Growth Strategy of China's Export - Case Study Example

The financial crisis across the globe brought the problem to light even though the growth model of China’s export received limited traction from political complaints. The export-led growth strategy in China began back in 1978 with the power acceded by Xiaoping Deng. During this period, China was an unsuccessful state communism, a poor nation due to the sufferings in the era of Zedong Mao’s Cultural Revolution for ten years. With the inefficient collective agriculture, closed economy, and enterprises owned by the state losing money, the population of China that was fewer than 1 billion showed a per capita income of $353. The entire nation was in poverty. However, with the death of Mao Zedong, a series of Deng Xiaopong’s reforms that were aimed at promoting the growth of the economy of China took over and retained the power of politics in Beijing. This reformed the country.

China failed to obtain membership in the World Trade Organization under the leadership of Xiaoping Deng. The nation needed the status of the most favored country in America in the 1990s. China, during the whole of this period, began the privatization of TVEs and SOEs on a large scale and considerably lowered its tariffs. The process of annual review apart from exposing issues of human rights became a source of Chinese government humiliation, with hard-lined China officials remaining a problem just like the negotiators of the United States. The Chinese officials had anticipated that membership with the World Trade Organization would possibly undo the apparatus of institutional socialism. China gained membership in the World Trade Organization eventually in December 2001 despite all the mentioned concerns.

The China reforms were however achieved through the membership of the World Trade Organization that facilitated the setting of China tariffs and allowed estimation of the cost of production of goods in China based on the cost of inputs. The country also facilitated specific reforms that promoted trade in the country such as reforms that enhanced foreign enterprise in the country; reforms that promote free trade; reforms systemic; and capital control reforms. The World Trade Organization had significant effects on China. The exports grew annually by 27%, and the economy of the country shot up in 2001.

The growth of GDP was accelerated up to between 10% and 11% from between 8% and 9%. Initially, China goods that were exported to European and United States markets were goods of low added value, and labor intensive. However, after the year 2004, the goods had a high value-added and the majority of the exported good shifted from toys, garments, furniture, textiles, and footwear to electronics, auto parts, and equipment for power generation. Generally, China’s mix of products was now similar to those of richer nations.

In summary, China achieved a harmonious society through efforts that were intensified after a financial crisis that hit the world during the recession. Some of the sectors that were reformed in China included: healthcare, the  Hukou system, pensions, unemployment issues, the housing bubble, real rates of exchange, and banking. Read More