Influence of Globalisation:· Indicate the reasonswhy China is an emerging economyThe major emerging economies include Brazil, Russia, India and China(the BRICs).
China is an emerging economy as it has become very dominant bysustaining higher rates of economic growth than advanced economies such ascountries in the Euro Area and the USA, rising per capita incomes andreductions in poverty. China has also increased their rates of domestic savingand investment.· Indicate the reasonsfor the differences between Australia and China, e.g. factor endowments, costdifferentials, comparative advantageAustralia and China have differing distribution of factor endowments andas a result, specialisation is possible and profitable. Australia specialisesin mineral resources whilst China specialises in cheap labour.
Cost differentials?Comparative advantageAs an agricultural and resource-based country, Australia exports itscomparative advantage in agricultural and mineral goods, such as energyproducts and iron ores to China which provides China with low-priced rawmaterials for industrial production. As a rapid industrialising country, Chinaabsorbs raw materials from Australia and exports its comparative advantage inlabour-intensive manufacturing goods such as clothing and textiles which inturn provides Australia with cheaper goods for consumptionSome of the changes in the direction of Australia’s trade can beexplained by its factor endowments. David Ricardo’s law of comparativeadvantage indicates that nations should specialise in the production and exportof those goods it can produce relatively efficiently and import those whichrequire resources that are not in abundance.
Australia, therefore, withplentiful land and mineral resources is likely to trade with those countriesthat have large labour resources (such as China) and capital resources (Europeand USA).Introduction maybeBeing an emerging economy, China has experienced rapid and sustainedeconomic growth since the 1990s, even through the GFC. Since China isindustrializing, it requires many resources to fuel its development andeconomic growth. Coincidentally, Australia is a complementary economy to China,that is, Australia has an abundant supply of mining goods and minerals and thushas a comparative advantage in that industry, whilst China’s low-income labourenables for the cost-effective imports of manufactured and capital goods intoAustralia.· Definition of the term’globalisation’ and indicate the features of globalisationGlobalisation refers to the increasing level of economic integrationbetween individual countries that lead to the emergence of a globalmarketplace. Globalisation results in increased cross-border flows of trade(goods and services), capital (financial and investment funds), labour(mobility of skilled labour) and technology (TNCs and communication).
Globalisation necessitated economic reform measures to be introduced bythe Chinese Government:· Outline the economicreform strategies implemented since 19781978Deng Xiao Ping implemented arange of economic reforms (from1978-1997) known as the ‘Opening Up’ Policy, designed to improve China’seconomic performance, largely based on rapid industrialisation. As part of thereforms, the ‘one child policy’ was introduced to contain China’s populationgrowth.It focused on the ‘FourModernizations’ – agriculture, industry, science and technology. Theseincluded:Agricultural reforms (1978-1994)involved de-collectivisation (abandoning the commune system), replaced by theHousehold Responsibility System, where households could make their ownproduction decisions & sell any surplus output in free markets once statequota or plan was met. Led to dramatic increases in food production and surplusincome was invested in privately run town and village enterprises responsiblefor light manufacturing of industrial goods.’Open Door Policy’ 1980 adoptedtowards foreign trade and investment, with Special Economic Zones SEZsestablished in the southern and eastern coastal provinces of China.
SEZsattracted foreign investment & enterprises through incentives such as lowtax rates, exemption from import duties, cheap labour & power, & lessstringent government regulationsTaxation reforms 1994 shiftedpower to collect taxes away from provincial governments to the centralgovernment in Beijing, in order to improve efficiency of tax collection andfinance infrastructure spending. Reforms also targeted tax evasion andavoidance, which had hindered raising sufficient government budget revenue tomeet government spending commitments.Banking laws 1995 wereintroduced to develop network banking, the establishment of stock exchanges andestablish a more efficient capital market to facilitate saving and investmentin China.Cuts to tariffs 1992 and otherforms of protection were used to encourage greater domestic efficiency throughdirect import competition. These cuts supported China’s drive to attractforeign investment and open its domestic market to foreign competitionThe 13thFive-Year Plan (2016-2020) Examine and critically evaluate the strategies recently proposed by thenew China leadership