Foreigners Influence on Chinese Trade - Essay Example

FOREIGNER’S INFLUENCE ON CHINESE TRADE Foreigner’s Influence on Chinese Trade Introduction Since the period 1850 to 1980, China has undergone massive change in a large number of areas including politics, culture and economy amongst other facets of the nation (Hsu, 2000, p. 2). The United States of America is one nation that has really played a significant role in changing particular areas of the Peoples Republic of China. After a long period of missed opportunities, China is currently a major player in the affairs of the world as it has undergone a rejuvenation of its systems mostly on the political, economic and military clout (Dorn and Wang, 1990, p. 277). This makes it exercise significant international power in both East Asia and other areas in the world such as Africa (Joseph, 2010, p. 21). After the period 1900, China was slowly on the decline and there was increased control of the Chinese ports of entry especially the seaports by foreign nations who controlled the trade that was taking place there. More important is the Opium Wars whereby China became increasingly under the control of Great Britain. The resultant effect of the defeats that China underwent was the control of its seaport by foreigners who divided different parts of the country to spheres of influence. An important period when the Chinese lost control of their trade was during the Manchu Dynasty, whereby the regime could only survive through the help of the European powers who expropriated the Chinese trade for their own benefit (Perdue, 2005, p. 521). In this paper, we will discuss how the Chinese came under the influence of the British especially their trade, which eventually affected their economy in one way or the other. American and British Influence on Chinese Trade As at 1900, China’s trade was dominated by the British who practiced what was known as mercantilism that involved the trade of raw materials from the colonies in which they exercised their power. One such place was China whereby a close trading network was formed with the aim of appropriating the raw materials that could be found in the land occupied by China. Therefore, the economy involved the extractive industries such as trading in timber, fish that had significant market in Europe. Moreover, the Navigation Act of 1651 required the North American British colonials to buy goods including those from China through England rather than through independent channels. Americans later joined the trade themselves and traded in Chinese products such as tea, porcelain and silk and their need to generate capital from the trade enhanced their influence on the Chinese. The Americans therefore shipped their goods from the ports of New York, Boston, and Philadelphia amongst other ports in exchange for Chinese products through ports such as Shanghai. With trade increasing from across the Atlantic into China, it came with influence that either changed the lives of the Chinese for the better or for worse. The most important commodity that the Americans obtained from the Chinese was tea and textiles, while the Chinese got manufactured cotton products from the United States, which had been highly mechanized. After the Taiping Rebellion as well as other revolutions, there was pressure on the Chinese ruling regime as well as from external powers, which advocated to the opening and liberalization of the Chinese economy (Clesse, 2004, p. 181). With such serious internal problems, many nations took advantage of China to come up with treaties that would only favour their economic affairs majorly in trade and investment. The United States therefore became at the forefront in encouraging the opening of China to foreign trade through an open door policy. However, there were differing views on trade amongst the Chinese and their American trading partners. According the Chinese Confucian thought, the society is usually divided into four classes that include the scholars, peasants, artisans and merchants. Within the same society, the regime only aims at providing the inhabitants the necessities but the ruling or upper classes are entitled to luxuries. America and Britain in their capitalist thoughts saw tea from China as a means of expanding their influence over the Chinese affairs achievable through trade between the two nations (Brook and Blue, 2002, p. 159). From this background, the influence of the foreigners on Chinese trade and how it handles it economic affairs began. The American influence on the trade as conducted by the Chinese has greatly changed how their economy is run in the last one hundred years and this has affected how it approaches current matters on economy in relation to international trade. Since then, China has actively developed an open door policy of investments following in the capitalist system, although it is always guised as guided by communism ideals. Through the cultural interaction with the foreigners, China opened up to international or foreign trade, influence, and has become a serious player in the global community when it comes to trade and economic matters (Spence, 1990, p. 3). Nearly all trade that occurs in the world has the input of China and its policies affect how many economies are run on top of the fact that it is the second single largest economy in the world. The Economic Reforms in China Due to Foreign Influence China has undergone major economic reforms largely due to foreign influence and this has had profound impact on their domestic modes of production, income and other facets of the economy. Starting the year 1979, China has changed from relying on its own centralized planning by the state to an economic system that allows the market and commercial competition to play a significant role in economic affairs (Niroomand, Hamwi and Hudson, 1996, p. 222). These included the restructuring of the agricultural sector and having price controls be dictated by the market, which are Western ideals of capitalism. There is also the implementation of economic levers and interest rates, which are significant factor that control any economy in the world. Through the open door policy adopted by China in its economic policy, there has been a decentralization of the economic system, which has attracted foreign trade and investment within the country thus dictating local policies enacted by the government (Niroomand, Hamwi and Hudson, 1996, p. 223). China’s rise to be an economic superpower is therefore described as that driven by exports and has led to effects not just domestically but in international trade regime (Liu, 1999, p. 212). It is important to note that before the year 2009, China did little trade with the rest of the world but with the policy of reform and the opening up of Chinese borders for trade its economy grew in bounds. This can also be attributed to the embracing of market-based economy, which liberalized trade resulting in the incredible growth of the economy, trade and foreign investment. Its value of exports to the world could also be attributed to the doing away with the dual-track exchange rate system and the uptake of the US dollar, which unified its international trading system. This means that the market in China became increasingly open to international trade especially the agricultural, manufacturing and the service sectors while at the same time removing the barriers for trade. Despite the positives that have been brought by the opening up of the Chinese market to international trade that has brought massive benefits, it has also come with challenges. Challenges of the Foreign Trade The opening up of China to foreign trade due to influence by the foreign nations led by the United States has also come with challenges. These can be in the form of social and economic imbalances that are caused by growth that relies mainly on trade through export, which has the potential of making the economy unstable in case of international recession in the world economy. The exports by China have far much exceeded its imports, which have made it have large sums of surpluses, which have led to the accusing of China of manipulation of their currency mainly through undervaluation. Moreover, the overdependence of China to manufactured goods to support its economy has left it vulnerable as when such sectors face problems, they may be forced to import which will cause serious imbalance in its trade. Global risks in economies such as the financial recession have affected the economy of China, which also faced collapse in its economy as it relies on an export-driven economy (Yang, 2012, p. 6). This is because of the fact that China also relies on the global economy and foreign demand for its products and any time that such economies are hit it is also bound to be affected in its export-led economy. It is also important that the foreign influence that has changed the economy of China can only offer temporal support in terms of investment and the increase in credits and loans for the economy can make its financial system to be overstretched. When this happens, China will find it difficult to recover or re-orient its economy for prosperity. The slowing of the economy also makes China less competitive in the international market and this has the potential of affecting its credit rating in the international financial arena. Conclusion In the early nineteenth century, China strongly relied on having its economy controlled by the government as opposed to the decentralization that was adopted in the years after 1978. Through the implementation of an open door, policy that focuses on market liberalization and having an open trade regime, China greatly implemented the hitherto foreign concept of market liberalization associated with capitalist societies such as the United States. This made China to have one of the fastest growing economies in the world as it relied on an export led trade economy. This came with numerous advantages, as there were massive increases in job creations as well as an improvement of the GDP of the People’s Republic of China. However, this also came with disadvantages as an export-led economy relies on exports only and any disturbance in the global financial system such as the recession that occurred starting from 2008 disturbed its economy. The decline of exports as a driver in the growth of China has the potential of affecting its economic development in the long-term, as it will soon have an imbalance of trade if it cannot find new markets. Moreover, China also faces competition from emerging markets such as India and Brazil, which have also experienced growth in their general economies. In conclusion, it can be stated that even though China was influenced greatly in its trade and economy by foreign nations such as the United States, it still has a foothold on its major ideals, which stresses on the power of the state in the running of its affairs. It will therefore remain a key player in global affairs, which it desires to be carried out according to its terms and conditions. Reference List Brook, T., & Blue, G. (2002). China and historical capitalism: genealogies of sinological knowledge. Cambridge, Cambridge university press. Clesse, A. (2004). The vitality of China and the Chinese. Amsterdam, Dutch Univ. Press [u.a.]. Dorn, J. A., & Wang, X. (1990). Economic reform in China: problems and prospects. Chicago, University of Chicago Press. Hsu, I. C.-Y. (2000). The rise of modern China. New York [u.a.], Oxford University Press. Joseph, W. A. (2010). Politics in China: an introduction. Oxford, Oxford University Press. Liu, G. (1999). 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