China - Grade: 12 PDF

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Economics China essay...

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CHINA IN T RO 

Over the last 3 decades, China has focused on the goal of maximising EG, integrating into the global economy to do so.

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Looked away to shift away from a centralised planned eco to a socialist market eco, whilst also allowing X and I to maximise G from 1980s to the early 2000s, rather than Dom C. China has achieved EG through the ODP, trade liberalisation, undervaluing of the RMB and financial market deregulation However, China is now currently more focused on its eco development to  their reliance on the global eco and its vulnerability to eco shocks This is to be achieved through initiatives such as the OBOR, WDP, pollution controls and the implementation of renewable energy

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A GRICU LT U RA L RE F ORMS

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Common ownership system (socialism – centrally planned) in favour of household responsibility system  allowed households to make their own economic decisions, such as selling surplus in the free market once state quota is satisfied Lead to significant rise in food production with  invested into private enterprises = significant rise in crop output, by 48% from

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1978 to 1987 o Increased incentive   productivity  G Agricultural output  by 8% per year and food prices  by almost 50%largely successful growth policy

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OD P   

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Focused on stimulating high EG in late 1980s, realising the growing disparities between China and Western regions of the world. First major policy was the ODP  Chinese gov implementing various reforms to facilitate and encourage FDI, trade and TNCs to increase EG. Included the implementation of SEZ (Shenzhen, Shanghai, Xiamen and Shantou) tax requirements for foreign coastal firms 24% 15% and  regulation to develop an attractive environment for foreign I and TNCs to establish in China o TNCs attracted to China due to CA in labour (now comprising of 94% of Chinese X) o Foreign companies  from 2000 to 80,000 o Industrial firms  from 377,000 to over 8M o New tech such as express Air cargo Hub Had huge positive effects on EG as 3-4% avg EG in 1980  10% from 2000-2007 at a high of 14.2% in 2007 Chinese eco now contributed to 17% of GWP

OD P : T RA D E LIB E RA LIS AT ION  

Along with the establishment of SEZs, China joined the WTO in 2001  to gain access, underwent trade reforms o Avg tariff levels decreased from 55% in 1980 to 12% in 2002  embracing comparative advantage Trade  from 8% of GDP in 1973 to 64.5% of GDP in 2006 o o

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“Workshop of the world”  crucial to global supply chain Economies of scale in manufacturing

o Allowed foreign producers to directly sell in the Chinese market and to establish themselves there if desired. China adopted this X oriented growth strategy to access the global market and hence reap the benefits of free trade, such as technical and allocative efficiency, resulting in a LT decrease in the cost of production. Highly successful, contributing to the drastic G increase of 8%.

RE VA LU IN G A N D U N D E RVA LU IN G OF T HE RMB  

The Revaluation of the RMB on July 21st 2005 was a priority of the Chinese govt to decrease economic volatility, by altering the nation’s pegged currency against the US currency to against a basket of currencies of China’s major trading partners. China has thus become less vulnerable to fluctuations in eco activity in the U.S.A reducing financial market volatility. o Since then, China has made small revaluations of their currency to maintain high levels of export led eco growth. For example, in August 2015, there was a 2% devaluation of the RMB by the People’s Bank of China to support China’s X trade competitiveness as world growth slowed.

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As a result of this strategy, China has sustained a high level of eco growth at 7% in recent years despite slowing global eco growth.

N E GAT IVE S OF E G 

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However, in order to adopt the advantages of globalisation, China had to open themselves up to potential volatility o E.g. During GFC, Chinese G was sig impacted, falling to 9.2% in 2008 o Due to stimulus package of $580B, this curbed Chinese G from falling further than predicted Rebound to 10.4% G in 2010 Following ESDC, extreme high debt in China + Japan and crises in Japan, there was a gradual decline in Chinese EG towards more sustainable levels of 6.7%.

RE BA LA N CIN G + IN E Q U A LIT Y  

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Following extreme downturn in GFC, Chinese gov pursued a process of rebalancing, focusing on achieving sustainable G In consideration of Kuznets’s curve, as China’s eco transitioned from developing to emerging, there has been extensive  in inequality o SEZs  dualistic eco as top 10 cities had Y 150% higher than that of national Y avg and Shanghai having 200% higher Y than the avg city. This resulted in a severe  in Y inequality as the GC rose from 0.3 to 0.5 in the last 20 years. o UN describes anything higher than 0.4 to be sever Target on  Dom C through MER  Aim for C to contribute to 2/3 of LT GDP EG

OBOR    

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Address these issues through the OBOR initiative, comprising of a series of infrastructure developments across western China, Central Asia and Europe. Involves the implementation of roads, ports, airports, Info and communications tech and I  formation of eco + trade o  Jobs Overall aim is to  QOL between the SEZs and the western provinces of China +  Inequality and facilitate shift to ETMs Similarly, in establishing transport networks  able to effectively channel any excess production to regions along the OBOR routes  profitability of Chinese domestic firms. o Likely to accelerate growth especially in rural and western regions, as trade is expected to lift by $2.5 trillion USD in a decade due to greater transport links. Fears china would abuse globalisation o 1 way trade route,  int debt o E.g. Sri Lanka took loan to build airport for $190M but was unable to pay the loan  handing it over to India

WD P 

Works in conjunction with OBOR, focusing on building power plants and establishing various modes of transportation in rural areas of China  $1T investment o Includes over 90 individual construction projects (  productive capacity  LT G) supporting infra

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Some success – whilst Y G in the western region has strengthened, EG in the East has continually outpaced the west, exacerbating Ineq o Urban-Rural Y ratio decreased slightly from 3.35 (2008) to 3.04(2013) o Rural poverty In China plummeted between 1980 and 2015 from 50% in 2000 to under 5% in 2016, however ineq still prevalent

COMP U LS ORY E D U CAT ION   

9 – Year law of Compulsory Education ratified in 1986 as part of “four Modernisation Policy” o Requires all children to attend school for a min of 9 years and authorised tuition free education for this period Education is strongly linked to future QoL, increase skill of labour force, increase eco dev Highly effective policy o Literacy rates  from 79% (1984) to 96.4% current and % of pop with tertiary edu rates increased from 21% in 2006 to 39% in 2014 o China has both large numbers of semi-skilled workers and a growing number of highly skilled workers. E.g. China trains 600,000 new engineers annually  This  Infra G and dev

5 Y E A R P LA N  

5 year plan  series of social and economic development initiatives issued since 1953  shaped Chinese eco 2016  focused on  innovation,  inequality and improving environmental sustainability and overall economic development o Implementation of 2 child policy  reduce likelihood of future ageing population o o

Raising retirement age  progressively reduce the likeliness of a weak labour force in the future Full implementation of the supplementary health insurance program proposed for jobless rural/urban resident suffering from major diseases

2020 

Due to the recent breakdown of connections due to the impacts of coronavirus and hostile international environment, China can no longer rely on X for the source of EG o Beijing  pushed an aggressive “Go West” stimulus campaign that includes a suite of incentives and tax policies to drive further I into the region o Aim to boost Y and C with substantial infrastructure spending on rail, irrigation and industrial projects in Chendu/Chonqing o Dom C only makes up 38% of GDP compared to the 68% of USA  targeting Western China as a source of new EG

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Chinese gov policy over the next 2 years  $20Bn funding for 35M job placements in W China. o China will need international partners to design + deliver vocational training  tap into the Aus VET market which

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has been a recently expanded and highly trained sector (discretionary fiscal $585M fund)  opportunities for both nations In West China, Aus has a comparative advantage  G prospect for both nations

E N VIRON ME N TA L P OLICIE S  

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In consideration of Kuznets’s environmental curve, generally as EG , enviro sustainability is compromised Issues o 20% of global Co2 emissions o Only 1% of Chinese cities meet WHO minimum standards for air quality o 20M people had respiratory diseases from air pollution o 300M people drink polluted water daily Globalisation has led to pressures in addressing these issues o Three gorges Dam to  S of clean water, and also led to  hydro power  Offset by the fact that 70% of Chinese power is in coal  The Yangtze River contains 300 different fish species. It is argued that the construction of the dam will prevent fish from spawning upstream, thus diminishing population sizes.  This would have a negative impact on the local fishing industry and also on the livelihoods of fisherman who depend on it. o 13th 5 year plan included the construction of 5M electric cars o Planned to cut emissions by 60% per unit of GDP by 2030 Paris Agreement in 2015 as part of a new Kyoto protocol to limit effects of pollution o China’s ratification of the Paris Agreement also emphasised the nation’s movement towards environmentally sustainable policies with a promise to cap CO 2 emissions by 2030 and to reduce carbon intensity levels by 60-65% from 2006 levels. o As a result of China’s greater focus on environmental sustainable policies we can see a trade off with the nation’s eco growth as the trend of high eco growth has slowed to 6-7% in recent years. Tengger desert  worlds largest solar energy sources...