Globalisation (China) and how it affects their economy.

1. In our increasingly interconnected world, the impact of
globalisation is becoming progressively more and more
prominent in every country. Globalisation is 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”. In this speech, I will examine how China
has been notably impacted by this worldwide integration. I will
specifically focus on how globalisation has influenced this
emerging economy’s economic growth… development… as well
as its policymaking.
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China’s economic growth has been dramatically impacted over
the last 20 years alone. According to Dixon, economic growth is
the “sustained increase in real GDP over a period of time and thus
increases in the productive capacity of the entire economy.” Under
revolutionist Deng Xiaoping’s reforms, China liberalised or
opened up its market to foreign investment in 1978. Today, it
finds itself as the largest trading hub in the world. With some
governmental control, China’s state capitalist economic system is
much freer and has an international trade-­‐‑orientated focus. It has:
expanded exports rapidly; overcome key deficiencies in areas
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such as transport and communication; invested in industry, and
most importantly allowed foreign investment to occur. The
Chinese government even sets the Yuan exchange rate at
artificially low levels to ensure that exports are relatively cheap.
This increases injections into the circular flow of income mode
thus promotes higher levels of economic activity.
Joining the WTO in 2001, China is now the biggest exporter in the
world and has enormous inflows of foreign investment (with
$101 billion in FDIs last year alone). It currently has a balance of
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trade surplus of $260 billion. Transnational corporations are
profiting from China’s comparative advantage in having a large
labour force & low wage rates. It has signed countless free trade
agreements with nations such as our own. For the past 20 years,
China’s GDP growth has averaged at a booming 8%-­‐‑10%. In the
midst of the GFC, despite slowing in growth, China was one of
the only economies in the G20 that did not have a period of
negative growth. It invested $586 billion into its economy to

2. refocus a`ention on domestic consumption. Globalisation can
thus clearly be seen to have many positive impacts on China’s
economy.
The level of economic growth also has a tendency to affect the
level of economic development of a nation. The World Bank
defines Economic development as the “incorporation of all aspects
of individuals’ well-­‐‑being, from their health status to their economic and
political freedom.” Since 1990, China has had a massive
improvement in living standards: Its life expectancy is now 5
years above the world average, citizens are more literate and
being educated longer and real incomes have risen dramatically
from $1,500 in PPP terms to $11,500 over 25 years. Further, 400
million people have also been alleviated from poverty and China
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is well ahead of the targets set by the Millennium Development
Goals. China’s HDI rank fell from 104th
in 2001 to 81st
in 2005.
Technological advancements, especially in infrastructure have
meant there has also been a mass urbanisation across China. This
has further allowed a shift in job sectors from principally
agriculture to now manufacturing and services. The world is
clearly seeing this mass change in China’s development and
hence allowed it the right to host the 2008 Olympics Games.
Being so concerned with economic prosperity, China is still yet to
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resolve some crucial issues in its society. Such high growth has
led to enormous inflation. Special economic zones in which trade
is greatly stimulated has also promoted rising income inequality.
With a Gini index of 47, this disparity is caused by the separation
of the industrialised coastal cities and inland rural farming areas.
Existing policy also prevents labour mobility from rural to urban
areas. Densely populated cities exhibit: poor sanitation, poor
access to safe water, child labour, and many other external
diseconomies of scale for industries such as bo`lenecking. 100
million people still live in poverty and over 35% of the Chinese
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population lives below $2 a day. With an ever-­‐‑aging population,
a large gender imbalance due to its 1 child policy, as well as
drastically increasing unemployment, social class division is rife
across China.

3. Rapid industrialisation has also had a huge impact on China’s
environment. China has some of the highest pollution rates in the
world. In 2000, China emi`ed 3.5 billion tonnes of CO2,
however, 12 years later was emi`ing almost 3 times this figure, so
much so that it is almost doubling the next highest producer
being the USA. China consumes more energy than it produces,
70% of which is produced in polluting coal power stations.
Currently only a meagre 1% of GDP is being spent to solve this
critical environmental issue. China needs to find a sustainable
way to profit from globalisation without destroying its
environment.
Upon opening itself up to the effects of globalisation, China has
had mass economic growth and vast improvements in economic
development. China’s most recent 5-­‐‑year plan understands it
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must address undesired impacts globalisation is having on social
class divisions and the environment. It is therefore aiming to
reduce growth to 7% to focus on these domestic issues. Aside
from these social costs, without opening up China’s market,
globalisation could never have had such a revolutionary impact
on a once poor farming nation. Without the impacts of
globalisation, China would never be as developed as it is today.
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sez
foreign investment
westernized