With regard to merchandise trade, China has definitely won the race of other parts of the South: while China increased its share of world exports from 0. To developing countries that depend on the export of a small number of commodities, this diversification of export markets, the rising world market prices, and Chinese investments have all been economically beneficial. In addition, cheap Chinese imports have been hurting local manufacturing companies that produced for the internal market, especially small and medium-sized companies.
The economic restructuring of China. In this development China resembled the processes of economic restructuring in numerous other developing countries. As we have argued elsewhere, the global spreading of neoliberal ideology and policies during the last two decades of the twentieth century gave way to fundamental changes of national economies, governance, and politics around the world.
The triumph of capitalism that went with the end of the Cold War was largely captured by the neoliberal current, resulting in the reform of various capitalist models. This does not imply that the diversity of regional and national economic models has been fully erased, since national programmes of neoliberalization have been partly shaped by historical circumstances economic, political, social and existing policies.
Characterized by the decentralization of economic policies and the redistribution of income, resources traditionally belonging to the state were transferred to the market and the private sector. The reform of state companies, which became more independent in their operations, was the main objective at the beginning of this second phase. Transfers between companies as well as mergers and bankruptcies radically changed the production relations and gave room to the rise of the private sector in the economy.
In this context the regulation of labour relations is no longer part of the absolute control of the state. The second phase of economic reforms that started in was the structural reaction to the inflation crisis, the economic chaos and the social instability that reigned in China in the early s as a result of previous economic policies Lin and Zhu, The debate then centred around the dilemma of either radically reforming the property system and privatizing public enterprises, or implementing structural adjustment policies accompanied by a partial liberalization of the system of fixed prices.
The latter option triumphed and was turned into the double price system or dual-track pricing system in which monetary policies became the main instrument to influence currency rates, while its fixed prices system was partially liberalized to improve the competitiveness of exports Mckinnon, This new price system meant that the prices of capital goods were fixed by the Plan of the centralized economy, while the prices of consumer goods were established by the market.
However, the system became an important source of corruption of state officials Wang, , as has also happened with some of the other policies of partial liberalization. In addition, economic inequalities deepened between social groups functioning in the planned sector of fixed prices and those working in the deregulated sector of the economy.
In , the Chinese government announced the termination of this pricing system and the acceleration of economic deregulation Li, The signing by China in December of the protocols for entry into the WTO consolidated its policies of economic liberalization.
For this purpose, in the preceding decennium China had significantly reduced its import barriers and economic protection. The average level of import taxes was gradually reduced from 43 percent in to 17 percent in Lemoine, These reductions have been accompanied by the parallel application of selective protectionism with more rights of importation, licences, and quota regimes in the sectors considered as strategic.
Quotas and licences for industrial imports have been lowered, and only limited quotas have been maintained for the import of agricultural products. The service sector has also been opened in a limited manner to foreign investment. In the transport sector the limitations to the participation of foreign capital are to be eliminated, while transnational enterprises are to be authorized to participate in wholesale and retail trade and to commercialize local or imported products.
To stimulate exports, import rights have been liberalized for all products destined for subsequent re-exportation and for the industrial sectors of assembly.
Why does it matter?
These foreign investments have been channelled towards the sector of export industries and the sectors of import substitution such as cars and telecom materials, although in the latter sector foreign participation is not allowed to exceed 49 or 50 percent of total capital, depending on the sector DeWoskin, The financial sector is also submitted to further liberalization of operations in local currency yet with some limitations.
As a result of the improvements in its investment climate, between and private investment as a share of GDP almost doubled in China World Bank, 2. For example, countries like Malaysia , Thailand , Poland , Hungary , Turkey and Argentina have been forced to reduce their import tariffs on products like textiles and leather, which is harming their national industries. Moreover, since China has benefited from the gradual elimination of import quotas on Chinese products in the European and US markets in which it is competing with many developing countries, although until members of the WTO may still use protectionist measures against Chinese textiles in case they destabilize their markets.
Internally the Chinese state uses these temporary export limitations in the global economy to press for a deepening of its neoliberalization policies. Its enormous and rapid economic progress is a result of strong economic management by its political elite. Interestingly, compared to many other developing countries, these economic reforms did not imply a weakening of the state apparatus, nor democratization or an end to socialist discourse.
The implementation of neoliberal policies in China is largely the result of the economic intervention and political decisions of the state. Although the economic reforms and privatizations have created strata of private entrepreneurs, they do not possess political initiative or the capacity to initiate social or economic action independent from the state.
China's Role in Global Economic Recovery
The deepened globalization of the Chinese economy is strengthening its specialization in the industrial sectors in which it possesses major competitiveness and comparative advantages. These sectors are intensive in the use of manual labour, and correspond to the pattern of international competitiveness of the majority of the Third World countries, such as textiles. In this sector China has demonstrated that its commercial expansion was successful in the production of both intermediary articles fibres and fabrics and terminated articles clothes. This will form an important source of a reduction of unemployment in China , and according to estimations, China may come to occupy 40 percent of the global textiles market.
Additionally, in this capital and technologically intensive industrial sector, its competition with foreign products can benefit from the immense potential of its national market. Due to the population growth in ten years there will be an extra million Chinese people competing for jobs in agriculture or industry Yao , The role of China in Asia.
The agreement, which went into effect on 20 July , will in result in a fully operational free trade zone. This zone encompasses 1. These two initiatives are forums for cooperation in which, among several other things, free trade is discussed. It is nevertheless of interest that China and India have been approaching one another and that they are trying to settle border conflicts in order to improve their bilateral relations.
The two countries that jointly represent one third of the world population announced in April a strategic partnership for peace and economic cooperation.
China's Role in Global Economic Recovery: 1st Edition (Paperback) - Routledge
In the first ten years of its existence it has even generated 70 percent of global economic growth. With this last matter, China also aims at weakening Japan. It disputes the regional hegemony of Japan based on an economic regionalization that has lead to superficial industrialization instead of profound modernization of the economies of Southeast Asia.
This gave way to the relocalization of exports and investments of Japanese manufacturing industry to Southeast and East Asia , thereby strengthening the economic regionalization. Shortly before the Plaza Accords came into effect, the United States absorbed one third of Japanese exports, but only a few years later at the beginning of the s Japanese exports to the United States had fallen to 27 percent, while the interregional Asian trade had increased from 32 to 44 percent, and in even moved beyond 50 percent Golub, The Plaza Accords thus strengthened the competitiveness of the Chinese economy in the region by reorganizing the regional division of labour in East Asia around the manufacturing capacity of Japan.
The irony for the United States was that its attempts to regionalize the Asian economy with Japan as the pivot has turned out to favour the regionalization of the Chinese economy Pottier, In the late s, it was the East Asian financial crisis of that brought about new views on global relations and changes in Asian relations. The severity of the crisis came to many as a surprise and a shock. The next shock was that the international support was weak and misguided.
Meanwhile, the United States was unwilling to financially support the Asian countries in crisis, which sharply contrasted with the immediate support of the US Treasury to its neighbour and NAFTA-partner Mexico during the peso crisis in Added to this was the frustration of many Asians that it had been US-led IMF conditions for liberalization of the financial policies of Asian governments that eased the outflow of capital and thereby deepened the crisis cf.
Jomo, All together, this encouraged regional Asian cooperation. Japan proposed the creation of an Asian Monetary Fund AMF that would allow for regional financial cooperation and policy coordination and that could provide financial liquidity necessary to confront currency crises in the region. The US opposition stemmed from the fear that such a fund would create an autonomous monetary system for Asia that would be a rival to the IMF and would deprive the United States of one of its main instruments of global hegemony, which has effectively helped to impose the opening of numerous developing countries and transition economies to the global economy and thereby, to US capital.
This Initiative involves a regional scheme for financial cooperation involving a system of swap arrangements. Although some bilateral swap arrangements have been established between several of the thirteen countries, including a Japan-China arrangement, the CMI is moving ahead quite slowly. Although the Japanese economy has started to grow again, in the regional power balance Japan is gradually losing its dominant position.
In addition, the United States has been pushing Japan and China further apart, and Tokyo has become more reluctant to cooperate in regional structures that would exclude the United States Wang, The rapidly changing economic position of China is affecting its global policies, too.
While the East Asian financial crisis of gravely affected many developing economies in and outside Asia, to China it manifested for the first time the issue of its economic security and its possible fragility when facing a global financial crisis. As a result, China intensified its strategy of globalizing and regionalizing its economy as expressed in its entry into the WTO and its active policies to negotiate free trade agreements, such as those with Japan and South Korea. China has become more active and vocal in South-South and global politics, especially since its acceptance as a member of the WTO in Two years after entering the WTO, China joined the G20 of developing countries that pushed for more fairness in the opening of markets.
China has also become a promoter of South-South cooperation. Interestingly, this project, among other things, stimulates private enterprises to take the lead in South-South cooperation. After China began to open its economy, and in the s in preparation for joining the World Bank and the IMF, it started to establish friendly relations with countries regardless of their social systems or ideologies. Relations with developing countries became largely based on mutual economic benefit, as shown in the shift away from grants and interest free loans to joint ventures and trade.
A system of intensified economic South-South relations with a large dose of pragmatism has been implemented at the bilateral and multilateral level. China has been promoting South-South trade, partly through active regional business policies. Part of it is performed by the participation of Chinese conglomerates in developing regions, based on traditional principles of transnational enterprises yet with a more pronounced role of the state in their transnationalization process.
Due to this lack of political conditions China is supporting several countries with authoritarian regimes that do not receive Western governmental support, particularly in Africa. For instance, between and , Senegal , Liberia , and Chad ended their diplomatic relations with Taiwan in order to deepen relations with China.
- Rising China in the Changing World Economy.
- Routledge Handbook of the Chinese Economy: 1st Edition (Hardback) - Routledge;
- The Devils Triangle: Eye of the Storm (Devils Triangle)?
- Rising China in the Changing World Economy - CRC Press Book;
- Routledge Studies on the Chinese Economy | Tanum nettbokhandel.
- China’s changing food habits and their global implications.
- Committee for the Abolition of Illegitimate Debt;
Peacefulness is stressed in the Chinese policy documents for bilateral and multilateral development relations with Africa , Latin America , Asia , and the Arab World. China refuses to join any military alliance or engage in any arms race. A stable, open and prosperous China marching on the road of peaceful development will make still greater contributions to peace, stability, and common development of the world.
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In the meantime, based on its approach to national sovereignty, China is supplying arms to many countries, including to those banned by Western countries because of human rights abuses. This opaque Chinese practice has been heavily criticized by many countries and organizations, including Amnesty International. Based on its principle of non-interference in domestic affairs China does not demand macroeconomic reforms, good governance more transparency and less corruption , or respect for human rights.
While the IMF berated Angola for corrupt oil deals the country exported 25 percent of its oil to China , in return for which it received Chinese loans and aid, including funds for Chinese companies to construct rail- roads, bridges, schools, hospitals, and a fibre-optic network. Much of this increase was due to the growing Chinese import of oil from countries like Sudan , and of copper Zambia , diamonds Sierra Leone , Cobalt Congo , and timber. With Chinese demand--among other factors--pushing up oil prices and exports, in Africa reached the remarkably high GDP growth rate of 5.
The government of China is very active in its relations with Africa and in the past few years Chinese officials have regularly visited the region. In November of , Beijing hosted the largest ever China-Africa summit with 48 African leaders to discuss plans to further extend trade and investment. Apart from serving economic interests, its new Africa policy provides China with important allies in the United Nations, such as Nigeria , Sudan , and Zimbabwe. With the Middle East , China has intensified relations on a similar basis of mutual benefit and with energy as key interest.
In particular, the ties with Saudi Arabia have been strengthened as China is now its major client, importing over 20 million tons of Saudi Arabian oil in Both China and Arab countries have capacities and interest to invest abroad, especially in the energy sector. In November President Hu visited Latin America with a trade mission and shortly afterwards vice president Zeng Qinhong went to the region to sign trade and oil agreements with Venezuela.
Off-farm work also emerged as a major source of income growth for many rural households Lohmar ; Kung From to the early s, township and village enterprises TVEs grew rapidly, providing jobs for nearly million rural workers Weitzman and Xu ; Bowles and Dong This marked the first large structural transformation of the rural economy as farmers were transferred from agricultural to industrial work within their home towns and average incomes rose as a result. Since the early s, rural-urban migration has become the most common way for rural labourers to get a job off the farm De Brauw et al.
It is estimated that in the mids, about 80 million migrant workers went to the cities, a number which roughly doubled over the following decade. As a result, the proportion of the rural population living below the dollar-a-day poverty line fell sharply, from 65 per cent in to Farm size is small and agricultural productivity remains low. Government policy seeks not only to expand the market but also to shape the forms that it takes. Zhang and Donaldson document how, with the rise of waged labour, these enterprises have led to the development of agrarian capitalism; it is, however, conditioned by continuing strong norms of collective land rights that have led to a distinctive, and more egalitarian, form of agrarian capitalism than is found in other developing countries.
The development of rural industry, however, was unbalanced and concentrated in coastal regions, with the less-developed western regions experiencing great difficulty generating off-farm employment, resulting in the exacerbation of inter-regional inequalities Cai, Wang, and Du Moreover, while restrictions on labour movement were relaxed, the hukou system still deprived rural migrant workers of equal access to employment, health care, and education.
All of these problems were evident in the s, and the economic slowdown following the Asian financial crisis in created additional hurdles for rural economic structural change. In the face of rising urban unemployment, rural migrants found it hard to find jobs in the cities and a large number of migrants returned to the countryside Zhao In the countryside, many TVEs went bankrupt, forcing workers to return to agricultural production.