State and Society in 20th Century China - Literature review Example

and Society in 20th Century China China is a country which is more in collectivism, whereby every individual will be taking care of each other. China also has high power distance and adopting a long term relationship in businesses (Robbins et al., 2). As China has making attention to the rest of the world due to its rapid growth, foreign investors have to be alert in the Chinese culture to avoid from any conflict and to build a long term relationship (Hudson, 2005). As said by Hudson (2005), in order to succeed in China, a country that has strong economic power, foreign investors has to respect Chinese culture that has been developed in 5000 years ago. This is whereby Chinese culture is no more an odd knowledge around the world. Globalization of business can be define as multi-directional because globalization is at the same time leading to greater emphasis on nation identity and leading to greater cooperation between nations. Globalization is creating a situation where manager must able to work with people from different cultures, nations, regions and continents. As China's economy has attracted attention from all over the world, lots of international companies can be found in China (Rodriguez, 2007). Due to globalization, most of the firms are workforce diversity. To be deal smoothly in China, foreigner should have ability to perform to a great extent when dealing with the Chinese. Globalization became a buzz word in the 1990s because of its influence in creating a world in which geographic location became increasingly irrelevant. In essence globalization refers to the unrestricted flow of goods, capital, information, technology and people across national borders (Chow, 5). Globalization is, however, by no means a new phenomenon and China has been subjected to its effects for many centuries (Alford, 1999). In fact, the effects of globalization in China go "as far back as the Han dynasty (206BC-220AD) when trade took place between the Han Chinese and neighboring people in the North-west through the Silk Route" (Chow, 3). Despite this, in the Qing Dynasty and the early stages of the Chinese Communist Party's rule, right up until Deng Xiaoping's open door policy, China tried to close its doors and restrict the influence of globalization (Street, 2000 and Chow, 11). This was not the first time that China was forced to confront and implement a national strategy to either embrace or combat the effects of globalization. In fact, as recently as the 1990s, China was confronted by this conundrum, namely: whether to continue its global economic expansion in the face of the Asian financial crisis or to once again close it doors and retreat inwards to protect itself from the economic fallout of a struggling region (Fishman, 25 and Nolan, 31). However, by carefully weighing the advantages and disadvantages of economic openness the Chinese government decided to open up the Chinese economy even more, and eventually joined the World Trade Organization by implementing large economic reforms (Bijian, 2). There is no doubting that these economic reforms and China's embracement of globalization has brought stunning results. Since starting to open up and reform its economy in 1978, China "has averaged 9.4 percent annual GDP growth, one of the highest growth rates in the world" (Bijian, 3). One of the reasons for the huge leaps in growth has come from direct foreign investment that has been facilitated by China's admission to the WTO. For example, in the space of a few days in 2004, a North Korean Steel Company launched a $500 million steel project in the Dalian development zone; France's St Gobain invested $70 million in one of its presented glass production lines in China; Germany's Siemens inaugurated its 14th office in China for development of software; and Finland's Stora Enso invested $1.6 billion in a paper pulp project in Guandong Province (Hall et al, Press). Such results have seen China become the third largest trading country in the world and the envy of many developing economies around the world (Chow, 27). While such economic statistics are regularly celebrated by the Chinese government as a success of China's inclusion into the WTO, many in China are in fact lamenting the negative effects of globalization and the scrutiny that WTO membership has brought. In fact WTO membership came at a very high price for the domestic Chinese economy (Overholt, 5). Throughout the 80s and 90s China initiated structural changes such as the phasing out of direct subsidies for exports and began cutting tariffs in preparation for inclusion into the WTO (Pearson, 3). From the year 1994 till 1997 the tariff rate at China was lowered from 43 to 17% and when China entered into World trade Organization in the year 2001, the overall average was just 15 percent. Such drastic economic changes were at the behest of the WTO and the result being that a lot of factories and domestic industries have gone bankrupt because many people prefer foreign products which have become cheaper as a result of China's inclusion into WTO (Solinger, 9). Furthermore, Moore (2002) also argues that China's accession into the World Trade Organization could be viewed as more beneficial to the rest of the world rather than China itself. WTO commitments made by China do not in any way protect China's "domestic producers" and therefore the argument that that the greatest benefit of China's WTO membership is enjoyed by foreign companies is indeed a valid one (Moore, 311). Yang (2004, 307) argues that admission into the WTO was in fact too big of a restructure step for China and continues by noting that Chinese involvement in the WTO is great for foreign companies and bad for local ones because "one of the first laws enacted" to ensure WTO membership "was designed to attract and protect investment from overseas". It is clear that this lack of protectionism, although beneficial to the outside world, has been disrupted the income to domestic businesses. Of particular note is the fact that with China's WTO membership foreign investors have been allowed access to markets that were previously restricted or highly regulated (Samuelson, 14 and Pearson, 8). These incursions have been most evident in the insurance, telecommunications, and financial industries (Prasad, 4). Such competition is however of great benefit to the domestic Chinese consumer. In fact, fifteen years ago China barely had any mobile telecommunication services, whereas now it claims more than 300 million mobile phone subscribers, more than any other nation (Bijian, 10). Whether this is a result of modernization or globalization is highly debatable, but it is clear that Chinese consumers are embracing the increase in products and services provided by many foreign companies. Other than the local businesses being hurt by foreign investments and industries, the labor market in China is also suffering from major unemployment as a result of the forces of globalization (Chow, 24). While entry into the WTO has in itself not created joblessness, it has however heightened a number of trends that were already underway, including accelerating the rate of insolvency of state owned enterprises. The result being the discharge of tens of millions of workers who, when they were younger, were once assured of employment by the socialist state (Economy, 8 and Chow, 36). According to Prasad (2004, 6) "the unemployment problem is in fact likely to worsen over the next few years due to restructuring in the rural and state enterprise sectors", the very type of restructuring that has been mandated upon China by the World Trade Organization. Another cause of the unemployment problem currently facing the Chinese economy is its shift away from sunset industries such as manufacturing, mining and construction to newer industries that demand workers with specialized skills (Prasad, 11; Solinger 15 and Yang, 311). Similar changes are evident in China's effort to upgrade its technology industry, which has not only involved the replacement of much unskilled labor but in many cases also reduces the need to employ as many skilled blue-collar workers (Nolan, 36 and Economy, 12). While this can not be directly liked to WTO membership it is clear that the forces of globalization are having a major impact on the Chinese economy, the products it produces and its labor force. Political factor has be one of the biggest issues affecting the Chinese economy. Since year 1979, China's political structure has mainly affecting the economy because of its various economic reforms (Political factor affecting the Chinese economy n.d.). The official government of China is the State Council. Thus, the Chinese government holds a big power in controlling the trade and businesses in China. The amazing growth in China's economy as a result of its increased participation and integration in a global economy is also having social and political consequences. Most notable a growing divide between China's rich and poor. Obviously China would not have self imposed such drastic economic changes purely to encourage direct foreign investment to the detriment of domestic businesses, but it is clear the benefits of the global marketplace are not being shared around China's 1.3 billion people (Solinger, 18 and Chow, 2004). It is very much the case in China that the rich are getting richer and the poor are just getting left behind. This is also evident in the growing regional inequalities in China. Despite the governments attempts to rectify the situation, foreign investment has continued to flow to those provinces where education levels are the highest, infrastructure most well developed and political power most concentrated (Overholt, 6 and Economy, 19). Moreover, while the wealthier provinces in theory pay taxes to the centre to compensate the poorer provinces, in practice this system has failed allowing corruption to flourish, resulting in power becoming de-centralized from Beijing to local authorities. Not surprisingly such inequality has contributed to serious political tension between the haves and have nots (Bijian, 18 and Economy, 21). Overholt (2005, 7) however argues that despite the growing divide between the rich and poor, the Chinese overwhelmingly support more globalization. Overholt asserts that "no large country in human history has ever experienced such rapid improvements in living standards and working conditions" (2005, 7) as China has in its acceptance of adjustments to accommodate the forces of globalization. So while the economic dividends of China's rapid growth are not being shared equally around the country, the majority are nonetheless better off. One of the reasons for such widespread approval of the modernization of the economy has been the upgrading of technology, especially telecommunications which has been an essential aspect of the Chinese government's plans for continued economic growth (Chow, 40 and Economy, 28). Normally if there is general contentment among the population then this would provide little in the way of difficulties for those in power. Fred Tipson (1998, 12) however, notes a difficult conundrum for the Chinese government in their embracement of economic globalization. Tipson (1998, 14) concludes that the communications revolution will "diminish the need or inclination of most Chinese to defer to central authority or accept routinely the government's characterization of reality." The Chinese government is more than aware of the threat to its power that the technological revolution and global scrutiny presents. Given the current uprisings and discontent in Tibet the government has blocked access to many websites to control the flow of information to not only its own people, but the international community (Maunder, 2008). So while the forces of globalization may have brought prosperity to China, the Chinese government also has to work overtime to maintain its grip on power. When evaluating the impact that globalization has had on China it is important not to lose sight of the big picture (Bijian, 25). However, the open-door policy that was first advanced by Deng Xiaoping in the late 1970s has been of great success in modernizing China. It is true that such rapid growth has presented China with some problems, including the demise of some domestic industries, unemployment and minor political instability, however given its current path it appears that China's rise to superpower status is inevitable. Works Cited Alford, William (1999) 'Does the rule of law really rule' paper presented before the Conference on Policy Reform in China, Center for Research in Economic Development and Policy Research, Standford University, November 18-20, 1999 (Online) Available from: http://www.cdy.sagepub.com/cgi/reprint/11/3/287.pdf [Accessed 10th March 2008] Bijian, Zheng (2005) 'China's Peaceful Rise to Great-Power Status' Foreign Affairs September/October 2005 Chow, Gregory (2002) 'China's Economic Transformation' Oxford: Blackwell Publishing Company Chow, Gregory (2004) 'Knowing China' Singapore: World Scientific Publishing Company Chow, Gregory (2005a) 'Corruption and Economic Reform in the Early 21st Century' Princeton University, California: Mimeo Chow, Greogry and Yan, Shen (2005b) 'Demand for Education in China' Princeton University, California: Mimeo Economy, Elizabeth (1998) 'China Confronts the Challenge of Globalization' New York: Rockefeller Brothers Fund, Inc Fishman, Ted (2005) 'How the rise of the next super power challenges America and the world' New York, N.Y.: Scribner Hall, D., Jones, R., and Raffo, C. (2004) 'Business Studies' 3rd Edition, Lancashire: Causeway Press Ltd Hudson, S. 2005. Negotiations, contracts and the Chinese culture. http://scm.ncsu.edu/public/lessons/less050615.html (accessed April 22, 2008). Maunder, Patricia (2008) 'The Great Firewall of China' The Age, March 20, 2008 (Online) Available from: http://www.theage.com.au/news/web/the-great-firewall-of-china/2008/03/18/1205602389513.html [Accessed 21st March 2008]Moore, Thomas (2002) 'China in the World Market' New York, NY: Cambridge University Press Nolan, Peter (2001) 'China and the Global Economy: National Champions, Industrial Policy and the Big Business Revolution' New York, N.Y: Palgrave Overholt, W (2005) 'China and Globalization' Testimony before the U.S.-China Economic and Security Review Commission, May 19, 2005. Santa Monica, California: Rand Corporation Pearson, Margaret (2001) 'The Case of China's Accession to the GATT/WTO', in David M. Lampton (ed.), The Making of Chinese Foreign and Security Policy in the Era of Reform, 1978-2000 Stanford: Stanford University Press Political factor affecting the Chinese economy. n.d. http://www.economyinchina.com/political-factor-affecting-economy/ (accessed April 24, 2008). Prasad, Eswar (2004) 'China's Growth and Integration into the World Economy: Prospects and Challenges' International Monetary Fund Publications, June 17, 2004. Robbins, S., Bergman R., Stagg I. and Coulter M.2006. Foundation of Management 2nd edition. NSW: Pearson Prentice Hall. Rodriguez, J. 2007. "One size fit all" approach does not work for global workforce diversity. http://www.diversityjobs.com/one-size-fits-all-does-not-work-for-global-workforce-diversity (accessed April 25, 2008). Samuelson, Paul (2004) 'Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization' Economic Perspectives, 18: 3 Summer, 2004 Solinger, Dorothy (2005) 'Chinese Urban Jobs and the WTO' The China Journal, May 2005 Street, N., Lynch, M and Marilyn, J (2000) 'American Business in China: Balancing Culture and Communication (Online) Available from: http://www.cald.org/website/polparties_asia.htm [Accessed 5th March 2008] The world factbook: China. 2008. https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html (accessed April 22, 2008). Tipson, Fred (1998) 'China and the Information Revolution' China Joins the World: progress and Prospects New York: Council for Foreign Relations Press Yang, Dali (2003) 'Remaking the Chinese Leviathan' Stanford, California: Stanford University Press Read More