10 Short Question for Chinese Economy - Assignment Example

10 short question for Chinese Economy Question The responsibility system also referred to as the household or contract responsibility system was adopted in 1981 in agriculture before it later expanded to other systems of the economy. The system entailed holding managers are responsible for losses and profits of a business. The system entailed the reallocation of collective agricultural land to rural household owned by individuals. This gave them the autonomy over land use decisions as well as crop selection. As a result of the system, it to a revolutionized agricultural production embarking on a period of rapid economic growth. It demonstrated the value of unified management that was combined with the enthusiasm of the peasants. On the other hand, the Free Trade Zone System launched in 2013, has been considered as a significant milestone to the country’s economic reform system. The system is expected to broaden the financial reforms in the country. The objectives of the system include opening up services to the foreign investors as well as reforming the foreign investment administrative system. The systems is also important in opening the financial services sector to foreign investors, developing new trading forms, establishing systems of policy to support innovation and investment for the greater benefit of the country growth. The system is essential in enhancing a free market oriented as well as flexible economic policies in certain regions of the china providing a more attractive way of doing business. Question 2 China cannot compete with the United States in entrepreneurship. Recently according to the global entrepreneurship ranking released, UK topped the list as china was in the 61 position. This is a disappointment for china as it is the second largest world economy in the world. The problem is from the existing entrepreneurship that does not blend with the countries culture of Confucian conformity to existing norms. The countries history paid no respect to business pioneers, investors, as well as entrepreneurs as they were regarded as the capitalist class involved in sucking blood and sweat of the working population. In the 19th century, the Chinese were reluctant to adopt foreign technology as the Americans did. Another factor resulting to the poor entrepreneurship is the heredity system that passes the family assets to all sons instead of the eldest son. This puts less pressure to the younger siblings to engage in new business opportunities. China has a poor management entrepreneurship system where the ability of business enterprises is limited in adjusting the outputs and inputs in respect to the changing market situations. The government denied managers freedom, incentives, as well as the ability of pursuing new business opportunities rather it embarked on an imitation strategy rather than innovation in entrepreneurship. China has considered innovation and inventions unworthy of dignity making it lag behind in entrepreneurship. Question 3 Pollution is a major problem that china has been facing in the recent times as various forms of pollution have resulted from industrialization resulting to major health problems. Because of the sustained growth of china, population increased rapidly increasing soil pollution. Most of the countries soil is contaminated as contaminated water is used for irrigation as other pieces of land are covered with solid wastes. Waste generation is on the rise and laws are being enacted to reduce solid waste such as the prohibition of plastic bags. China alone produces an average of 2.3 million tons of electronic waste and is the second largest in the world. With increasing economy, waste production is expected to increase. Industrialization has led to air pollution causing serious respiratory illness to the people. The air in the cities at times becomes too bad that the visibility drops to 30 feet causing crawling in traffic. Nearly every person is in a mask due to air pollution. Due to industrialization, there is demand for water resulting to problems in water shortage as well as pollution from industrial wastes. Over the past decades, the economic development of the country was unrestricted resulting to an increase in car ownership, and the country’s overreliance in coal. China owns over 120 million cars and an additional 120 million vehicles of other kinds. The fuel standards set by the government have not kept the pace. The country is involved in coal burning similar to what the rest of the world burns as it relies on coal for 70 percent of its power needs. The environmental problem in china is driving investors along with their money and talent out of the country. Question 4 China property may be worthless one day as the structures are built for the sake of stimulating economic growth. The property sector may be worthless one day if pollution in the country continues rising as the current state. People will opt to leave the country rather than move to the polluted cities especially the young. This, as a result, will cause a depress for real estate making the large property and cities useless. The country is the world top producer of carbon dioxide as the government has been considered part of the problem rather than a solution. The problem is due to the rapid industrialization of the country with most of the polluters companies being government and state-owned; thus, the government plays the greatest role in pollution. Thus, the countries property sector is at the risk of turning worthless if the pollution problem is not addressed appropriately in the next years. Question 5 It is difficult for china to lead the global economy as it misses major conditions for sustainable economic growth. The country lacks a world market frontier for product manufacturing. China’s world market has come at a time when capitalism is almost in the last frontier. This leaves little time for china to maneuver before it clashes with the world’s markets players that have a better position to be global economy leaders. The country has a large labor and consumer market that is necessary, but is enough to propel economic development. The income inequalities experienced; low per capital income, high illiteracy levels, fragmented administrative structures and low population density makes the country’s market to be a collection of separate local markets. China lacks an indigenous resource entrepreneurship that it is yet to nurture. The country economy is a more producing and merchandising economy on products already invented or produced elsewhere rather than their own. The government is present in almost all enterprises controlling the market forces. For china to be a global market leader, it needs sufficient conditions such as an open market frontier, right cocktails of markets, and genuine entrepreneurship with new business mindset that all lack in the country apart from the large labor force and market present. Question 6 If there is, a foreign company that should have failed in china it should be Starbuck Company. China has years of drinking tea with a strong culture associated with it. However, the company has successfully opened over 570 stores in 48 china cities since its entry 12 years ago. The company has a greater plan of even opening over 1,500 stores by the end of 2015. Given the fact that Chinese people have a preference of tea, it seemed impossible that the company would be a success. The company created the demand of coffee by creating awareness of its benefits and revolutionized how the Chinese view and drink coffee. The company never used advertising or marketing but rather developed a smart marketing strategy focusing on high traffic locations to project its brand image. Advertising would be perceived as a threat to erode the Chinese tea drinking culture. The company later developed local ingredients such as green tea that was essential for its success. The company also provides customers with exceptional experiences providing a strong appeal to its customers as many visit Starbuck for the experience. Therefore, the company has established itself as an inspiration brand in china and it is able to charge premium prices. Question 7 Greece and china have special characteristics in common “A soviet economic model where a large section of the economy is under control of the central and local government”. In both countries, the government has been present in energy, transportation, utilities, and other sectors. The governments have been outright owners of town and state owned enterprises. Moreover, the government is also present in the banking sector in both countries. As a result of over presence of the government in banks, common corporations, and pension funds, the resulting situation is that creditors and borrowers is the government increasing and magnifying uncertainties and risks across the economies. As it happened in the Greek crisis, banks end up piling non-performing loans and the ownership of the government as borrowers and creditors concentrates credit risk creating a situation of a potential system collapse. In china, the situation is even worse as government owned banks lend money directly to the government owned corporations where one government arm lends money to another arm. This happened to Greece in 2011. However, for china it may take a longer period as china is the second largest economy in the world and has its own currency. Question 8 The Chinese communist party is one of the most powerful political organizations in the world. However, it has undergone significant transformation since 1978 it has undergone significant transformation, as in an effort of overcoming the legacies of the Cultural Revolution that has undermined its legitimacy. Central to its transformation, its goal has shifted to political stability as well as regularity of facilitating economic development and modernization a mindset linked to Deng Xiaoping’s leadership. However, the party remained committed in socialism principle albeit with characteristics of the Chinese emphasizing on its official ideology to be a source of legitimacy. The party is continuously adjusting its international framework to guarantee political stability and economic reform. It had to go transform in order to accommodate drastic changes resulting to socioeconomic development. Overall, the party has remained committed to maintaining stability as well as improving its governance capacity to enhance china’s economic development and has done this by institutional and ideological change. The party has thus, proven to be adaptable to issues and challenges of the modern world and has maintained its dominance on the Chinese political system. Question 9 Alibaba has been considered as the Wall Street darling for its soaring revenues and its great promise to operate in high margins as well as it great promise on capitalizing on china that is the world’s largest internet market. It enjoys four advantages i.e. the economy of scale, scope, it good relations with the Chinese government and the economy on networking that arises from its expanding network of users. However, it has a weak spot of the uneven distribution of the benefits across its members as its network grows in size. Some members benefit greatly will others benefit very little or not at all. Thus, as a result, the network may be divided into groups when it moves in a certain direction, as the network may not bring higher benefits to each work group. The weak point may go ahead to provide an opening to upstarts to grab a piece of the market. This is how Alibaba’s site beat eBay in china back in the days when it was an upstart and eBay a giant industry providing a weak point in the market. Question 10 American has the right cocktail of institutions developing and maintaining a good combination of the free market and government. It protects the civil liberties as well as the economic freedoms taking care of the common sectors of the economy where there are inadequate markets. Thus, the rich enjoy the economic opportunities that are created by Americans free market as well as the quality of life that is assured by the transparent, fair, and effective government. China is however missing the right cocktail of institutions as the country has failed in developing and maintaining a good combination of the free market, as well as the government. The government rather acts as entrepreneurs, landlords, regulators and managers running almost every enterprise in the country that the rich have disapproved with. Moreover, the country has failed in developing a transparent government that enhances economic freedom and civil liberty. This has undermined the economic opportunities and quality of life of the citizens in doing business. As a result, the rich are migrating to china to seek for economic freedom. Read More