Globalization refers to the process of increased integration between different countries and economies and the increased impact of international influences on all aspects of life and economic activity.
China is located in the continent of Asia with the highest population in the world of 1.3 billion people. They are the fastest growing economy due mainly to foreign direct investment in which occur because of cheap labor rates and manufacturing costs. With the tremendous progress in the last decade China has reduced poverty dramatically thanks to an economic system increasingly open to trade and foreign investment.
Their political system is run by the communist party in which according to the corruption index rated from 0-10 with 0 being absolute corruption in the political system. China ranks 71 out of 145 nations with the index at 3.4. Although China is a communist country they are taking a very western approach to how they are run with trying to become a much bigger player in globalization and using strategies in order to promote economic growth and development.
On the 17th of September 2001 China was admitted membership into the World Trade Organization after 15 years of lobbying for the position. They were then able and were participants of the Doha round on the 10th of November 2001. “International economic cooperation has brought about this defining moment in the history of multilateral trading system,” said Mike Moore, WTO Director-General, at the conclusion of the meeting of the Working Party on China's Accession.
Under the chairmanship of Ambassador Pierre-Louis Girard of Switzerland, the Working Party agreed to forward some 900 pages of legal text for formal acceptance by the 142 member governments of the WTO.
As a result of these negotiations China has agreed to undertake a series of important commitments and rules it must follow by, some of these include:
China will provide non-discriminatory treatment to all WTO members. All foreign individuals and enterprises, including those not invested or registered in China, will be accorded treatment no less favorable than that accorded to enterprises in China with respect to the right to trade.
Price controls will not be used for purposes of affording protection to domestic industries or service providers.
The WTO will be implemented by China in an effective and uniform manner by revising its existing domestic laws and enacting new legislation fully in compliance with the WTO agreement.
China will not maintain or introduce any export subsidies on agricultural products.
“Now this economy will be subjected to the rules-based system of the WTO, something which is bound to enhance global economic cooperation “, said Mr. Moore.
As a result of this negotiation, China has agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules. This more stable environment with hopefully then lead to a decrease the level of corruption in the political system which will lift its index and ranking as so then will become more attractive for foreign investors, to China's benefit and to the traders.
ECONOMIC GROWTH
The 2003 statistic provided by the Market Economy textbook displays China Producing their Gross National Income of $1417 [US Billion] with a ranking of sixth.
This indicates that a lot of output comes out of China, but one must encounter the population when calculating the real output of a nation and which China has a GNI per capita of only $US4980 with a rank of 119.
Between 1965 and 1979 the gross domestic product grew at a rate of 6.4 per cent a year, and between 1980 and 1988 the increase was 10.3 per cent annually. The growth rate dipped below 4 per cent in 1989, but returned to well above 10 per cent annually in the early and mid-1990s.
The 2005 growth rate started at strong at 9.5% and flattened out to average to 9.4% for the 2005 year. Since 2002 the Industrial production has increased by 15% along with the Consumer demand, which increased by 10.1%.
With reference with the agriculture sector as a % of GDP, has decreased from 29% in 1997 to just 13% in 2003, this is a result of more industrialization, more infrastructure and investments into China, and so some farms have been converted into cities and factories. Another factor due to the decrease into agriculture is the fact that this is a percentage of the GDP and expresses the fact that all other industries are producing a lot more and growing more than the agriculture industry itself.
Much of the growth as stated before is attributed to the Foreign Direct Investment increase, this is a very attractive market for western expansion. This is the result of a more market-based economy with globalization and deregulation by the Chinese government. These recent trends of growth that averages 9.4% growth rate over the past decade is 1.7 % higher than the Asia region which stands at an average growth rate of 7.7%, while the average growth rate of the rest of the world is at approximately 2.65%.
