Analysis on the Globalization in China
Globalization is defined as the process of incorporation of the global economy which comes about as a result of exchanged views of ideas and products, free trade, smooth and free transfer of capital across-the-board. Globalization leads to advancement in various sectors of a country’s economy, including its transport and communication sectors, education and sports welfare are some of the areas that could be affected by globalization. Improvement in these sectors enhances interdependence of the cultural and economic activities Al-Rodhan and Nayef (2-3). In 2000, the IMF (International Monetary Fund) described four main factors that cause globalization; they identified them as capital and investment movement, circulation of knowledge, transactions and trade and the migration and movement of people (20). Globalization has some negative effects on the earth and countries; for there to be some improvement in something, depletion has to occur somewhere. Pollution of air and water, over-fishing in the water bodies, climate change are some examples of the negative effects that are caused by globalization.
This essay will concentrate on the globalization that has taken place in China, its effects in the universe and locally. The economy of China has drastically improved, and this has established it to be one of the richest countries in the world. In the world of technology, communication and transport, industrialization, China tops the list. China appears in the western part of Asia, and it boarders 14 countries like North Korea, India and Russia. It is the second largest country and with the largest population of people in the world. Between 2007 and 2010, China’s economy grew very fast that its growth rate was the same as the Great Seven countries’ economic growths combined. China has prospered in the manufacturing business where its great infrastructure and low labor costs take credit of this. It has the highest number of exports and the second largest importer of goods worldwide.
Globalization in China has both the advantages side and disadvantages and the developing countries suffer most from the disadvantages of globalization. It has greatly benefited China and its companies have grown larger and stronger, and this has developed it into an economic superpower. The Chinese economy has grown due to its numerous exports of goods which have come about as a result of cheap labor in the manufacturing of these goods. This has a drawback as the workers do not earn much leaves them locked out to improve their ways of living. This also causes lack of improvement in their own enterprises because the profit they make from manufacturing these goods is not enough to support the advancement in their activities.
China began its journey to greatness in the year 2001, when the leaders present at that time made a decision to join the World Trade Organization (WTO). This was a great move because at this time, the economy of China was low and their businesses were not strong compared to other firms in the world. The economic success of China is based on the political sector unlike in many countries; the leaders of the country make decisions including the move to join WTO were basically the leaders’ Nolan (32). The leaders went back to their discussions and established Radical Liberalization of investment and trade. This meant that they had to give up most of the policies laid down in East Asia. This ensured the promotion of the small industries in China that were still in their growing stage and since then, most of them have grown into huge industries that make lump sum profits.
After the accession to the WTO, private enterprises were encouraged to prosper, but this move did not do far as the government did not approve of this in that regime. Most of them nearly collapsed since they did not have support from the government. However, foreign investors were not moved as they were more on the making money side that the politics side, this maintained the private enterprises in business. Most of the multinational companies (MNCs) relocated their main activities to China since the wider market and cheap labor made it the best manufacturing site in the world. This led to competition with the existing businesses in the same line of business and became the market leaders in China and also the international market. However, the policies in the WTO agreement maintained these companies in the country, not to create competition for the other companies but to make them larger and create huge profits through oligopoly and monopoly in the market.
After the WTO accession of China, investment boom occurred in this country more than it has ever happened and was referred to as “the factory of the world”. This is because it took the role of Britain in the 19th century as it led in the manufacturing industry. This has recently been overtaken by China leaving Britain as “the assembly plant of the world” which maintains among the leading suppliers of goods especially machinery. In the face the MNCs owning the global market of their products and the entrepreneurial systems, the local companies were not able to keep up with the pace MNCs had set on China’s local market. Instance like dependency of the manufacturing equipment, designs and other critical components in the production activities from the advanced firms. This means that their gains were little that mostly came about due to the cheap labor during production; this increased the entry barrier into the international market of the indigenous firms.
This did not go for long as it captured the leaders’ attention and had to make a move on it since the foreign invested enterprises were flourishing more than the Chinese based companies. This led to the establishment of Research and Development outlays and to introduce policies that would improve indigenous companies and at the same time advancing their self reliability. This prompted a reduction in dependency from other countries from 50% to 30% by the year 2020. This boosted the absorptive nature of China’s local businesses with help from the MNCs which offered technology offers. These policies in addition to the development of Research and Development subsidies by the government enhanced domestic innovation. This indigenous innovation was successful but had some drawbacks. They were brought about by incoherency of the policies and the major liberalization strains they are getting from their trade partners. Hence this did not solve the issue; in fact it intensified it especially after 2005. Amsden states that without nationally owned firms that are run by professionals’ industrialization to become large firms controlling the international and local market is impossible (93). Thus, globalization in China did not make it “King of industrialization” since most of the international market is controlled by foreign investments, as well as about 85% of the high valued exports.
The world is going through major economic crisis and China, being a building block of the international community, is responsible to help solve this issue. In contrast to the USA, which uses some “strategic industrial policy” to bring manufacturing back home and double its exports, China is ruled by the WTO agreement. These commitments drive the country into more of innovation rather than export-driven growth, which is almost equal to impossible.
A journalist travels around the world so as to understand the consequences of globalization and records his views in a published book “Tropic of Chaos”. Most of the developing countries have been regarded to be stagnant economically as a result of globalization in the developed countries, for example, climate change. The concept of the developed countries becoming stronger as a result of globalization as demonstrated by this book is prone to fail soon. This is because the struggling countries in the developing countries will pull down the economic performance of the developed countries, thus cannot be allowed to go down. It is required to form strategic policies that will help fight the problems caused by globalization. The strategies are also supposed to develop a sustainable economy that will benefit all parties concerned.
A problem arises in China due to globalization; which is the migration of people. Chinese move out of the country to other places to look for jobs and get educated, this is because China is over-populated hence these opportunities may be sparse. If the people who migrate out of China are more educated and skilled, China suffers a problem known as “brain drain”. This can be defined as depletion of knowledge in the country as they move out to go and develop other countries with the skills and education they have. This is a benefit to other countries as they get a touch of expertise from China and can use their knowledge to develop their firms and infrastructure. It is also a benefit to their families back home as the income they earn in the foreign countries is sent to them. This improves their living standards and the economy of the country as a whole.
In addition, the globalization in the country has attracted humans from all over of the world leading to overpopulation in China. Overpopulation in a country may deplete its resources and may make it impossible to sustain all the people. However, immigration has a positive effect, which is the spread of different cultures from different places of the world. This is essential in a number of ways, for example, they show the Chinese the ways of living and improve them if they are desired. This also has an effect on the legal system and behavior of the Chinese people.
Globalization is described as a threat to the cultural systems and spread of the world. It is feared that it is prone to deplete the local economies of smaller countries, their language and cultures and replace it with those of the developed countries where globalization has prevailed. The same is happening in most of the developing countries, Chinese language has begun to be taught in most of the schools since it is a resourceful language. Same case occurs to their culture; people have opened up restaurants that are Chinese-based; the food cooked, how it is served and eaten are all the same with the customs of the Chinese people. Their movies are gaining fame and selling more than the other countries’ movies. This is because the Chinese movies contain a lot of scenes that refer to their culture. Most people buy these movies so as to have a glimpse of their culture like the how the Chinese dress, the design of their houses and also their unique way and skilled fighting. In few years to come, the Chinese culture will be widespread, and people from other countries will adopt these activities.
China has been described as the largest user of energy in the world due to their numerous manufacturing industries. Examples of energy they use are electricity, coal, petroleum and nuclear energy. When petroleum and coal energies are used, they release toxic gases into the atmosphere; this causes pollution of air and global warming. Global warming has a unique issue, which is that it has effects in all parts of the world irrespective of the country causing it. Effects of global warming are adverse, long term and are negative. If global warming is not sorted as soon as possible, most people will suffer due to issues like climate change. Globalization in China has contributed greatly to the pollution of the natural resources of the world. The use of these energies in China prompts investment in the countries that produce and this worsen the case.
A rise in oil prices has come about as a result of globalization. The companies that mine oil are unable to invest in their companies so as to produce more because of lack of funds. A rise in prices of oil especially in developing countries is an issue; this is because of the exploding demand from the developed countries like China that they are not able to meet. The developing countries thus suffer from hiked prices of oil and this suppresses their economy. Another negative effect of globalization in China is the continued decrease of the currency value. This is because of the competition of the export-products from different countries and everyone wants to sell their product, the only way they can do so is by lowering the price of the commodity. This creates a “race to the bottom” by the various countries with different currencies which does not end in a good way. An increase in the prices of imports in countries with a debased currency occurs which is a huge problem.
However, the Chinese strategy to help the developing countries that are suffering from the globalization occurring in their country is yet to be a success. China is supposed to engage two reforms both globally and locally; political reforms that work to establish balances and checks, as well as to reduce the gap between the poor and rich. It is also required to develop ways in which the globalization taking place is beneficial to the other countries economically Bakari and Mohammed (2). This will ensure that their economy is continually growing, and the economic performance globally is healthy.
Works Cited
Al-Rodhan, Nanyef. Definitions of Globalization. Berkeley: University of California, 2006.
Amsden, A. The Rise of "The Rest"- Challenges to the West from Late-industrialising Economies. New York: Oxford Press, 2004.
Bakari, Mohamed El-Kamel. Globalization and Sustainable Development: False Twins? London: New Global Studies, 2010.
International Monetary Fund. Globalization: Threats or Opportunity. London: IMF Publications, 2000.
Nolan, P. Transforming China: globalization, transition and development. London: Anthem, 2004.
