Globalisation and China - Case Study Example

Globalisation and China Name Institutional Affiliation In the recent years, globalisation has been an issue that has been widely talked about in different circles. De (2005:10) describes the current globalisation process as the one that generates exclusion and extreme inequality. This brings about serious consequences for protecting human rights in terms of both civil and political rights as well as social, cultural, and economic rights. Globalisation has some impacts on people’s enjoyment of social and economic rights. Global markets is a creation of globalisation which is a strong mechanism for achievement of dynamic development but at the same time can lead to marginalisation and exclusion of large numbers of ordinary citizens who have neither wealth or status advantage (Breznitz & Murphree 2011:110). The benefits of globalisation are many but what is controversial is whether all stakeholders enjoy these benefits equally. Mahtaney (2010:191) asserted that ‘globalisation is not about unleashing opportunities worldwide but about consolidating access to global markets by a few privileged players... Although the benefits [of globalisation] have been substantial, the beneficiaries have been few’. This essay discusses the validity of this statement in relation to China which is a latecomer to globalization process. It starts by describing the meaning of globalisation, reasons, process, and benefits of globalisation. It then relates all these to China and how globalisation has affected it. Arguments will be supported by various academic sources. Globalisation process is generally thought to be an economic process but it also encompasses such dimensions as social, cultural, environmental, technological, and political (De 2005:11). Lo and Rodriguez (2012:96) explain that globalization refers to acceleration and intensification of increasingly open flow of technologies, goods, ideas, communication, images, and movement of people across national borders. In this case, cross-border interaction connects countries, cultures, organizations, and individuals into a global economy. Yeung (2000:22) reckons that globalisation represents a set of complex ‘tendencies and power relations that are capable of creating a new spatial order of social life’. Therefore, tendencies and power relations shape private and public institutions and social actors. According to Perraton (2011:62), globalisation involves transformation of human social organisation that is extended beyond power relations reach across the globe’s major continents and regions. In sum, globalisation is a global movement in integration of financial, trade, economic and communication. It is the opening of local and national boundaries to wider perspective of interdependent and interconnected world where existence of capital, goods and services is present across national boundaries. Since globalisation emerged, it has continuously gained popularity because it is driven by certain reasons. Intriligator (2009:303) explains reason for globalisation as a global agreement on ideology that converge beliefs in free trading system and market economy. This process was started in 1970s when political and economic changes in China were followed by revolutions in Central and Eastern Europe in late 1980s. Soviet Union dissolution in 1991 ended this process (Intriligator 2009:304). The result of this process was convergence of ideology between East socialist economies and market economies in the west which had been nearly replaced by market system reliability. Convergence of beliefs in the value that market economy carries led to a world that was no more divided into socialist and market-oriented economies. The nations and international organisations that have been constantly championing globalisation have focus on three areas in transitioning to a globalised world. These approaches are privatisation of state-owned enterprises, macro-economy stabilisation and liberalisation of prices (Perraton 2011:67). Globalization is widely accepted to be driven by economic, liberalization, politics, media and cultural factors. Historical and modern migration patterns are also the reason for globalisation (Martell 2010:105). People have always moved across their boundaries hence exporting their technological know-how, manpower and skills to their new destination. Thus, globalisation is achieved through export of these skills by individuals. Blanco and Razzaque (2011:121) argued that globalisation has been driven by the necessity of accessing and exploiting natural resources. Foreign investment and free trade require large amounts of raw materials and energy and as such accessing and exploiting these resources becomes an end to achievement of globalisation. In the late twentieth century, rapid globalisation characterised the international economy as labour and capital flowed across national boundaries in an unprecedented quantities. Convergence of living standards especially in European countries was realised during the late 19th century. These globalization trends can be explained by various reasons. International market components of trade, international finance and multinational production contributed to globalisation (Garret 2000:106). Information technology has been spreading rapidly across all countries making it difficult for governments to conduct controls on capital movements at the border even if political incentives exist. Perraton (2011:73) asserted that new information and communication technologies break down the distance barriers leading to worldwide spread of technological knowledge. In this case, management of economies is spread internationally by aid of these technologies. Multi-nationalisation of production can be restricted by governments but many have increasingly preferred to liberalize owing to its macroeconomic benefits (Garret 2000:105). There has been increased interest by exporters to open up domestic markets which had consequently impacted on liberalization trends in a powerful manner. Therefore, globalization of markets is heavily impacted by these factors. Intriligator (2009:304) explains cultural developments as the reason for globalisation. The move for a homogenised and globalised media, popular culture, the arts and increase spread of English language use for global communication are some of the cultural developments for globalisation. In this case, some have interpreted globalisation as new version of imperialism and colonialism. In summary, globalisation has been led by policy, technological, ideological, cultural and institutional developments. Globalisation has become one of the powerful tools in the new world system representing one of the most influential forces that will shape the future of the world. It has become a pervasive phenomenon where people, communication, goods and services are continually crossing national boundaries. Blanco and Razzaque (2011:124) asserted that the need of economic reach of countries to be expanded since the fifteen century has been at the centre of globalisation process. In addition, Schellnhuber (2001:14) stated that globalization was initiated by technological evolution of 19th and 20th centuries and is accelerated further by the 21st century ultra-technologies. This process had subsequently led to both negative and positive impacts on different nations and cultures in the world. Globalisation process started several centuries ago from such vices as colonisation, spread of Christianity, slave trade and industrial and capitalism development (Blanco and Razzaque 2011:123). In addition, the recent revolution of information and communication technology has played a part in the process of globalisation. De (2005:12) considers the process of globalisation to be an economic process but it also encompasses dimensions such as social, cultural, environmental, technological, and political. Economic process of globalisation is widely known and debated. It is what characterized the current globalisation process which is focused and partisan in nature as it affects only some few privileged players. This will be expounded later on in this essay. The world economy has benefited from globalisation in numerous ways. It has clearly changed the world economy and system whether one sees it as a negative or positive development. De (2005:11) describes globalisation as posing both opportunities and challenges. Globalisation has impacted on all economies of the world even if not uniformly. By overcoming political, administrative and physical barriers, globalisation has increasingly exploited the comparative advantages that all economic actors in the world have to the full extent. The World Bank (cited in Schellnhuber 2001:16) estimated that the world gross product has grown since 1970 by more than tenfold to US $29 million. This increase has been achieved due to globalisation. Globalisation has affected production of goods and services as well as production inputs and employment of labour. Intriligator (2009:306) pointed out that globalisation has led to greater openness in international economy and market integration on worldwide scale by moving towards borderless world. All these have led to increase flow of goods and services globally. Globalisation has unleashed opportunities globally which never existed before to different sectors in the society. Technological innovation has been impacted by globalisation (Intriligator 2009:306). New technologies has been one of the reasons for globalisation as previously noted, but globalisation and competitiveness that it entails have led to stimulation of further technology advances and increased its diffusion to various countries through foreign direct investment. Globalisation increased mobility of capital to different countries, regions and firms (Sliwa 2007: 112). Nevertheless, not all regions, countries and firms have received capital flows in equal measure. The rise of globalization has facilitated capitalism expansion hence enhancing global capital system (Abbas 2014:116). In this way, creation of new economic opportunities to many millions of people is made possible. However, the benefits and access to these opportunities seems to differ across the developed and developing countries. In developing countries, business globalization has opened economic opportunities for skilled and unskilled labour. Abbas (2014:115) stated that globalization enables the poor in the society to grab new opportunities. This is because upper and middle classes groups have already seize their opportunities and established themselves. In essence, globalization has generated jobs for the poor as well as creating opportunities for them to get new skills. Globalisation has led to rise in competition globally (Intriligator 2009:105). Competition leads to division of labour and specialisation which is the preposition and arguments of the classical economics. In turn, they increases production nationally and because of globalisation, it increased it internationally. Overall, the benefits of globalisation are many. The beneficial effect that is attached with competition that stems from globalisation is shown by the potential value in improvement of all position of the parties involved. Fundamentally, there is potential for increased output, living standards, and higher levels of real wage resulting in potential well being of all human beings all over the world (Martell 2010:105). However, there is equity or distributional issue pertaining to who really gains from the potential benefits of globalisation. Substantial equity problems in distribution of globalisation gains among individuals, organisations, countries and regions are evidently present (Intriligator 2009:305). Indeed, most of the globalisation benefits are derived by rich countries and individuals which further create greater inequalities and potential conflicts both nationally and internationally. China, a case in hand here, has benefited enormously from globalisation which has resulted to lifting of hundreds of millions of Chinese people from poverty. Its economy has been growing at rapid rates while least developed nations in Asia, Africa and South and Central America have registered slower growth rates. In modern human history, globalization is a highly controversial and complex subject which has yielded mixed results. On one hand, globalization has led to spread of information and technology across nations. On the other hand, globalization has generated losers in both developing and developed countries as its benefits are not shared equally and evenly by wider world’s population (Leng 2009:10). Globalization has been criticised with some levelling it ‘conspiracy of politics and money in the rich west’ (Leng 2009:10). In addition, globalization is seen by these critics as a damaging process that serves interests of profit oriented western multinationals eager to exploit developing countries poor population. China is a perfect example of a country that have largely benefit from globalization. In 1980s and 1990s, China engaged actively on bilateral and multilateral relationships with other nations. The intentions were to influence external political and economic environment in protecting and enhancing China’s national interests (Knight 2007:57). Globalisation became a slogan used by China in engaging the world. The country realise that the world is increasingly becoming open and interrelated hence its social, economic, and foreign policies should be tailored towards this aim accordingly. China has realized significant reductions in poverty over the last two decades as they have open up foreign trade and investment (Ke & Wang 2014:76). It has been able to consolidate its access to global market in the recent past becoming one of the few beneficiaries of globalisation. The process of globalization has enable China to emerge as one of the important economic players in the world. Currently, China is ranked number three in terms of gross domestic product and number one exporter in the world economy (Wang & Hong 2012:79). This has been achieved through reforms and its opening up strategies to the rest of the world. The establishment of World Trade Organization (WTO) has accelerated the achievement of economic globalization worldwide (Blanco & Razzaque 2011:124). China became a member of WTO in 2001 which was seen as a powerful tool that push forward the country’s reforms and facilitate its transition to a full market economy in the wake of globalisation (Leng 2009:11). China has used its WTO membership in furthering its protection of trade interests. In a globalised economy, China has taken advantage of it seen from its emergence to become major player in the world economy. Globalization has benefited China as a whole although at firms and individual levels there exist great disparities. China is increasingly registering unequal distribution of wealth and the gap between the rich and the poor is ever increasing (Lee, Yao, Chang, Lin & Shen 2013:139). In addition, Wang & Hong (2012:82) asserted that the gross domestic product of China is unevenly distributed among its regions. This is supported by a study conducted by Lee et al., (2013:140) about the perceived impact of globalization among four cities in China. They found out that Xi’an and Shanghai cities have recognized that globalization have more positive impact on them as compared to Beijing and Chengdu cities. Given this, globalisation has benefit few players in a strict sense and more privileged and endowed players continue to benefit as the poor continue to lack behind. Globalisation has brought unprecedented development in many countries in the world. However, while many players exist in the globalization process, few have significantly benefited more than the others. Developed countries and multinationals operating in developing countries are the major beneficiaries of globalisation while developing countries derive few benefits and at times suffer some disadvantages (Boulle 2009:34). China is one of the main beneficiaries of globalization and it is evident from its massive rise in growth rates to become the second largest economy in the world according to data by the World Bank in 2013. Statistics from various international organisations such as International Monetary Fund, World Bank and United Nations Development Programme (UNDP) shows that developing countries have benefit from globalisation economically (Intriligator 2009:304). However, the data also indicated rise in inequality during the globalization era between the rich and poor countries. Additionally, inequality between rich and poor persons has also significantly risen. This is true in case of China where inequality between the rich and the poor has expanded since its liberalization of the market. Wang and Hong (2012:80) explain that China has successful achieve high growth rate due to its comparative advantage it has in large amount of skilled labour force in a globalized world. In this case, China has consolidated access to global markets while other globalization players not having large labour are disadvantaged. China has continuously encouraged free trade since 1978 which is evident from its step by step abolition of trade restrictions. Today, Chinese exports are nearly found all over the world. Because of opening up its market for globalization, China has provided large market for foreign manufacturers hence gaining economic power in the process (Chan 2005:62). As stated earlier, China became a member of World Trade organisation in 2000 which showed commitment of China to reform its economic system and integrate itself into economic globalization process. In reaching this agreement, United States played a key role. In an era of globalization, United States has been able to increase its exports to China while at the same time China has boosted its economic growth by increasing its share of United States market (Chan 2005:65). It can be deduced from this that globalization has consolidated access of global markets to privileged actors such as United States and China. Today, China and United States occupy the first two positions as the largest economies in the world. Wade (2004:568) pointed out that globalization is a process of equitability and inclusion that is pointed towards increasing exploitation and inequalities in the global marketplace. This is reflected by the statistics in China and United States that shows great disparities between the rich and the poor. Moreover, there are inequalities between and within societies partly exacerbated by globalization. In concluding his explanation about undesirable effects of globalization, Wade (2004:569) expounds that even with inclusion of fast growing economy like China into globalization arena, absolute incomes between the rest of the world and the West continue to widen. Additionally, he reckons that this trend will likely persist for decades. In conclusion, globalisation is becoming ubiquitous which has both positive and negative effects. While globalisation has led to modernisation and generation of wealth in large volumes to developing countries such as China, it also has some undesirable effects. It has led to economic exploitation and environmental degradation which has resulted in a world in which the poor get poorer and the rich, richer (Chan 2005:62). In this regard, countries are striving to maximise the benefits while minimising the costs of the globalization process. In the end, some countries perform better than others inevitably becoming the winners while others end up becoming losers in the globalization process. By opening up its markets to international community and entering into globalization process, China has achieved net gain relative to others. Furthermore, China has achieved unprecedented economic development in the last three decades (Ke & Wang 2014:76) achieving some of its modernisation goals and emerging as one of the strong and wealthiest nations in the world. The current globalisation rules may not fully favour China but globalisation has undoubtedly benefited China evidenced by its sharp rise in growth rates since entering the globalisation process. The privileged players such as China and United States continue to access and consolidate global markets while developing countries continue to reap few benefits out of globalisation. The beneficiaries of globalisation are few as inequalities exist in the process of globalisation hence poor become poorer as the rich becomes richer. References Abbas, J.A. (2014). Globalization and Inequalities. International Journal of Commerce and Management, 24(2), 114-118. Blanco, E., & Razzaque, J. (2011). Globalisation and Natural Resources Law: Challenges, Key Issues and Perspectives. Cheltenham, UK: Edward Elgar Publishers. Boulle, L. (2009). The law of globalization: An introduction. Alphen aan den Rijn, The Netherlands: Kluwer Law International. Breznitz, D., & Murphree, M. 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