China: A Global Trade Leader

Chinese economy has become the world’s second largest economy after United States. The economic reforms have started in the year of 1978 with an increase in manufacturing power, exports, technical advancements and tourism support (Whalley and Xian, 2010). The economic reforms stabilize the economy and also make the country capable of fighting with the internal instabilities. With the economic reforms, China became the global manufacturing hub and the largest exporter of goods in the world. China is also popularly known as the fastest growing consumer market and the second largest importer of goods and services. Economic reforms provide the strength and courage to take part in the international trade. China has become the largest trading nation in the world by making free trade agreements with several countries such as Australia, South Korea, New Zealand, Switzerland, and Pakistan. The standardized economic forecast has been affected by the internationalization of the Chinese economy. In this essay we shall demonstrate China’s economic performance and the wider influence it exerts over the world economy. Market principles have been introduced and carried out in two stages with the economic reforms in China. The de-collectivization of agriculture and the initiation of foreign investment have been involved in the first stage of market principles during the period of 1970s and 1980s. The second stage has given more focus on privatization, controlling price, protecting industry policy and regulation. The implementation of China’s economic policies has brought success into the society by giving focus on minimizing poverty and income inequality. Large scale government planning programs have been introduced and applied for the advancement of the society. China’s economic growth has tremendously increased since the economic reform which reflects on the country’s annual GDP rate that lies between 9.5% and 11.5% a year. In this section we shall focus on the global output share and trade structure of the Chinese economy. The share of global output of China has been increasing over the last three decades due to large-scale economic reforms, rapid growth in productivity, and high return on investment. The future prospects of the country are expected to be positive due to rapid increase in share of global output which makes the nation capable to dealing with the internal issues (Guariglia, Liu and Song, 2011). Uninterrupted trade surpluses have been found out in China’s trade structure which is the result of the government’s massive investment programs since the economic reforms. Global trade system has been highly integrated with the Chinese economy which benefits the country from a steady improvement in its trade structure. China, being the manufacturing hub, has engaged in several trade agreements with different nations which give an opportunity to the country to introduce new market segments for its products.

We shall now discuss about the exports from China which generate considerable revenue to the economy. China has been involved into producing important inputs of manufacturing such as power equipments, auto-components, electronic and computer hardware, pharmaceutical ingredients. A positive growth in export has been found out in the Chinese economy because of absence in industrial disputes, low wages, domestic availability of cheaper raw materials and government-adequate land (Cole, Elliott, and Zhang, 2011.). The intermediate goods and commodities dominate the imports of the country which include oil, iron ore, copper and cereals. The Chinese economy has been modernised due to proper market planning which introduces profit incentives that make the firms able to compete with global firms in local as well as international level. The economic strengthening is the result of foreign direct investment and access to foreign market. The Chinese labour force has been moved into the competitive high-productive industries due to international integration (McMillan and Rodrik, 2011). The high growth industries are far away from the agriculture which provides new opportunities to the Chinese workers that include new technologies and management techniques into operation. The application of new technologies and innovations are required for competing in the international market. The Chinese enterprises actively participate in the international market by utilising modern technologies. The employees become more efficient which increase the overall productivity of China (Peters, Minx, Weber, et al. 2011). The economic growth of China has been improved from 11 per cent to 40 per cent after moving towards mixed market economy. Previously the state owned enterprises dominated China which affected the country’s production potential of goods and services. China has effectively been organising its large labour force after the economic reforms which has led to an increase in the country’s productivity. China has moved away from state-run firms due the inefficient management that decreases the overall productivity (Fu, Pietrobelli, and Soete, 2011). In this section we shall discuss about China’s economic policy. The economic growth of China has accelerated due to government’s support for economic activities and global integration in terms of imports and exports which increase the productivity (Hong, Chu, and Wang, 2011). The government has designed a successful economic model which has fuelled the country’s economic and social development. The country has been facing many economic challenges which include economic imbalances, environmental issues, economic inequality and increased population which are required to be tackled for ensuring country’s sustainability (Zhang, Wang, and Wang, 2012.).

The overall industry structure of China is worth mentioning in this context. The overall productivity of China has increased after the introduction of dual-price system and greater autonomy for the managers (Lardy and Subramanian, 2012). Large scale privatisation has been introduced after the economic reforms which reduce the market share of state-owned enterprises and increases the private sector’s market share. Foreign capital controls has played an important role in Chinese industry which make the country world’s largest producer of steel, concrete, ships and textiles (Guthrie, 2012). Chinese steel output has rapidly increased which contributes to one-third of global production and increase the western productivity. Labour productivity, automobile and textile production have significantly increased due to the removal of barriers to entry and increased competition among the private enterprises (Shahbaz, Khan and Tahir, 2013.). In this section we shall discuss about investment and capital accumulation of China. Before 1980s, China’s international trade has been controlled by the central government. Now competitive channels for the domestic firms have been opened up which provide an access to the foreign direct investment and new technologies outside of China (Boons, Montalvo, Quist, et al. 2013). FDI has increased the capital inflow to the country which plays an important role in capital accumulation that brings higher productivity levels. The foreign-related legal system has been designed by institutional reforms which help to manage the trading and investment environment. The rate of return on investment has been maintained above 20 per cent over the last 30 years 9 (Wang, 2013). The government of China has made continuous investment in stock market which benefits the economy as the Chinese capital stock levels have rapidly been increased over the past three decades. China’s economic growth has been found mainly because of two factors which are large scale capital investment and rapid productivity growth. The domestic policy influences on the composition of the Chinese population and working force which has been changed with time (Donnithorne, 2013). Two large-scale decentralisation schemes have been implemented which are the Great Leap Forward and the Cultural Revolution during 1950s and 1960s. These two schemes have largely impacted on the society and economy. Migration restrictions have created surplus labour in rural areas as it restricts movements from the country to the city during 1953-1978. Later, the urban population has increased because the construction and manufacturing job opportunities have been provided to the people of China in the mainly coastal areas. The economic development has been accelerated because 12 per cent of labour workers work in coastal regions. These workers are paid 15 per cent higher than those workers who receive inland wages. Education and training programs have been arranged by the employers of the organisation which improve the skills, quality of human capital and employability of workers (Chen and Golley, 2014).

We shall now talk about Macroeconomic indicators of China. After the economic reforms, the average growth rate of China has been increasing with a rate of over 9% per year. The increasing trend in growth rate is the result of the start of market based reforms in Chinese economy. The rapid economic growth in China has come from capital investment and exports which increase the overall production. The China government helps the companies to dominate the industry as a whole by taking the step of massive investment. Big enterprises of China share the advanced technology of the foreign companies which allow them learn new techniques of the process of manufacturing. The Chinese currency has strongly been controlled by the People’s Bank of China, the nation’s central bank. The pricing of exports have been managed by the central bank to the United States. Thepoverty level has been reduced with the economic reforms as the country accounts for 20 per cent of the world’s population (Guan and Yam, 2015.). The total production has increased due to reallocation of resources in the sectors which are controlled by the central government. The sectors include agriculture, trade and services. The agricultural reforms allow the workers to work into the manufacturing sector which boost the overall production. The private firms or the non-state enterprises have been introduced with the decentralization of Chinese economy. The private firms are market-oriented and pursue more productive activities which increase the overall production (Lai and Tang, 2016.). Exports by private enterprises has increased which males a huge contribution towards the economic growth of China which has a greater share of the economy. New advanced technology and processes have been brought with the help of foreign direct investment that boost the overall efficiency. The level of productivity gains and real GDP growth has been increased with the China’s technological development. Chinese economy has been recognised as the world’s second largest economy which influences the global economy as well as financial markets (Zhang, 2016.). The progress and prosperity of the global economy has been greatly impacted by the fastest economic development of China. A sustained and rapid development has been maintained by the government of China which contribute 9.3 per cent annual growth in GDP during 1978-2001. China’s rapid economic growth has reduced the poor population by 147 million in East Asia. The steady growth in global economy has seriously been affected by the poverty which also hampers the sustainable development of the economic growth. As per the data given by the World Bank, more than 14 per cent of global economic growth has been contributed by China during 1980-2000. China has contributed to the global trade with nearly 4.7 per cent annual growth rate during the same time period. As per the recent measurement, China’s contribution to the global economic growth has increased to 17.5 Per Cent (Aiguo, 2016).

China, being an emerging market, has become one of the largest commodity markets in the world due to the rapid economic development and sustained growth. The government of China has started taking initiation for improving the overall productivity due to the economic reforms which increases the production as well as country’s total revenue. The Chinese products are largely accepted by the other nations as large quantities of products have been exported to various countries. USA is involved in exporting large number of products which help them to save USS 15 billion annually because of the low-cost with quality products are supplied by China (Chun, 2016). The competitiveness among the products of different countries has been enhanced because China has maintained lower production cost of each single product. The free circulation and optimized distribution of global resources have been increased with advancement of China’s foreign trade practices. China has been considered as one of the fastest developing countries in the world with its advanced productivity and marketing strategies. The developed nations have been attracted due to the rapid economic growth of China during the global economic recession as they have surplus productive capacity, huge fund and manpower (Overholt, 2016.). China has been maintaining an improved investment environment which attracts many traditional companies around the world to make an investment. The large companies share the profits as they have made a huge investment in different parts of China which influence them to continue their investment in future. China has welcomed the foreign investment by absorbing more than US$50 billion of overseas investment. China’s economic growth has largely increased in the year of 2001 after the central government has made the decision to join WTO which also fuels the overseas investment. It has been measured that more than 80 per cent of top 500 companies have made their investment in China during 2001. Many of well-performed Chinese companies have started making their investment into the world market by setting up their own factories in various parts of the world. The increased number of factories creates additional production which generates more revenue to the Chinese companies that help them to take part in global investment. The economic development of the countries and regions has been contributed by the Chinese-funded businesses (Jin, Li and Wu, 2016).

It is estimated that Chinese economy has contributed more than 30% to global economic growth. The world financial market has also been influenced and impacted by the Chinese economy. The Chinese government has given more focus on urbanization and advancement of the real estate sector which fuel the world’s economic growth. China has made a decision to join WTO which has the positive impact on its own economy as well as it contributes to the world’s economic development. China’s economic growth has contributed to the world’s gross domestic product. China has made nearly 24% contributions to the global economy as the China’s reform policy benefits the growth of other nations in world. China has become the second top trade partner of United States. China has made ASEAN–China Free Trade Area (ACFTA) for the purpose of maintaining continuous exports to the Asian countries. The free trade agreement has been made between ten member states of the Association of Southeast Asian Nations (ASEAN) with an aim of establishing free trade area among the eleven nations. The free trade practices generate more revenue and create a significant impact on the global economic growth. The free trade agreement has the global impact on the economic performance as it maintains high national saving rate and economic growth rate. The trade practices have increased the overseas investments by reducing the domestic consumption and increasing the rapid growth in economy. China has implemented the economic reforms since 1978 which contribute to the world economy development. China’s economy has seen rapid growth after the economic reforms which improve the growth rate in GDP by reaching 10 per cent in the past 33 years. The tremendous growth rate provides an opportunity to China for making a significant contribution to global economy. As per the statistical data, China has made the largest contribution after joining WTO in the year of 2001 with an average of 13% worldwide growth rate. It has been measured that, the Chinese economy ranks second largest economy in terms of global contribution at current exchange rates. The output rate of production has continuously been increasing in the last 20 years which help the experts to project the future expectation in GDP growth. The positive trend in GDP growth is expected to be continued in future which account for 25.6% of global output by 2020 (Day, 2016). The Asian financial crisis has greatly impacted on East Asia's economy in the year of 1997 as the economy has undergone through a deep stagnation period. Other strong Asian countries, such as Japan, have failed to support the economic growth as the economic slowdown has greatly impacted on each country. During the economic slowdown period, China has come forward to take the responsibility for tightening up its cooperation with other East Asian countries and regions. China, being the responsible nation, has tried to maintain the strong collaboration with other Asian countries for the purpose of helping them in reducing their difficulties and recovering from the situation. The surplus trade has been found out with the increased growth in exports among the Asian countries which generate revenue and enhance the economic growth. According to the statistics, the Republic of Korea, ASEAN and China's Taiwan have yielded US$12 billion, US$5 billion and US$20 billion respectively in 2000. China has attracted the top global companies in terms of making huge investment as because it generates the surplus trade and increases the overall production which replace the United States as the largest investment destination of the Republic of Korea and Japan.

A series of correct macro-control policies have been adopted by the central government of China which include the policy of expanding domestic demand and proactive fiscal and prudent monetary policies that are designed to facilitate the rapid economic growth. The policies help many of developing nations by providing an in-depth study of development economics and valuable experiences. The foreign reserves of China has been in an increasing trend since the year 2002 which has reached up to USD 3.181 trillion in the year of 2011. The china’s foreign reserve amount has been considered as the world’s greatest amount which has crossed the amount of Japan by more than 2.6 times. The US dollar holds the large amount of China’s foreign exchange reserves which comprise of 54% of the total reserve amount. China’s policies, economy and environment impact on the world economy by having a significant amount of shares in global import as well as export industries. There are few key implications have been found out which explain a China centric global growth in world. China has been seeing the fastest economic growth science the economic reforms which largely impacts on the growth of other nations in world. It has been measured that world GDP has directly been affected with every one-percentage point decline in Chinese GDP that reduces the foreign trade practices. The GDP rate has increased 6.8 per cent year-on-year in 2016 as compared to a 6.7 per cent growth in previous year. The GDP rate has increased in 2016 as compared to last three years which is supported by the consumer spending. China’s population has increased by 1375 million as compared to the last three years due to higher productivity in coastal region. The level of investment has increased in 2016 as compared to the last years and it is expected to grow in future.

The Chinese economy is considered as the second largest economy by nominal GDP. Since the economic reforms, the economy has tremendously been increasing due to the advancement of each and every sector. China has increased its productivity and become the largest manufacturing hub in world. It has been concluded from the given study that China has seen a steady growth which makes the country attractive among other countries in world. The economic growth of China has influenced on other countries around the world which increase the revenue and make the global economy strong. It is expected that China’s economic performance will continue to grow which shall generate revenue into the global economy.

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