Custom «The International Trade Issues Caused by Globalization in China» Essay Paper

Introduction

Globalization means crossing of the nation’s boundaries. It presupposes the flow of capital, goods, technology, people, and even information over the country’s borders. Throughout the history, China underwent several globalizations: 206 BC-220AD, during Han dynasty, when the trade was very active between the people in the West-North and the Hen Chinese; 618-901, Tang dynasty, the Silk Route grew with the Chinese trading with the Romans. In the Qing dynasty and up to Deng Xiaoping’s policy, however, China tried to stop globalization. Therefore, the aim of this essay is to trace the reasons for the constantly expanding globalization in China and to analyse its impact on the whole world (Min, n.d.).

Economic globalization is, like a coin, two-sided. Disadvantages and advantages of it go side by side. It can be also compared to the swimming in the sea during the summertime. One enjoys swimming but can also catch a cold or drown. All highly-developed countries are very good at swimming, whereas the developing countries are not so strong or even very bad, like beginners. The feelings of these beginners about the sea differ from those of the professionals very much.

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China has both challenges and opportunities from the globalization.  Thanks to the speedy globalization of the world economy, China got the opportunity to enter the phase which could be called the Cultural Revolution. This helped China’s planned economy transform into a socialistic marketing economy, which was followed by a great modernization of the country’s productive sectors. During the past 20 years, a significant economic growth could be observed in the country. Probably, this was China’s sole golden opportunity to make such drastic advances in the economy and it did not lose it. Therefore, let us see what is going on in the whole world due to China’s powerful globalization. First, this essay will explain the changes in the Chinese foreign trade; then it will analyse the foreign investment, and then proceed to the situation with technological and informational fields, which play the key role in China’s economic upsurge. Finally, a few words about the migration of people will be added.

Foreign Trade

Since 1978, China has gradually abolished restrictions on trade and encouraged the expansion of free trade. The government has changed its policy and provided provincial authorities with a great deal of autonomy in foreign trade, permitting private entrepreneurs to be also engaged in foreign trade. Because of this, the increase in export and import spheres was from $20.64 billion in 1978 to $620.8 billion in 2002.  In 2004, this amount went up to $1.1 trillion. China became the world’s third biggest trading country after the United States and Germany (Chow 2005).

Nowadays, China’s exports can be found across the whole world. On the one hand, the United States has benefited greatly from the cheap and high-quality goods from China. But on the other hand, it has caused a lot of resistance and resentment by domestic American workers and manufacturers. Finally, Americans are afraid that Chinese exports to their country could hurt some U.S. industries, which are making the same products. Fortunately, this helped our national industries adjust. Moreover, the development of new industries has allowed us to hire many unemployed.

China has gained a huge economic power for expanding market for foreign producers. Thanks to the demand for imports in this large Asian country, the economic growth of many other countries has also increased.

When in 2001 China entered the World Trade Organization (WTO), it had to reduce its tariffs on agricultural and manufactured products. This helped to provide significantly cheaper goods for Chinese consumers and increase competition for manufacturers from China (Chow 2005).

Foreign trade has improved economic growth in China in the following ways. Many world-known companies have opened their enterprises in China, bringing the country great profits. What is more, domestic production only would never allow China to increase the flow of money by that much. China’s exports are vital for the bigger half of the world, which increases the national output. And finally, foreign investment together with trade have improved China’s productivity greatly by bringing in modern technology.

Foreign Investment

Since the reform in 1978, the country’s foreign investment policy has reached a huge turn, which began with treating Chinese people just as cheap labour force and ending with making direct investments into China’s development. In 2003, the amount of direct foreign investment increased to $56.1billion from $49.7 billion in 2001 (Globalization and Chinese Economy 2006).

Foreign investment, however, cannot be called the key factor of a rapid economic growth in the country. It only facilitated that the growth in the amount of money in China could make much more goods than the same capital in the USA. The following three fundamental factors have brought China to its today’s prosperity and attracted foreign capital:

1)      Abundance of well-functioning marketing institutions;

2)      Large amount of high-quality human resources, which includes hardworking and skilful workers and professional entrepreneurs;

3)      The opportunity to adopt already well-developed modern technologies from other countries.

Nowadays, China’s capital is exported not only to developing countries but also to the highly-developed ones, like the USA. China’s investments have helped to develop some African and Asian countries as well. Financial investment is a key objective in developing financial markets. China encourages foreigners to make investments in Shenzhen, Hong Kong, and Shanghai.

Technology and Information

Information and technology are transmitted as well as goods and capital. China has benefited greatly from modernizing its technology. China is one of the biggest exporters of technology nowadays, with the United States having already lost its place as a leading exporter of goods. China is becoming a number one because it has developed a technology-based economy, whereas the U.S. is now staggering with the economy-planned policy. No wonder that the USA has restricted the transferring of military technology to China, as this country becomes a potential threat after it obtains such technology. I do not think that China has any plans for expanding its military sector, however, many Americans think in a different way.

Migration of People

In Chinese economic globalization, there is one very important aspect of people’s movement, which is influenced neither by foreign trade nor by investment. All those Chinese professionals who obtained their education abroad and now they are willing to come back home to develop and improve their own country. China’s economic growth flourishes from this returning human capital. The open-door policy proves to be the best again (Chow 2005). Many people can still underestimate this factor of Chinese rapid economic development, but China knows better – just a couple of years before a huge brain drain left the country with little skilful professionals. The increasing number of foreigners who come to start their business or just deliver lectures at local universities is greatly benefiting China, too.

Conclusions

Having examined the main factors which have caused Chinese globalization, we can see that China is a threat to many leading world economies. On the other hand, we do not regard China as a danger to U.S. markets but try to develop tight cooperation with this country and also to learn from it. The way China has gained its striking economic growth should be a good lesson to most countries, and especially to the United States. Technology is an answer to everything and America’s step back from modernization deprived it of the leading position on the world’s market. But to make this modernization effective, an open-door economy should be practiced.

In this essay, we have analysed the influence of China’s globalization on the international trade, especially of our country. We have traced China’s development since 1978. The economic reform has drastically changed the position of China among the world’s leading highly-developed countries, bringing it very close to the top thanks to its foreign trade, investment, and technology.