Globalization and Global Governance – Does Integration Brighten China’s Economic Future?
Globalization and Global Governance – Does Integration Brighten China’s Economic Future?
Chantal Guedon
Globalization and Global Governance
Does Integration Brighten China’s Economic Future?
Currently, China has one of the largest economies in the world and every year it is impressive to see the growth that the country endures politically, socially, and economically. The progress of China is due mostly to globalization and the integration and support from the west. With the size and potential of China there was always a question of whether or not it would be appropriate to expedite China’s integration into the modernized world and if there would be a backlash against what was inevitable. Since the fall of Communism following the Second World War, China has resorted to a socialistic economic standpoint which has increased its productivity and the cash flow within China itself. It is hard to argue that globalization and the opening up of China has been nothing but beneficial. However, the intense growth that China has endured over the past few decades has been so fast that there are many loops in its economy leading to detrimental ramifications to China’s people, labor market, and fiscal sustainability.
A nation who is subject to globalization is seen as a nation willing to adopt a homogeneous viewpoint on all economic and political issues while giving freedom to foreign investors, jeopardizing domestic industries. China has done many things to benefit the world economy and has definitely been a great support system as it has slowed down in recent years. Although the progress that China has made is amazing, there are still many aspects in its policies that are beneficial for the global free market economy; however, these economic structures are detrimental to local businesses. The openness that China has agreed to has allowed a taxing amount of foreign investment that is more than likely to squeeze out all of local Chinese investors, companies, and competition. According to author yang this type of foreign investment has lead to the “flounder of investors” of local businesses (Yang 2004, 118). Another argument is that and the process of globalization went too fast and China was unable to keep up with the changes, resulting in a poor labor market outcome. This argument is mainly based around the fact that unemployment is increasing while the most of the major industries are controlled by the government leaving a limited amount of room for local business to thrive in the market. In the long run, unless the Chinese government takes action to increase the private sector then the largely expanding economy of China will come to a halt and quickly reverse itself. Other than the local business being hurt by foreign investments and industries, the labor market in China is suffering from major unemployment. According to a paper written by an International Monetary Fund official, “the unemployment problem is in fact likely to worsen over the next few years due to restructuring in the rural and state enterprise sectors” (Prasad 2004, 6 ). The type of restructuring that the author notes is what has been mandated upon China by the World Trade Organization. The WTO was too big of a restructure step for China. In a global sense, Chinese involvement in the WTO is great for foreign investment and bad for local investment because “one of the first laws enacted in the reform era was designed to attract and protect investment from overseas” (Yang, 2004 307). However, the real detriment is with the local government in China not receiving proper adjustment to China’s globalization. While the Chinese Central government is doing well with WTO policies, many of the local governments are being left in limbo between their old policies and their new ones. There is a great amount of “underdevelopment” in China’s legal system and local governments which “has required significant adjustment on the part of China.”(Yang, 2004 307). As stated before the Chinese Central government is doing well with these adjustments there seems to be no force on the local governments at any level, leaving them in their state of underdevelopment. The harsh effect of this is the lack of faith by the people in their government and also the failure of local government investments.
The unemployment issue leads to a bigger issue. With the lower classes in the Chinese society reaping the bad effects of China’s integration and the upper classes gaining all the rewards, there is a definite social strain on the Chinese society. According to authors Street and Maelski their biggest argument against China joining the WTO is the cultural ramifications because currently China’s WTO involvement has “cut deeply into the fabric of China’s social order” (Street, 211). The specific ramifications that they speak of is the enlargement of the gap between