Economy of China - Research Paper Example

 China (Economics) Introduction In the present era, the world is observing progressively extensive and powerful impacts led by globalization. As a consequence of trade liberalization, import limitations and enforced rules on foreign investment have also reduced considerably. Thus, at the present time, the cross border trade activities confront with low level of barriers mitigating the gaps between nations and simultaneously motivating them towards adopting the virtues of international relations. Simultaneously, the roles of cross border business activities, especially for multinational organizations, have become significant and dominant in certain segments. Contextually, with respect to commercial activities, national limitations are lessening in terms of legitimate administrations where independent federations are performing as the principle power over their respective regions (Kojima, 2002, pp. 1-2). A similar notion can also be held true in the context of China’s relation with major global powers, including US, UK and other countries. On political and economic grounds, serious economic conflicts have transpired in recent times between China and other economies, especially those concerning US on numerous aspects. Besides, Chinese economy is also facing problems which are likely to have profound impact on the world economy (Xuetong, 2010, pp. 267-269). Considering these aspects, this essay will review the world politics on international business causing conflicts, majorly among China and US along with other nations. Therefore, prime focus of the essay will be on the economic problems witnessed by China concerning its relations in the global arena. Stating precisely, the objective of the essay is to evaluate the economic issues currently witnessed by China in the international context from different perspectives. China’s Economic Problem In the global political history, two most apparent changes in power has been identified in the recent occurrences; one being the rise of European economy after ‘Industrial Revolution’ and the other being the rise of American economy in the post-Civil War era (Zhou, 2008, pp.171). These power moves have resulted in international conflicts with the motive to acquire more authority in the global trade systems. It was during this era that weakening nations became more probable to lose the governing position in the international business system, thereby increasing the gap in relation to international power distribution. However, with continuous changes occurring in the international context and also with the virtues of globalization, China emerged as one of the most apparent leading economies attracting huge amounts of Foreign Direct Investments (FDIs) and thereby obtaining competitive developments. This can be observed with reference to the growth of Chinese economy which has evidently created a degree of anxiousness amid the leading global powers concerning their threat of losing their dominating position in the international business system. Furthermore, China’s deliberate attempt to rise as a global power, which at times have been criticized to challenge the other existing entities, also tend to impose a severe implication on its international relations (Zhou, 2008, pp.171). Proximate Causes of the Situation The proximity cause of the economic situation, currently prevailing within China has often been accused to be more political rather than being economic. According to Johnston (2012: pp. 64), in various instances, the governance of China has been witnessed to get negatively affected due to political corruption causing grievances not only in the national but international context. Arguably, the issue of political corruption cooperates with public distress concerning inequality of income by a considerable extent. In political terms, the monetary policy of China can also be verified to be a reason for the currently identifiable economic problems. China’s economic growth is believed to be the result of intense export businesses which are expected to slow-down in the upcoming days. The major reason of such circumstances can be identified in relation to the key procurers of Chinese products, i.e. US, Europe and Japan. Besides, the value of Chinese currency is also believed to be undervalued with the potentiality to create problems in relation to the international relations existing amid China and US. However, experts depict that the problem of imbalances in China’s international relationships are more than only currency fluctuations (Tseng, 2010). It is in this regard that China’s economic growth is also believed to be unsteady by several economists, especially when comparing the statistics with that of the international scenario (Lardy & Subramanian, 2011, pp. 43-52). State and Non-State Actors of China’s Economic Problem The economic issue concerning income disparity can be identified as a result of the traditional legislative measures enforced by China. Corruption as well as educational limitations can also be stated as major actors for China’s economic problem (Higgott, 1999, pp. 20-23). Furthermore, in relation to its international relations, it can also be stated that China had to witness serious impact of global economic crises during the past decades owing to its higher degree of dependency on FDIs. It was also due to globalization that the financial turmoil witnessed in western countries where channelized to China causing conflicts in relations to its international trade policies (Reinicke & Witte, 1999, pp. 8-10). Therefore, the state actors can be identified in terms of political legislative measures to have an impact on China’s economic problem, by a large extent. In the similar context the non state actors can be identified in terms of globalization and international trade relations. Impacts of China’s Economic Issues on its Sovereignty Studying the recent fluctuations in the global arena, it can be argued that the sovereignty of China has been greatly affected because of its international relation issues (Pan, 2010: pp .229-232). As was noted by Christensen (2001, pp. 5), the Chinese sovereignty can be identified as experiencing a mini resurgence where several scholars and strategists have assumed that China can carry security risk to the US along with its regional interests in the East Asian region in future. These international issues in turn have been observed to further raise the risk of misinterpretation of arguments occurring between China and other European nations, making it quite challenging to reach settlements on several mutual subjects. The impact of economic issues on sovereignty has been further observed to have complicated China’s cooperation with the third world nations by a large extent. However, the conceptual gap of sovereignty does not prevent China to build strategic business relationships with other Western nations owing to the currently witnessed economic issues in terms of its foreign trade liberalisation and regional as well as global economic imbalances (Pan, 2010, pp. 228-231). Role of Globalization and Economic Interdependence on China’s Economic Problem Globalization has caused significant economic benefits in China; however these benefits of globalization are not essentially enjoyed by the entire residents. As criticized by Kegley & Raymond (2011, pp. 76), in China, there are no genuine plans or guidelines about reduction of income disparity. Thereby, it can be stated that due to globalization, China has to face several challenges which have been identified as unique to other various nations. Owing to the trend of globalization, the banking system of China was also examined to be particularly weak in comparison with other foreign banking organizations. Arguably, it was considered that due to globalization effects, the banks in China had to witness huge competition from foreign organizations. However, China has also been trying to cope up with the level of international multinationals in the midst of most insightful revolution in global commercial system (Nolan, 2001, pp. 97). The economic interdependence of China existing between various nations including US, UK and various other global economies is quite likely to enable constancy ensuring political harmony by mitigating the imbalances identified in the national context. It is worth mentioning in this regard that the primary objective of every nation is to inspire economic wealth and preserve global peace. In the context of international relations, these objectives are defined to be accomplished through strategic economic interchange and interdependence. Contextually, higher interdependence in terms of business can ensure proper realization of economic problems and methods to reduce them effectively in the long-run. In relation to the Chinese economy, it has also been observed that in terms of ‘Foreign Direct Investment’, the country has sustained as an attractive investment market for US. Similarly, Chinese organizations have also raised significant amount of capitals from the market of US. Thus, it can be stated that reliance between both the nations can minimize the political conflicts by way of understanding subjects of common interests. As a result, it can also encourage overall economic improvements (VanHook, 2011: pp. 2-4). Role of Collective Security on Chinese Economy The collective security system also has a significant impact on Chinese economy which can further be regarded as a vital reason behind conflicts arising between China and US in terms of their international relations, influencing other allied economies as well. Historically, U.S. and Japan have remained as two economic giant collaborations in the world, controlling the future of East Asian region. However, with the rise of the Chinese economy as a sovereign power in the international ground, the pre-bipolar system of security has emerged to be insufficient to ensure the sustainability of US by a major extent (Tran, 2012: pp. 5-6). Consequentially, there is high probability of development of collective security in the East Asian region between India, China and Japan which has been further argued as quite probable to coincide with the collective security of US and Japan thereby augmenting the degree of word politics in their international relations (Pollens, 2012). Furthermore, security problems always have existed resulting in discouragement of relationships between different nations which can be most prominently observed in the context of China and US (Tran, 2012: pp. 2-3). Impact of Information Revolution on Economic Problem of China The information revolution has also played significant role in the economy of China. As Chinese economy has transited into a new developmental phase, it necessitates an updated information system which can reflect the economic problems currently persisting within the nation and also in relation to other economies. The major economic problem which can be identified in this regard is the economic disparity and imbalances existing within the Chinese nation. In this circumstance, information system can play a significant role towards certifying a stable and reasonable progress for every person. Hence, it can be attributed that the information revolution has deliberately acted as a major international developmental factor which determines the intensification of global integration drifts, especially in the area of economy and politics. It is in this context that the information revolution, due to huge computerization has already raised geopolitical inferences between different nations. The first inference arrives from divergence of the world which is the result of increasing gap between rich and poor people, i.e. income disparity as well as between technologically regressive and progressive nations which are often regarded as the major source of instability for present as well as future probability of economic and political conflicts. It is worth mentioning in this regard that information revolution not only contributes towards transforming the methods and ways of conducting business operations, but also attempts to alter escalated conflicts within an economy. Undoubtedly, information system acts as tangible equipment for nations to attain success in political and economic conflicts. Considering this particular aspect, China and U.S. are persistently and actively preparing themselves towards conducting an information warfare which again provides a significant reason for economic problems in terms of international relations (Tsygichko, 2008, pp. 4-5). Impact of China’s Problem on Global or Regional Imbalance of Power Global imbalances generally arise owing to the economic issues pertaining between international bodies. Contextually, due to rise of China as a strong nation, the global balance can be identified as slightly shifting on every front i.e. on economic, technological and political fields as well. China’s economic and political evolution appear as a major event in the history of international economy performing as a primary driver of wide ranging variations in global and regional balance. Today China is forging alliances with Eastern nations (such as Japan and Russia) which were often criticized as not ‘well received’ in Western nations suggesting that China’s attempted associations were disorganized to an extent. It has further been assumed that China is instigating on its deliberate international path towards accomplishing power in African, Latin American, Central Asian and South East Asian region which has impacted the interests of many member nations of European Union (Zheng & Tong, 2010, pp. 179-183). On the regional ground, Asian region is usually considered as blend of heterogeneous counties which have different interests and political values. This particular aspect, at the global level tends to give rise to various conflicts affecting the negotiation process amid trading parties belonging to different countries. In today’s context, with the rise of Chinese economy, nations such as Japan, Russia, India and China are observed to adopt a differing route to that of European Union, reaffirming the establishment of traditional protective national systems. These behaviors deciphered by the most prominent Asian nations have further been accused to create conflicts between international powers, resulting in global and regional imbalances (Kagan & Crossick, 2007). Conclusion China’s economic situation has been greatly impacted by trade liberalizations and globalization, in terms of the enhancement of international business along with the reduction of trade barriers in China resulting in immense economic growth in the recent times. However, the economy has also been examined to be confronted with problems of inequity and disparity in the national context. This economic problem raises doubt about the sustainability of the economic growth of China in the near future. Furthermore, due to a higher degree of income disparity, the consumption pattern of China has become highly imbalanced. Furthermore, with overall slowdown of the economy of US and Japan, it becomes unclear whether China will face economic boom in the long run or face economic eruptions in the near future. Although, China is still regarded as one of the most preferred choices for international investments, the government must take measures in order to solve the problem currently witnessed by the economy to enjoy the benefits of globalization and trade liberalization with the aid of international relations based on mutual understandings. References Christensen, T. J. (2001). Posing problems without catching up: China's rise and challenges for U.S. security policy. International Security, 25(4), pp. 5-40. Higgott, R. (1999). Coming to terms with globalization: non state actors and agenda for justice and governance in the next century. Retrieved from http://www.labourstudies.mcmaster.ca/institute-on-globalization-and-the-human-condition/documents/IGHC-WPS_99-3_Higgot.pdf Johnston, M. (2012). Public Officials, Private Interests, and Sustainable Democracy: When Politics and Corruption Meet. Institute for International Economics, pp. 61-82. Kojima, T. (2002). International conflicts over the extraterritorial application of competition law in a borderless economy. Retrieved from http://www.wcfia.harvard.edu/fellows/papers/2001-02/kojima.pdf Kagan, R., & Crossick, S. (2007). China’s global rise: a threat to the U.S. balance of power? Retrieved from http://carnegieendowment.org/2007/10/23/china-s-global-rise-threat-to-u.s.-balance-of-power/o6y Kegley, C. W., & Raymond, G. A. (2011). ). The global future: a brief introduction to world politics. Boston, MA: Cengage Learning. Lardy, N. R. & Subramanian, A. (2011). Sustaining China's economic growth after the global financial crisis. Washington, DC: Peterson Institute for International Economics. Nolan, P. (2001). China and the global economy: National champions, industrial policy, and the big business revolution. Basingstoke: Palgrave. Pan, Z. (2010). Managing the conceptual gap on sovereignty in China–EU relations. Asia Europe Journal. Pollens. (2012). Collective security in East Asia. Retrieved from http://www.pollens.ens.fr/index2.php?option=com_content&do_pdf=1&id=136 Reinicke, W. H., & Witte, J. M. (1999). Interdependence, globalization, and sovereignty: the role of non-binding international legal accords. Retrieved from http://virtual2002.tau.ac.il/users/www/61641/Reading%20Material/Globalization/Interdependence%20globaliization%20sovereignty.pdf Tran, Y. (2012). China’s rising influence: impacts on U.S. - China relations and the role of America in Asia. Morehead State University, pp. 2-23. Tseng, N. (2010). China's economy has bigger problems than its currency. Retrieved from http://finance.fortune.cnn.com/2010/11/05/chinas-economy-has-bigger-problems-than-its-currency/ Tsygichko, V. (2008). The information revolution and information security problems in Russia. 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