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The Global Economy Essay

1539 words - 7 pages

Globalisation refers to the process of increasing integration among different countries throughout the world; this results in the establishment of a single world market. Globalisation encourages overseas trade and the reduction or removal of trade barriers hence allowing for economic growth and development. One economy that has been drastically affected by globalisation is China. The main areas that have been affected in this economy are: financial markets, income distribution, trade, investment, and environment. To promote the growth of China’s economy the government has employed various strategies that have propelled China forward giving it the most rapid economic growth status in the ...view middle of the document...

Since the Shanghai and Shenzhen stock markets were established in the early 2000’s China’s foreign share trading volumes have increased at a rapid rate. It can be said that these stock markets were largely opened for that reason. While these stock markets were hit heavily during the global financial crisis China’s GDP continued to expand. The government has aided in the globalisation of China’s stock markets by simply relieving some of their previously strict restrictions.
Whilst globalisation has caused massive economic growth in China, it cannot be said that the benefits are distributed equally amongst the nation’s people. When examined statistically it can be seen that the richest 10% of people in China account for 45% of the nations wealth whereas the poorest 10% only hold 1.4% . Speaking regionally, the costal cities receive much greater benefits of globalisation than inland China, simply due to their proximity to the rest of the world. For example in Shanghai and Shenzhen between 1978 and 1998, per capita incomes increased by 11%. The unevenly dispersed incomes in China show that while the standards of living overall have improved, equality is not shared thus widening the gap between the richest and poorest communities, as seen in figure 1 . The government has not done a lot to make income distribution more equal throughout China in the hope that due to the economies continual growth the good effects of globalisation will be more widespread throughout the country.

Globalisation largely encourages international trading and economic growth, China’s economy, largely due to its immense population, has benefited tremendously from this. In the past 3 decades China’s exports have gone through the roof, just in the period between 2003 and 2006 the nations exports grew in value by 35% as seen in figure 2 . These exports now account for a total of 35% of China’s GDP, however China is also a large importer with the majority of its resources being imported from overseas. A major turning point for China was when it joined the World Trade Organisation in 2001 as a response to the globalisation trend, and reduced its trade barriers, thus leaving the gates open for foreign investors and international trade. Recently China’s overall trade surplus in merchandise has averaged around 2.5% of GDP , this is a massive figure for exports in any country. The government played a massive role in encouraging economic growth through the means of trade; it did this by drastically lowering trade barriers such as tariffs with other countries. As well as this the Chinese government peg their currency, which means they keep it at a constant value, this keeps China’s exports competitive in the global market allowing for continued economic growth and development. The Chinese government has also set up various international trade agreements with countries such as Thailand and Singapore, agreements such as these allow for easier exports and usually create...

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