminating sources of drinking water for most of the population. This incorrect and illegal disposal of waste acts as a major threat to the health and safety of individuals, reducing their level of quality of life.

To counteract these issues and threats caused by the manufacturing process, the Chinese government has vowed to increase the level of integration of renewable resources within production processes to 20%. From Fig 2.0, we can see how the purity level and conditions of the air in Beijing, was never safe for direct human exposure. The aim to eliminate emissions by 60%– 65% per unit of GDP will hope to reduce China’s carbon emissions produced, subsequently delaying and providing cleaner air and water supplies for the entire population, in comparison to what they could experience if they continued with no intervention.

The introduction of globalization has led to an increase in awareness of the positive effects and benefits of using environmentally friendly technology and practices. Developing countries often adopt those practices and technologies that are used in developed countries. As a result, an instant decrease in pollution can be observed. Within China, the welcoming of globalization as well as the scares from the effects of their bad habits and malpractice when disposing of waste. The Chinese government have since decided to become more vigilant and conscience of their ecological footprint, as well as the effect that their actions and practices has on the environment. This has been achieved through adhering to policies and legal regulations that must now be met by operations managers of individual businesses. By implementing strict legal regulations, businesses will begin to operate with resources that are not harmful to the environment nor potentially threatening the opportunity for future generations to access these resources. By using environmentally friendly technology, materials and practices, consumers will be more inclined to purchase from a company displaying these traits as they display good corporate citizenship. As a result of this, the greater economic output can be achieved and in turn, economic growth rises aswell.

Conclusion

China’s economy since the introduction of globalization has had both positive and negative impacts as a result. To boost economic growth, the Chinese government focused on agricultural reform. By replacing the existing commune system with the HRS policy. This allowed for free trade to slowly occur, enabling households to become self-sufficient, whilst also raising industrial output levels significantly. With the arrival of globalization, the quality of life has overall increased for more of China’s population, however, there are still cases in rural areas, where the quality of life has decreased. Globalization has still helped lift more people out of poverty, subsequently raising their quality in comparison to the number of people who have experienced the reverse of this. Initially, China’s environment was severely impacted by practices and incorrect disposal of waste, however, with the introduction of tighter policies and legal regulations, firms operating in China are no longer harming the environment as much as before. The Chinese government setting goals to reduce emissions by 65%, indicates how with globalization and economic growth, the environment does not have to be compromised. Overall, China’s interaction with globalization has proved to be more beneficial to the economy, rather than detrimental.

Reference List

  1. *No author*, “China has gained hugely from globalisation. So why are its workers unhappy?”, Website, The Economist, accessed 13/12/18, https://www.economist.com/china/2016/12/10/china-has-gained-hugely-from-globalisation
  2. Dr. Hong Lu, “A Changing Nation: The effects of globalisation on China”, Website, RSM, accessed 13/12/18,  https://www.rsm.global/australia/insights/finding-opportunity-change/changing-nation-effects-globalisation-china
  3. *No Author*, “Globalisation”, Website, accessed 13/12/18, https://www.bbc.com/bitesize/guides/zxpn2p3/revision/5
  4. United Nations Development Programme, “Human Development Reports”, Website, accessed 13/12/18,
    http://hdr.undp.org/en/countries/profiles/CHN
  5. Sylvanus Afesorgbor, “Globalization may actually be better for the environment”, Website, accessed 13/12/18,
    https://theconversation.com/globalization-may-actually-be-better-for-the-environment-95406
  6. Tim Riley, Year 12 Economics 2017, Textbook, accessed 13/12/18
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Economics Analysis of Globalisation in China. (2020, Nov 03). Retrieved from https://samploon.com/economics-analysis-of-globalisation-in-china/