National Policies and Growth Strategies - China - Case Study Example

National Policies and Growth Strategies China Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction The policies and strategies which are developed for growth by any economy depend on the internal and external factors that influence the ability to implement the policies effectively. Before formulating any growth strategies, it is important to consider various factors that can help to implement the strategies effectively. It is also important to consider the factors that can influence the implementation of the strategies for growth. This is because the growth of any economy depends on the ability to implement the strategies and policies that should be followed to improve the way business operations are conducted and the policies differ from one economy to another. In this effect, this report will discuss that it is the prevailing context that influence the strategies and policies which are developed by an economy. The country selected for this assignment is China because it is one of the growing economies globally because of its policies and strategies (OECD 2007). Chinese economy China is one of the greatest growing economies in the recent years. The growth rate of the economy of China is about 10% in the last 30 years. The GDP growth in the year 2015 the first quarter is 7% and this means that the economy is doing well. The inflation in the year 2014 was rated as 2% meaning that the economy stable and it has clear policies and strategies for the national growth (Eckstein 2015). In this context, it can be determined that China is one of the greatest growing economies. Circumstances that influence the policies and strategies of growth in China Political context It is important to understand that it is the context and circumstance that should determine the policies and strategies of growth in any economy. In China, there are various policies that determine its growth but these policies are being influenced by the context of the market and the circumstance. The first circumstance is the political policies. The political system in China is stable and for a long period of time now there have been no post election violence in China meaning that the political system is effective in influencing the success and its growth (David et al 2012). The political system influences the policies and strategies of growth in that because of the stability in the political system, strategies have been put in place to attract foreign investors. In addition, the global investors tend to invest in economies with stable political stability. In addition, the political stability has also influenced the policies of doing business in China. As a result, the government has managed to develop policies that help to attract foreign investors like lowering the cost of doing business and ease at which foreign investors can do business in China. This has helped to improve the formulation of the policies and strategies that influence the growth of China. Population growth rate The other prevailing and circumstance that determine the policies and strategies of growth is the population. China is one of the most populated economies globally. This means that the population of China can determine the growth strategies and policies. For instance, the population itself can provide the market for the products and services which are provided domestically. This means that the prevailing circumstances and context influence the growth strategies and policies which are developed by the economy. For instance, most of the Chinese products are consumed locally (Jalil & Feridun 2011). As a result, the government of China has developed the policy and strategy of encouraging the domestic consumption. The policies which have been developed concentrate on encouraging the domestic consumption as compared to the global products. In this way, the growth strategy is achieved because the locally manufactured products are being consumed domestically while the surplus products are being exported to the international market. This helps to increase the growth of the Chinese economy. Environmental policies The other prevailing circumstance and context that influences the growth policies and strategies is the environmental impact issues. Despite the intention to improve the growth and economy of China, the environmental policies should not be forgotten because they are important in forming the growth strategies. The global warming has been the issue and the G8 countries and other countries have developed policies that can help to reduce the negative impacts of industrialization on the environment. In this context, the prevailing circumstances and context regarding the environment influence the policies and strategies of growth since the environmental policies have to be considered when formulating the growth strategies in China (DeWeaver 2012). These policies that should be considered in formulating the growth strategies because failing to consider the environmental policies will lead to legal battle. Therefore, the environmental circumstances should be considered when formulating the growth strategies and policies. Health circumstances In addition, the other circumstance that determines the strategies and policies of growth in the economy is the health concepts in the economy. The health standards of the people will also influence the growth rate of any economy. Because healthy is the first priority of many economies because health population helps to improve the productivity of the products and services. Furthermore, health population helps to reduce the cost of maintaining the health standards of the people. There will be no growth strategies that can be developed when the citizens are starving (David et al 2012). As a result, the health standards of the people determine the growth strategies that should be developed. The growth strategies can be developed after the health of the people has been satisfied. It is therefore important to ensure that the growth policies and strategies consider the extent of quality of health standards of the people in the economy. Infrastructure Infrastructure on the other hand influences the policies and strategies of growth in China. Infrastructure includes the transport and communication network that is applied in any business. The communication network influences the growth policies and strategies that can be applied by an economy. When it comes to prioritization, it is important to consider the most effective industries that can be developed first before the growth strategies. For instance, due to increased business operations the transport network should be expanded so that it will be easy for people to move from one place to another. This will help to influence the growth strategies that can be applied because of the stability in the transport network process (Jalil et al 2010). After investing in the transport and network process, the government can be able to understand the policies and strategies of growth that can be formulated. This implies that the prevailing circumstance and contexts like the transport and communication network can determine the growth policies and strategies that can be applied by the economy. In China, the infrastructure is effective and this has enabled the country to formulate policies that can help create market for its products since the domestic market has been saturated. For instance, the Chinese companies have developed the strategy of securing building and construction projects especially in the developing economies like Africa so that they can generate income for the country. In this way, the exporting strategies have helped to increase the growth of the Chinese economy. Strength of the currency Furthermore, the other prevailing circumstance that determines the policies and strategies of growth is the strength of the currency. The Chinese currency is stable and this means that the export and imports can be balanced. When formulating the growth policies and strategies, the strength of the currency should be developed and this influences the interest rates as well as inflation. For instance, when the currency is weak there is likelihood that inflation will be high. This affects the cost of doing business in China and also determines the strategies and policies of growth (Phil 2012). However there is financial stability in China and this has helped to manage the inflation meaning that its currency is stable. The cost of doing business is therefore manageable and the development strategy that can be developed by the economy is encouraging internal borrowing by lowering the interest rates as the strategy of encouraging the bank borrowing. In this way, the investors will be able to access the sources of capital to ensure that the investors are encouraged to do business and this influences the growth and development. However, the instability of the currency can affect many economies which means that the global trade can be affected hence not only one economy can be affected. External conditions The other context that determines the growth policies and strategies is the external business environment. This is the business environment that exists in the global market. China is one of the leading exporters of products and services like construction and building services. However, competition in the global market has intensified and this has determined that the growth strategies of China. Due to high competition in the market the strategies developed by China focus on the external market. This is because in the developing economies like some parts of Africa have not managed to develop competency in various industries which are capital intensive like the building and construction (Alon et al 2008). In this way, the growth strategy is based on the external business conditions which have helped to eliminate the trade barriers hence the economy is expanding its operations extensively in the external market. However, the business environment can affect the growth strategies which are formulated negatively because the global economy keeps on changing. In this context, it is hard to formulate standard strategies that can be implemented by the economy because of the changing business environment. In achieving this, short term strategies can be developed to ensure that the changing business environment has been captured. Competition challenge The extent of competition in the global market has also determined the growth strategies and policies which have been developed by China. The challenge to growth like competition in the global market has also determined the growth strategies that can be unique to improve the growth of China. For instance, the Chinese firms have embraced technology in their operations so that the cost of their operations can be managed and also improve the quality of the work. This strategy has been developed because of the competition and embracing technology will help to improve the competitiveness and growth of the economy (Firzli & Nicolas 2011). In this context, the competition in the global market has prompted the Chinese government and the firms to embrace technology in their services so as to be competitive and earn the country foreign exchange thus improve its growth. Market opportunities The market opportunities are another circumstance that influences the policies and growth strategies formulated by the government. Due to globalization, the global market has been liberated and this means that best strategies should be developed to exploit the business opportunities. For instance, the China market has been saturated and the government has formulated the international market strategy to improve the ability of the domestic companies to enter into the global market to exploit the business opportunities (Shah 1995). As a result, the context of the market opportunities determines the strategies and policies of growth that should be developed. From this context, it can be agreed that the context and circumstances determine the strategies and policies of growth. This has been supported by the above literature. However, there are those who argue that strategies and policies of growth cannot be determined by the circumstances and quality. There are various contexts that influence the growth strategies. The first one is the strategic planning of the economy. The strategies and policies of growth are determined by the strategic planning and rules that govern the economy (DeWeaver 2012). This means that the prevailing circumstance and context does not determine the growth strategies but they are determined by the government planning. In addition, they also argue that growth strategies can be determined by the ability of the government to prioritize its activities effectively. In this way, they argue that the growth policies and strategies cannot only be determined by the circumstances and context but also by the strategic planning of the government. Therefore, these factors should be taken into account when formulating strategies and policies of growth in the economy to ensure that the strategies developed can lead to growth effectively. Conclusion The circumstance and context determine the policies and strategies of growth. This is because the circumstances and context helps to indicate the most effective strategies that can be implemented to achieve the growth of the Chinese economy. The contexts that determine the strategies and policies of growth include economic stability, financial and political stability as well as the external business conditions. The market challenges and the strength of the currency also influence the growth strategies and policies. The other circumstances and context that determine the policies and strategies of growth include the environmental issues as well as the health standards and population of the economy. However, there are those who argue that the growth strategies and policies are determined by the government planning and prioritization. Sources sited Alon, I. Marc, F & Marc S. (2008), "Geely Motors: A Chinese Automaker Enters International Markets", International Journal of Chinese Culture and Management, Vol. 1, No. 4, pp. 489–498. David, A. D. Richard, D & John, M. W. (2012). Continuing Factors Influencing Growth, Bennett Jones. DeWeaver, M. (2012). Animal Spirits with Chinese Characteristics: Investment Booms and Bust in the World’s Emerging Economic Giant. Palgrave Macmillan. Eckstein, A. (2015). China’s Economic Development: The Interplay of Scarcity and Ideology. University of Michigan Press. Firzli, B & Nicolas, M. (2011). "Infrastructure Investments in an Age of Austerity : The Pension and Sovereign Funds Perspective". Revue Analyse Financière, Vol. 41, No. 4, pp. 19–22. Jalil, A & Feridun, M. (2011). Long-run relationship between income inequality and financial development in China. Journal of the Asia Pacific Economy, Vol. 16, No. 2, pp. 202-214. Jalil, A. Feridun, M & Ma, Y. (2010) Finance-growth nexus in China revisited: New evidence from principal components and ARDL bounds tests. International Review of Economics & Finance, Vol. 19, No. 2, pp. 189-195. OECD. (2007). Information and Growth, Rationale for Innovation Strategy, OECD. Phil, M. (2012). "Exposing China's vast underground economy". The Register. Shah, A. (1995). Fiscal Incentives for Investment and Innovation, Oxford University Press. Read More