The Economy of China and the Advantages of Its International Exporting Trade - Essay Example

An economy which has strong roots and resources contributes to the growth and well being of people. The growth rate of an economy is depicted by the GDP and per capita income. Many factors contribute towards making an economy successful. Some of these factors are agriculture, infrastructure, exports, and production as all this contribute towards the growth. China despite being a Socialist country has been able to grow on all the fronts. China with its sheer hard work, dedication and using the latest technology has been able to project itself as the third largest economy. In 2009 it had a GDP of US$4.91 trillion. The country is growing and its policies are totally inclined with the world thereby enabling China to enter the world market. The development has been such that it is believed “the balance of power will shift to the East”. (Engardio, 2005) The growth shows that China has been able to dominate the world and it supplies everything from a small pin to an airplane. This has led to many “industrial parks, retail district, man made lakes for tourist and colleges” (Engardio, 2005) come up. This is thereby attracting business as well as tourist to the country to have the charismatic view of their country and increasing their foreign reserves. The growth has been mainly due to the “government new policies” (Schuman, 2010) which falls in line with the world policies. The country’s’ open trade policies and policies relating to currency fluctuation have helped them emerge stronger. This enabled China to “sustain the economic recession and come out of it because of the strong economic policies during recession”. (Schuman, 2010) This improved their international trade. The fact that they follow a policy of openness has given them stability in the market. This can be seen from the fact that China leads “the honey market and this is due to prices they offer which is below the world price levels”. (Ma, 2009) Ma who is a researcher says that China who is on the “weaker side due to trade barriers” (Ma, 2009) has been able to lead the market due to stability in prices. China thus has been able to enter various markets. It has been able to mould the external environment towards it and due to it even the economies which didn’t prefer this economy are getting an advantage as they get the products at a cheap price. The country has a diversified export policy and the interest rate both in the short and long term supports it. This has been supported by the growth from all sectors. The result is so phenomenal that it is expected that “Chinese economy will reach US$123 trillion by 2040”. (Fogel, 2010) This will be reflected in the “per capita income which is estimated at $85, 000”. (Fogel, 2010) This will improve the credit worthiness and will help China become a super power. The growth for the future can be attributed to the following factor. “The enormous investment China is making in education sector”. (Fogel, 2010) This will help them to have educated people. They will be able to work better as educated people have a pattern of doing well. It will make people get “more jobs abroad and help China reach every nook and corner of the globe”. (Fogel, 2010) China due to its population will be able to “provide learned workforce who are young and cheap”. (Engardio, 2005) It is seen that China presently has a “wide market for consumers due to which their consumption pattern has grown and with the increase in educated population it is bound to grow”. (Engardio, 2005) For example, we see China having the largest cell phone users. This speaks volume about the penetration level of technology and the state of livelihood. This has made them come with new electronic devices at cheaper rates. The only problem the Chinese companies are facing is the durability. People consider it not up to the specific requirements and the quality is a concern. This is something the country needs to work on and improving this will help them increase their share in the market. The economy is “producing in small batches to save the expenses of producing in huge quantity” (Engardio, 2005) which is helping the company to test the product and then work on mass production. This is helping them to come with tested products and this strategy is working well for the Chinese government. This has given them the leverage to come with new designs and a product which has helped them capture a chunk of the market. It has ensured that efforts are directed in the right direction. The growth has been such impeccable that Jim Jubak a journalist argues that “China with its sheer presence and policies can save the global economy”. (Jubak, 2010) This is due to the fact that “middle class consumer” (Jubak, 2010) has grown leap and bounds. This has caused “the number of people consuming goods increase”. (Jubak, 2010) This is helping the other economy as they are able to get a share of this and is helping the economy come out of the recession. The “increase in consumer spending” (Jubak, 2010) will help the GDP to rise by 39% as the “the policies are in tune with the world” (Jubak, 2010) and will give them a level playing field. Despite this there are certain fears which might hamper their progress. The recent fear which might hamper China’s progress is “property price bubble” (Schuman, 2010) as the prices have escalated at a rate faster than expected. This is creating doubts that the “banking system of the economy might fail”. (Schuman, 2010) Policies in this direction have been framed to restrict credit. An example of this is “reintroducing taxes on certain property and raising the required level of cash”. (Schuman, 2010) The bubble pressure is also checked by ensuring that “larger reserves have been set aside and inflation rate has been maintained under limit”. (Li, 2010) This has been due to “tight foreign policy which will control inflationary expectation and help to manage the risk of asset price bubble”. (Li, 2010) It will make them gain more share in the international market and will act as a tool to grow in the future. International trade has given China a lot of advantage. “It has helped them to move to different markets and grow in size”. The Chinese economy due to “anti-protectionism and the $250 billion support to trade finance” (Xinzhen, 2009) will be able to cater a wider market. “They will be able to enter new markets” and check the fluctuations back home. This is helping them to improve their “foreign trade dependence ratio” (Xinzhen, 2009) by declining the negative impact. This will give them an advantage and pose better growth rates. The other advantage they have is the “G20 summit which will provide China with a bigger space for development in the finance endeavors”. (Xinzhen, 2009) This will help to strengthen the economy and come up with policies and norms which support their development. China has a lot of advantage in the international trade. The country with its demographic and nature of business has been able to establish a wide market. The advantages China has in international trade is Firstly, “the availability of cheap labor as compared to other nations puts it in a commanding position” (Xiao & Qi, 2008) This is making them to produce products at cheap rates and even anti dumping is not restricting because the country has been able to deliver this at a low price. This is giving them an “advantage as compared to other countries as the product is cheap” (Xiao & Qi, 2008) especially when it comes to developing and poor Afro-Asian countries. Secondly, “reducing the environment pollution by having norms” (Xiao & Qi, 2008) in place. The country is having carbon credits which has allowed companies to trade in those and see that the economy “preserves the environment and operate within the limits prescribed by the governing body”. (Xiao & Qi, 2008) The economy is purchasing credits from other countries and using it to produce goods at cheaper rates and also ensuring environment safety. The advantage can be seen in the growth rate shown below: 9.6 8.8 7.8 7.1 8.0 8.3 9.1 10.0 10.1 9.9 11.1 11.4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Gross Domestic Product (GDP) Growth - China (%), Source: National Bureau of Statistics of China The above chart shows that “China has gained advantage in comparison to its counterpart and has been able to dominate”. (National Bureau of statistics, 2008) This has also given the following advantage Thirdly, “develop domestic competitiveness as the international market has given them a wide market”. (Article base, 2009) China due to competition and pressure from other markets has become tough and develop their local markets in such a manner that they are able to face it. This has developed their infrastructure. This has also attracted more tourists. This includes both the business visitors and tourist. This has increased their foreign reserves. This has as a result given them wide presence and recognition. Fourthly, “this has allowed for diversification and risk management”. (Article base, 2009) Having entered into different market has reduced the risk. It has given them a chance to work in countries where they can grow. China can push their products in those markets which give them profits and ensure that the local people don’t suffer. Having so many different countries to trade with ensures that they are not engulfed by the local deflationary pressure. This has reduced their dependency and improved their effectiveness. Fifthly, “develop the life cycle of item by making them available in different markets”. (Article base, 2009) This will help them to see that the product doesn’t phase out. When a product looses relevance in one country China pushes it in the other markets thereby resulting that the facilities are properly utilized. This is helping them continue with the same tested product and enter different markets with the same formula. China thus has been able to maintain its advantage. The policies and stability in the government has further added to it. This has ensured that the country looks forward towards integrating the west with the east. The country has been using the factors which they have a front hold. This has ensured stability and their policy of developing products which are sophisticated and trendy is adding to their coffers. This has made China emerge as the largest growing economy and with pro foreign policies the country is bound to move ahead. This will help China to grow and in the future will become a super power dominating the world. The fact that all sectors are contributing equally and with the population being young is giving them a boost. The country based on its demographic features and with the vision to dominate the world with its products is sure to grow. The results already have been impeccable and with more policies and development on all fronts the country seems to moving in a direction where it will lead all the economies and in coming years it is bound to rule the globe. 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