China Economy
Economy Over the past thirty years, there has been a major shift in the world economy. One of the reasons is that companies like those from China are now playing a more vital role in the economy as a whole. China is a country whose economy has been greatly influenced by globalization. Globalization is “the increase in international exchange, including trade in goods and services as well as engage of money, ideas, and information.” (Hill, 2014) In short, globalization allows for the breakdown of global trade barriers, like those in China. The breakdown of these of these trade barriers are quickly putting China on track to becoming the largest economy in the world, surpassing the United States by year 2020. (Hill, 2014) Currently China has the second largest economy as a whole in the entire world. However, many economist agree that China has already surpassed the United States when it comes to purchasing power.Prior to 1979, Chinas government owned all farms, markets, and industries making the country a command economy. Trade with the United States and other countries were limited to acquiring only those goods that could not be made in China. In 1979, after the death of their leader, China launched many economic reforms. Under new leadership from the very famous premier named, Deng Xiaoping, China moved more toward a free market economy. In doing so, the central government allowed farmers to receive ownership incentives for their crops. Also, as part of this new economic reform, China developed new special economic zones. (Morrison, 2014)
Xiamen, Fujian Province was one of the first economic zones created. That means it had a special government system that allowed foreign investments and foreign trade. The idea worked so well that the Chinese government continued the process establishing 14 more economic or specialized zones. These were mostly coastal cities with access to ports. The results were double digit GDP growth year after year for almost two full decades. See figure 1 below. Figure 1China GDP and Real GDP Growth Rate From 1978 – 2011[pic 1]Starness International: China Market ResearchSince the introduction of economic reform in the 1980s and the accession to The World Trade Organization (WTO) in 2001, China has seen rapid growth and gained great acceptance into the global economic system. The country is rapidly becoming trade partners with many countries around the world. In 2011, they were exporting/importing partners for 32 and 34 countries. Chinas share in global trade has doubled, accounting for 10.38 percent of the worlds merchandise trade exports and 9.43 percent of merchandise trade imports. Major exports include electrical machinery, machinery (including computers), knit apparel, and furniture and bedding while major imports include electrical machinery, mineral fuel, ores, slag, and hash.