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Over the past 30 years, international trade and investment are very fast- growing and expand faster than the world economy. Many firms decided to expand their business outside their countries, employing peoples internationally. Varieties of products are offered in the stores competing against one another. The technology has been introduced which allows the economy to increase their chance of trade internationally.(1)
"Globalization is today's objective trend in the economic development in the world in which featured by free flow and optimized allocation of capital, technology, information and service into the global context. It is result in development of the productive forces and advances in science and technology."(1)
"As a result, economic interdependence and interaction between countries are very strong. In the economic sense globalization means that means there is no country in the world which can develop and prosper in their isolation and successful without trading internationally. China has therefore learnt from their history that isolation in business leads them to go backward. Development progress and prosperity could only be able to achieved through the integration of the outside the countries by increasingly exchanges and cooperation with other countries in the world and influenced by human civilization. Therefore, the globalization gives the world opportunities to keeping up with the changing world outside their origin country."
The Criticle Reflection on the Impact on China
Globalization is the process of increasing the integration between different countries and economies by increase the impact of the international influences on other economic aspects.
China sees globalization as their key to economic development and securing a better future for its 1.3 billion of populations.
As the world's greatest opponent of globalization, China, due to the lack of international economic order, the influence of globalization on specific countries in different stages of their development is entirely treated different. Most of the developed countries often benefit from globalization through their capital, technology, human resources and administrative expertise. On the other hand, developing countries are on focus mainly on the unfavourable position where they can benefit from other foreign investment, advanced technologies and management expertise. (3)
China is benefit from being a fast growing economy. This is mainly occur due to their low cost of manufacturing and labour. Many Westerns companies have change to use Chinese labour more extensively. China has been successfully reduced their poverty through their economic system by mainly focused on increasing openly to trade and foreign investment with other countries.
Even though China's political system has been run by the communist party, their approach and how they form their strategies in order to promote their economic growth and development has become a bigger player in globalization
The accession of China to the World Trade Organization (WTO) in 2001 has further improve its economy through the integration into the world economy and furthermore into the globalization. As the result becoming part of WTO members they are entitled to provide non-discriminatory treatment to all other members and all foreign individuals. In order to protect the domestic industries and service providers, the price controls is not to be used in this purposes. WTO provided regulations to restrict China's export subsidies on their agriculture products as they aimed to revise their existing domestic laws and therefore restart their new legislation in compliance with the agreement. In order for China to optimize their export structure and fully participate in international trade. China has to agreed to seize the opportunity under WTO who actively optimist its export structure.
However it does gives China to liberalize its regime in order to integrate in the world economy and offer more pleasant environment for trade and foreign investment in accordance with WTO regulations. This is possible to lead to reduce in the level of corruption in political systems which then pull its index and ranking up as China become more attractive to the foreign investors and traders
"From 1983 to 1985 China has double-digit GDP growth as it has been accompanied with the first wave of the foreign investment into China and the development of non-state enterprises." (4)
"In 1989-1991 The growth start to slow down after the Chinese Government has set the price reform in 1988 which resulted in panic buying and runaway inflation. The price stability was achieved by cancelling large fixed investment projects, slowing domestic demand, foreign investment fell off after the Beijing Massacre of June 1989'' (4)
"In Recent year the global economic crisis began to reduce China's economic growth rate, the government decided to injected 4 trillion RMB into the economy in form of economic stimulus package consisting largely of investment in infrastructure and human capital" (4)
As a result of industrialization and increase in infrastructure and investment in China , the agriculture sector as a percentage of GDP has been dramatically decreased from 29% to 13% in 1997 to 2003, as the farm that used to do agriculture has been converted into cities and factories. It might be also that all other industries have been producing much more than the agriculture industry. This economic growth has been very attractive to the western expansion market, which later has result in more market-based economy with globalization and deregulation by the Chinese government. The recent trend growth rate is at average of 9.4 % over the past decade is 1.7% higher than other countries in Asia. As China is a major economy in the world, their main competitor which has another major economy is the USA.
Globalization helps China to make a better use of foreign investment to promote the increase in their industrial construction. As Labour cost in China is very low respectively, it become very attractive to the foreign investment. The more consumption of labour, the faster they can speed up the high development of new technological industries, thus China's industrial can compete internationally.
Globalization also lead to the increase in the level of trades in China as subject prior to 1978. China's trade has been conducted under the system of state where a foreign trade corporations monopolized all foreign trade. Under the planning regime, import has been minimized while exports authorized only for the extent to pay for the imports. In the last 20 years, the systems has been changed dramatically and China's trade has expanded enormously, the increase in the share of the world trade.
The foreign direct investments and transnational corporations (FDI and TNC's) have been increasing very rapidly since the globalization and the opening of the markets and deregulation by Chinese economy. FDI and TNC encouraged in the modern agricultures, high tech industries, infrastructure and construction. They focus on the development of the western regions, and the re-engineering of State Owned Enterprises. Foreign investment capital became major factor in growth. However, rapid growth has caused some problems such as, high inflation rates in urban areas which may leading to increasing economic inequalities between regions and social group.
The last area this report will be discussed is about the environmental issues in China. In an attempt to maximize the opportunities of globalization, China may pursue unsustainable practices. As globalization increase the level of economic growth, the environmental problems also arise. The fact that China has been getting used to be the fastest growing economy with high growth rate and development and HDI levels that environmental issue may be less concern by the government. As it play less important part in the growth of the economic situation. As the major exports are based on the manufactured goods, the process of manufacturing involves degradation or pollution done to the environment. "It is estimated that 300 million peoples are drinking contaminated water in China, only 20% of solid waste is properly disposed of, and only 10% of the sewage is treated." These problems are very costly, as about 7 %of China's GDP and could rise to 13 % if the problem are not to be addressed.
The problem of the air pollution in South East Asia is very serious occurs due to the increase in industrial production contributing to poor environmental quality. The increase in the amount of oil used through the production, it may impact the rest of the world as well as China, such as, they may faced the problem of rise in oil price as the demanded created by China has increased the consumption.
The globalization benefits China in terms of economic growth and economic development. As China has lower their trade barrier internationally which leads to the increase in the international trade and foreign investment, this results in significant levels of economic growth and development. It also give the competition for the domestic industries and encourage high level of efficiency and competitiveness. The Chinese government provided the more ways in which to promote its domestic and international investment. However, the inequality in distribution of income still a problem. The growing economy also caused the problem to the environment through the pollution.