Globalisation (China) and how it affects their economy.

1.
HSC
Economics
2015
Assessment
Task
1:
Globalisation
Case
Study
The
impact
of
globalisation
on
the
Chinese
economy
Name:
Brendan
Falk
BOS
Number:
28381476
Word
Count:
2469

2. Brendan
Falk
28381476
Page
2
Analyses the impact of globalisation on the economic growth, economic development and
quality of life of an economy other than Australia and comes to a conclusion that evaluates
the impact of globalisation on that economy.
In
an
increasingly
interconnected
and
internationally
minded
world,
the
impact
of
globalisation
is
becoming
progressively
more
prominent
in
each
and
every
country.
Globalisation,
defined
by
the
World
Bank
as
the
“growing
interdependence
of
countries
resulting
from
the
increasing
integration
of
trade,
finance,
people,
and
ideas
in
one
global
marketplace”
(World
Bank,
2004).
It
is
widely
agreed
that
globalisation
has
had
very
positive
effects
and
some
negative
consequences
(WTO,
2006).
In
our
inextricably
linked
global
market
place,
it
is
often
easy
to
discern
how
globalisation
has
affected
one
country
or
another.
China,
today’s
2nd
largest
economy,
has
been
notably
impacted
by
this
worldwide
integration.
This
essay
will
examine
globalisation’s
effects
on
China’s
economic
growth
and
development,
and
how
it
has
influenced
this
emerging
economy’s
policy
making.
Before
we
are
able
to
examine
the
effect
globalisation
has
had
on
China,
we
must
first
look
at
China’s
historical
influence.
Indicators
of
globalisation
can
be
traced
back
to
the
late
100
BCE
Western
Han
Dynasty.
The
famous
“silk
road”
through
central
Asia
was
pioneered
by
Chinese
merchants
who
looking
for
foreign
trade.
Over
time,
each
Emperor’s
opinions
differed
in
regards
to
foreign
trade,
some
shutting
China’s
doors
to
the
global
economy,
as
they
believed
China
was
self-­‐sufficient.
It
was
not
until
the
revolutionary
drive
of
party
leader
Deng
Xiaoping
in
the
mid
70s
that
China
began
to
open
up
to
the
world
economy.
As
such,
trade
almost
doubled
in
5
years.
Growth
was
at
9
per
cent
and
by
1980s,
China
committed
itself
to
opening
its
doors
to
foreign
investment.
China
soon
became
more
interlinked
with
the
world
than
it
ever
had
before.
Xi
Jinping,
China’s
current
president
said
himself
“As
economic
globalization
gathers
momentum,
China
and
the
United
States
have
become
highly
interdependent
economically.
Such
economic
relations
would
not
enjoy
sustained,
rapid
growth
if
they
were
not
based
on
mutual
benefit
or
if
they
failed
to
deliver
great
benefits
to
the
United
States.”
China
finds
itself
today
at
the
centre
of
the
globalised
world,
benefiting
greatly
from
this
recent
change.
Globalisation
is
one
of
the
major
driving
factors
of
economic
growth.
It
refers
to
the
“sustained
increase
in
real
GDP
over
a
period
of
time
and
thus
increases
the
productive
capacity
of
the
entire
economy
(Dixon,
2015).
In
the
past
two
decades
alone,
Chinese
growth
figures
have
been
sustained
between
8%
and
10%.
Globalisation
has
had
a
profound
influence
on
the
Chinese
economy
and
China’s
policy
has
further
encouraged
this
positive
impact.
China
has
slowly
changed
from
a
socialist/planned
economy
to
much
more
of
a
free
market
one.
It
is
no
longer
just
domestically
focused,
but
rather
is
trade
orientated
and
more
industrialised
than
agricultural
to
capture
the
benefits
of
globalisation.
It
has
an
international
focus
and
is
today
a
world
economic
power,
being

3. Brendan
Falk
28381476
Page
3
the
second
largest
nominal
economy.
The
main
drivers
of
this
continued
growth
(as
seen
in
the
graph
below)
can
be
attributed
to
foreign
investment,
financial
flows
and
trade
(or
more
specifically
net
exports).
With
the
global
economy
once
again
booming,
China
fits
into
the
international
business
cycle
and
has
slumped
into
a
5
year
low
of
GDP
growth
indicating
the
world
economy
really
does
have
an
influence
over
China’s
GDP
growth
rate.
http://www.tradingeconomics.com/charts/china-­‐gdp-­‐growth-­‐annual.png?s=cngdpyoy&d1=19890101&d2=20141231
Globalisation
has
many
indicators
and
these
all
affect
a
country’s
level
of
output.
China
is
now
part
of
the
world
economy
and
its
growth
and
economic
prosperity
is
dependent
upon
fluctuations
in
the
international
business
cycle.
This
can
be
particularly
seen
in
the
GFC
where
China
had
a
negative
growth
in
trade
of
20%
comparable
to
its
surrounding
years
of
a
positive
20%
growth.
In
addition,
its
FDIs
almost
halved.
In
the
midst
of
this
Global
Financial
Crisis,
China
was
able
to
implement
a
$586
billion
stimulus
package
to
rebalance
growth
and
direct
more
attention
to
domestic
consumption
and
investment.
China’s
strong
reserves
in
currency
as
well
as
fiscal
policy
enabled
it
to
be
on
of
the
only
countries
in
the
G20
to
avoid
a
major
economic
crisis.
China
is
heavily
influenced
by
the
surrounding
economy.
With
a
huge
development
in
technology,
the
flow
of
money
through
the
economy
is
more
efficient
than
ever
before.
Short
term
and
long
term
investment
can
reach
China
faster
and
therefore
strong
economic
growth
can
be
seen.
Last
year
along
over
$101b
was
invested
in
China
in
long-­‐term
foreign
direct
investment.
Further,
China
is
seen
as
a
major
trading
partner
with
all
advanced
economies.
Free
trade
agreements
such
as
the
one
Australia
recently
signed
with
China
remove
former
protectionist
policies
China
had
once
implemented
and
allow
China
to
be
more
and
more
influenced
by
the
global
market.
Huge
transnational
corporations
(such
as
Apple)
and
many
others
are
also
profiting
to
the
full
extent
of
the
Chinese
labour
force,
of
which
it
has
a
comparative
advantage
over
the
rest
of
the
world.
It
is
abundantly
clear
that
with
1.3b
people,
investing
in
a
cheap
labour
force
will
allow
domestic
profits
in
China
as
part
of
the
company’s
global
supply
chain,
but
also
allow
for

4. Brendan
Falk
28381476
Page
4
international
profits
for
the
business’
base.
This
sudden
boost
in
profits,
international
trade
and
therefore
economic
growth
could
never
have
arisen
if
it
wasn’t
for
China
opening
itself
up
to
the
world
implementing
policy
directed
towards
a
successful
future.
The
level
of
economic
growth
has
a
tendency
to
affect
the
level
of
economic
development
of
a
nation.
The
United
Nations
first
devised
this
term
and
created
an
internationally
accepted
standard
for
its
measurement.
This
Human
Development
index
aims
to
“incorporate
all
aspects
of
individuals’
well-­‐being,
from
their
health
status
to
their
economic
and
political
freedom”
(World
Bank,
2004)
and
to
measure
all
round
how
developed
a
nation
is.
A
change
in
China’s
HDI
can
be
seen
in
the
graph
below.
Over
the
course
of
the
past
30
years,
all
aspects
of
China’s
economic
development
has
increased.
In
particular,
China’s
GNI
per
capita
had
a
mass
shift
from
$1,500
PPP
to
$11,500
PPP
over
the
last
20
years.
This
increase
could
be
reflective
of
its
strong
economic
growth
and
its
success
being
passed
onto
the
population
through
income.
Aside
from
its
improving
HDI
figure,
other
aspects
of
China
as
a
nation
have
significantly
improved.
Over
the
past
20
years,
the
World
Bank
estimates
400
million
people
in
China
no
longer
live
below
the
poverty
line
(130
million
occurring
between
1990
and
2001
alone).
It
was
during
this
period
that
revolutionist
policies
were
continuing
to
be
carried
out
in
China
–
large
scale
privatisation
was
occurring,
trade
barriers
were
being
lifted
and
there
was
a
mass
increase
in
foreign
direct
investment.
Chinese
real
incomes
rose
significantly
and
therefore
so
did
non
material
indicators
of
development
such
as
health
(life
expectancy)
and
education
(literacy
rate).
Rapid
economic
growth
has,
however,
led
to
incredible
inflationary
pressure
that
is
only
now
being
alleviated
due
to
China
tightening
its
monetary
policy.
The
Chinese
financial
system
is
being
greatly
burdened
by
former
loans
to
state
owned
enterprises
and
this
investment
is
not
paying
off.
Globalisation
had
a
massive
influence
on
the
way
all
1.3
billion
Chinese
citizens
live
today.
With
the
largest
population
(and
labour
force)
in
a
country
in
the
world,
globalisation
has
impacted
http://hdr.undp.org/sites/default/files/Country-­‐Profiles/CHN.pdf

5. Brendan
Falk
28381476
Page
5
Chinese
employment
greatly.
Currently
China’s
unemployment
value
is
averaging
at
around
4.1%.
These
figures,
however,
can
often
be
misleading
as
there
estimated
to
be
10
million
workers
who
are
not
accounted
for,
as
they
have
been
made
redundant
through
failed
state
owned
enterprises
or
due
to
underemployment.
Either
way,
unemployment
is
an
enormous
problem
in
China
and
the
government’s
solution
to
it
is
“pump
priming”
its
economy.
It
tries
to
keep
GDP
growth
above
8%
in
order
to
keep
its
citizens
employed.
However,
in
2008
during
the
GFC,
unemployment
rose
rapidly
due
to
the
slump
in
economic
growth.
The
Household
Responsibility
System
in
China
also
prevents
movement
within
the
labour
market.
People
are
not
allowed
to
relocate
under
the
system
and
it
is
particularly
an
issue
for
peasants
trying
to
move
to
the
city.
This
is
clearly
an
inefficient
allocation
of
resources
by
China
in
order
to
maintain
production
of
agricultural
goods.
The
employment
by
sector
and
by
industry
has
also
been
affected
greatly.
As
portrayed
in
the
graph
below,
China’s
employment
has
shifted
greatly
in
past
20
years.
It
can
be
seen
in
1991,
employment
in
the
primary
industry
peaked
but
then
began
falling
as
soon
as
China
opened
itself
up
to
the
world
market.
There
was
a
great
shift
in
the
structure
of
employment
from
agriculture
to
manufacturing
for
exports
and
today
predominately
services.
China
attempted
to
become
a
bigger
player
in
the
world
market
and
hence
it
modernised
its
nation
too.
In
the
space
of
25
years,
over
125
million
people
relocated
from
rural
to
urban
areas
in
search
of
a
better
way
of
life
through
better
job
opportunities.
Globalisation
has
brought
much
more
efficient
and
better
technology
to
China
and
the
change
in
employment
reflects
this.
http://www.tutor2u.net/blog/images/uploads/china-­‐sectors-­‐employment.jpg

6. Brendan
Falk
28381476
Page
6
Over
the
past
20
years,
it
is
abundantly
clear
that
China
has
had
the
fastest
rise
in
living
standards
in
the
world,
however,
has
globalisation
helped
or
hindered
China’s
quality
of
life?
Despite
some
improvements,
100
million
Chinese
people
are
still
officially
classified
as
living
in
poverty
and
this
number
is
the
second
largest
in
the
world
(only
after
India).
Roughly
35%
of
the
Chinese
population
lives
under
$2
a
day.
In
its
most
recent
(12th)
5
year
plan,
China
has
set
itself
a
growth
target
of
only
7%
indicating
it
is
now
taking
time
to
address
quality
of
life
issues
present
in
society.
It
is
also
one
of
the
only
non-­‐advanced
countries
in
which
it
is
performing
well
in
attaining
the
Millennium
Development
Goals.
As
previously
stated,
massive
improvements
in
HDI
scores
have
also
been
recorded
over
the
past
20
years.
Education
rates
have
risen
and
people
on
average
are
living
much
longer
in
China
than
they
once
were,
as
well
as
much
longer
than
the
world
average.
This
could
be
attributed
to
the
mass
investment
in
infrastructure
and
urbanisation
of
the
country.
People
are
also
seen
to
have
much
more
freedom
(after
the
abolishment
of
a
socialist
economy
prior
to
1978).
This
political
and
social
freedom
allows
the
nation
to
continue
thriving.
Globalisation
has
certainly
greatly
promoted
the
economic
development
of
China.
Globalisation
has
certainly
directly
and
indirectly
contributed
positively
to
China
and
the
way
in
which
people
live;
however,
it
has
also
created
immense
disparities.
Such
inequalities
include
that
of
income
distribution.
There
are
major
geographic
disparities
in
the
distribution
of
income,
with
urban
and
rural,
as
well
as
coastal
and
inland
regions
having
different
per
capita
incomes
(as
reflected
in
the
graph
below).
These
inequalities
were
specifically
brought
about
by
China’s
introduction
of
Special
Economic
Zones
in
the
80s.
The
bulk
of
national
income
is
concentrated
in
these
metropolitan
and
coastal
regions.
Therefore,
quality
of
life
and
living
standards
in
these
northern
regions
is
much
lower.
The
rich
and
the
poor
are
becoming
more
separated
than
they
ever
have
been.
Further
portraying
the
negative
impact
globalisation
has
had
on
Chinese
economic
development
is
the
Chinese
healthcare
system.
China
restricts
movement
of
people
between
cities/provinces.
People
therefore
are
often
forced
to
work
in
local
industries
for
low
wages.
These
industries
often
expose
workers
to
numerous
dangers
and
hazards
and
lead
to
many
accidents
and
unnecessary
health
risks.
People
rely
on
local
water
sources
that
can
often
been
contaminated.
8%
of
China’s
population
still
lacks
access
to
safe
water
sources;
even
after
an
improvement
of
6%
over
the
last
10
years.
A
startling
35%
of
people
still
also
lack
access
to
sanitation
facilities.
So
much
infrastructure
is
being
built
yet
it
is
in
urbanised
places
and
not
rural
ones.
China
is
therefore
coming
to
grips
with
huge
amounts
of
logistical
issues
with
small
and
densely
populated
cities.
Bottlenecking
in
dockyards,
inadequate
electricity
production
and
practically
empty
cities
are
all
overlooked
by
the
Chinese
government
as
they
choose
to
invest
in
nuclear
power
plants
and
infrastructure
to
promote
growth
in
the
private
sector.
Globalisation
has
led
to
the
onset
of
great
social
class
divisions
in
China’s
society.

7. Brendan
Falk
28381476
Page
7
http://www.china-­‐mike.com/wp-­‐content/uploads/2011/03/china_inequality-­‐gini-­‐rural-­‐urban.jpg
Along
with
impacts
on
China’s
state
of
development,
the
outcomes
of
globalisation
have
had
a
huge
effect
on
the
environment.
Historically,
economic
growth
and
development
comes
at
the
significant
cost
of
damaging
the
environment
and
in
China’s
case,
nothing
has
changed.
It
is
natural
for
a
government
to
want
to
promote
and
stimulate
jobs
and
growth
in
the
short
term,
rather
than
aid
the
environment.
Especially
with
the
onset
of
globalisation
in
China,
the
nation
has
had
an
increasingly
worse
and
worse
impact
on
it’s
surrounding.
The
most
prominent
issue
is
pollution,
particularly
seen
in
all
major
cities.
Smog
and
thick
air
pollution
hangs
over
cities
and
blocks
out
the
sun,
unlike
it
did
20-­‐30
years
ago.
All
this
pollution
can
be
attributed
to
mass
emissions
from
factories
and
industrial
jobs
which
then
remains
in
the
atmosphere.
As
depicted
in
the
graph
below,
China’s
CO2
emissions
have
drastically
increased
as
of
2002
and
are
expected
to
double
that
of
the
second
highest
producer,
the
USA,
in
the
coming
years.
Such
a
huge
shift
in
emissions
can
only
be
from
massive
revolutionary
policy
in
China
that
has
been
in
favour
of
economic
prosperity
and
negligent
of
the
environment.
Electricity
consumption
is
now
also
outpacing
electricity
production,
both
of
which
are
5
times
more
than
what
they
were
30
years
ago.
70%
of
China’s
energy
needs
are
supplied
by
polluting
coal
fire
power
stations.
Deforestation
is
occurring
in
order
to
meet
such
high
demands
for
exports
also
is
having
a
major
effect
on
pollution
and
erosion
in
China’s
rural
areas.
Such
a
dense
population,
many
with
poor
living
standards
and
sanitation
further
contribute
to
environmental
problems
with
dumping
in
the
streets,
having
a
follow
on
effect
with
other
citizens.
Despite
some
government
intervention,
much
more
needs
to
be
done
to
prevent
the
even
greater
cost
that
it
will
be
in
the
future
to
protect
the
environment.
More
than
just
the
current
meagre
1%
of
GDP
needs
to
be
spent
to
aid
the
environment
and
reduce
the
indirect
impact
globalisation
is
having.

8. Brendan
Falk
28381476
Page
8
http://www.earth-­‐policy.org/images/uploads/graphs_tables/indicator7_2013_top5.PNG
Globalisation
impacts
all
aspects
of
a
nation.
Aside
from
impacting
economic
growth
and
development,
political,
social
and
environmental
effects
are
often
overlooked.
In
a
case
study
of
China,
there
is
no
doubt
that
globalisation
has
had
a
monumental
affect
on
the
entire
economy.
China
has
grown
at
a
never
before
seen
rate
and
is
a
market
leader
in
countless
industries.
However,
it
is
doing
so
at
a
cost.
Despite
its
political
attempts
and
implemented
policies,
China’s
economic
development
and
social
standings
are
not
improving
as
rapidly
as
its
economy.
If
the
Chinese
government
placed
more
of
an
emphasis
on
resolving
these
social
costs,
consequential
of
globalisation,
China
could
become
the
world’s
most
distinguished
economic
powerhouses
of
the
21st
Century.

9. Brendan
Falk
28381476
Page
9
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