Chinas geo economic strategy
The Chinese government has implemented various strategies in order to propagate and maintain the country’s economic growth. Globalization is one of the major methods used by China in their bid for worldwide economic dominance; local Chinese companies are encouraged to venture into foreign markets under the “going out” strategy. The “going out” strategy is subdivided into three stages, which shall be discussed extensively in this paper. The utilization of its large population is another way in which China is expanding its market power; with a relatively highly skilled labor force, large corporations across the globe such as Apple outsource labor to China. With such a large willing labor force, cost of labor is low compared to other countries, this is however a two edged sword and has its cons as shall be seen later.
As China’s economy grows, it is affecting the economy of other countries thus affecting how other countries relate to it. American and European countries have trade treaties with China and other Asian countries, but as China’s economy grow so does its bargaining power in the trade agreements (Norris 2). In the past decade, China has greatly been investing in many countries infrastructure and economy especially in Africa and other Asian countries. China has greatly funded many road, railway and commercial building constructions throughout Africa and Asia creating what is being termed as the modern Silk Road. Such investments have made China more relevant in the world economy and pushed it to grow as a superpower. As China stepped into its new role as a superpower, they held influence over many foreign countries, with the new initiatives such as “get out” or Belt-road, China has become a key driver in many developing countries’ economies.
I shall expound on the Chinese influence in developing countries, their loan programs and the ramifications of these advances to the developing countries. It has not all been smooth sailing though and there have been challenges, China has to adapt to the outside world despite its closed borders policy, this is a major obstacle which I shall discuss in depth among others. All this is crucial in comprehending the diverse ways and the multitude of policies that China has utilized for the last four decades, and the strategies that are currently in play with their aim to achieve economic growth and development by global economic success. Literature Review A geopolitical strategy is the systematic formulation and passing of policies on an international level for the betterment of a state.
China has always been a communist country but has been becoming more authoritarian towards democratic in the past few decades. China’s political future maybe unpredictable but Westad states that China may follow other states patterns such as Taiwan and South Korean to become democratic (2012. Pg. Equating the CCP party to the country by foreign observers is a major mistake as China’s history shows political change capabilities as indicated by its economy and social culture. Westad also states that although the changes maybe drastic they may not be in conflict with other neighboring or Western countries (Nicholas 26). Both countries have seen fundamental foreign policy changes in the past two decades. Especially after the dissolution of Soviet type socialism and the end of the Cold War there have been a change to a new more pragmatic, gradualist and experimental type of foreign policy including a renewed attempt to upgrade bilateral relations between India and China.
Two-way trade has increased from $270m in 1990 exceeding $60 billion in 2010 which if it continues at even half the rate it has grown for the past 10 years it will overtake US-China trade in 2020. As revealed in table 1 and 2 (appendix) China is India's biggest trading partner but there is a huge trade deficit but very low levels of foreign investment (Rasskazov 359). Foreign Investments In the past decade, China has been greatly investing in other Asian countries and most of African countries. At present, China has become the largest trading partner of more than 120 countries in the world. China's economic interests have been extended to Asia, Africa, Europe, America, Oceania and other major regions of the world. In the future, it is an urgent task for China to maintain and expand its own interests through a comprehensive opening and closing strategy.
"One Belt and One Road" will become an important strategic support for China's opening up to the outside world in the new era. Through economic cooperation with developing countries, close economic ties with each other, and form an interdependent relationship of interests, in order to enhance China's discourse in global affairs. Economically applicable technology and financial support to accelerate the process of industrialization and achieve mutual benefit and win-win (Liu Huaqin). Last but not least, on May 1, 2014, Premier Li Keqiang pointed out in the article "Several Issues on Deepening Economic System Reform" that in the past 30 years, China's opening up to the outside world was mainly in coastal areas, and the opening up of inland and border areas was relatively lagging behind.
Despite the implementation of the strategy of the rise of Central China and the development of the western region, the growth rate of the western region and some central provinces has accelerated, but the economic imbalance between the central and western regions of China and the eastern coastal regions is still increasing. In 2013, the total GDP of the seven provinces of Ningxia, Qinghai, Gansu, Guizhou, Xinjiang, Yunnan and Chongqing was still lower than that of Shandong Province. Actively promoting the construction of the “Belt and Road” will enable the central and western regions to change from the end of opening up to the frontier, activate their development potential, accelerate their opening up process, expand open areas and room for maneuver, and take advantage of the opportunities created by the global market for China.
Accelerating the development of self-owned brand vehicles to the international market through means such as peripheral factories. Promoting innovation and upgrading to improve the international competitiveness of the information and communication industry. Integrating superior resources and promoting manufacturing companies such as construction machinery to improve their global business network. Strengthening foreign cooperation and promoting the export of aerospace equipment. Improving product and service levels and developing high-end markets for marine and offshore engineering equipment (Liu Huaqin). ii. The stage of investment-oriented investment development in the early stage of reform and opening up (1979-2000) After China implemented the reform and opening up policy at the end of 1978, domestic enterprises went to overseas investment-run enterprises to have the first wave of rapid development.
During this period, many professional foreign trade companies and provincial and municipal international economic and technological cooperation companies in the central and local governments took the lead. Each foreign trade company has established overseas representative offices or overseas trading companies abroad, such as China National Chemicals Import and Export Corporation, China Minmetals Import and Export Corporation, and Shanghai Machinery Import and Export Corporation, relying on its foreign-related business experience and numerous advantages in import and export channels. In the late 1980s and early 1990s, with the expansion of foreign trade, Chinese enterprises “going out” had a relatively rapid development, and the types of enterprises participating in overseas investment increased, not only foreign trade enterprises but also industrial enterprises and trade materials enterprises.
The distribution of countries and regions is more extensive. By the end of 1992, Chinese companies had established overseas companies in more than 120 countries and regions around the world, including Asian countries and regions. In the early 1990s, there were phenomena such as overheated economic development, unreasonable investment structure, and excessive price increases in the development of the national economy. Since 1993, the state has adjusted and reorganized the economy, appropriately tightening monetary policy, and letting the overheated economy land softly. Correspondingly, the overseas investment business has also entered a period of clean-up and rectification. The accelerated development of this type of overseas investment has also led to new changes in the main body, mode and industry structure of overseas investment. In 2001, China joined the World Trade Organization, and with the influx of a large number of foreign-funded enterprises, the Chinese economy began to integrate into the process of economic globalization.
The Chinese government has proposed an open strategy of “bringing in and going out”. Foreign direct investment by domestic enterprises has entered a period of rapid growth. In 2008, the global financial crisis caused the unemployment rate in Europe and the United States to rise, corporate funds to be difficult, business contraction, and asset prices to plummet. China’s trade strategy in Africa is profoundly tied to the oriental nation’s political and economic goals. According to information issued by the Economist, Chinese state-owned corporations get funded four-fifths of all Chinese international direct assets, which motivates these immediate, high-level relationships between senior individuals at China and African governments. (rice , D. , Oct. 2012) DI in China, also known as RFDI (renminbi foreign direct investment), has increased considerably in the last decade, reaching $19.
(fDi Magazine. 25 June 2014. ) Foreign Trade Nowadays, China is the largest product exporter in the world, working large trade surpluses with nearly all great economies. China’s loop and Road enterprise, once OBOR/MSR, is the geo-economic and geo-strategic hit, though there are serious questions about Taiwan’s power to pay that BRI in the long term, given the debt burden of Chinese banks. China’s military modernization, especially its naval expansion, should make no single in any doubt about its aim to turn into a big force, and influence the Indo-Pacific area. Opened the door. At that time, the Ministry of Foreign Economic Relations analyzed the domestic and international situation, and jointly reported to the State Council on the “Report on the Proposed Foreign Contracted Project”, and proposed that it should seize the favorable opportunity of the international contracted engineering market and use China’s foreign aid and the Middle East.
The friendly relations established by all countries will organize our building forces to enter the international market as soon as possible. The State Council quickly approved the report. Under the guidance of the reform and opening-up policy, China Construction Engineering Corporation and other enterprises seized the favorable opportunity of strong demand in the construction contracting market, took the lead in entering the Middle East market, and established a firm foothold there, which opened up China's foreign contracted projects and labor cooperation. During this period, while giving correct macro policy guidance, the Chinese government has also strongly supported the enterprises to conduct business abroad in terms of policies and funds. China's foreign contracted projects and labor cooperation business have entered a stage of steady development.
From 1983 to 1989, China’s total contracted foreign contracted projects and labor cooperation contracts amounted to US$11. 56 billion, with a turnover of US$7. 22 billion and 244,000 overseas labor services. In 2007, China and the ASEAN region signed a new contract for foreign contracted projects with a total contract value of US$12. 4 billion and a turnover of US$5. 6 billion. In the first nine months of this year, the amount of newly signed contracts was nearly $7 billion. At present, China and the ASEAN region have signed a total contract value of nearly 50 billion US dollars. , the parent company of the Northern International Cooperation Company, successfully built the Tehran Metro Line 5 project with a successful construction of the Tehran Metro Line 4 project. The contract amount was 836 million US dollars, which was the amount of China's foreign contracted projects at that time.
In 2005, China National Mining Corporation, a subsidiary of China Railway Construction Corporation, won the bid for the Turkish high-speed railway with a cost of US$1. 27 billion. In January 2006, Sinoma International Engineering Co. contracted the second bridge project in Penang, Malaysia by EPC. The Chinese government provided the Malaysian government with a preferential export buyer's credit of 800 million US dollars through the Export-Import Bank of China; China Hydropower Construction Group International Engineering Co. , Ltd. and Laos The State Power jointly builds a hydropower development project to recover investment in the form of a franchise period. In 2008, China’s “Turkish Landscape” designer went abroad and won the bid for the design of the surface engineering project in Boston’s largest excavation project, which is the largest project in the US and cost more than $16 billion.
With the improvement of finance, technology and management level, Chinese contracted enterprises have formed a “one-stop” comprehensive service capability from project establishment, investigation, financing, construction and capital recovery. These are not inferior to any European and American enterprises(Chuncheng 11). China's import and export chamber of commerce was born in the tide of foreign trade system reform. Before the reform and opening up, China's foreign trade sector did not distinguish between government and enterprises. Enterprises operated according to the unified plan of the country. The Ministry of Foreign Trade and Economic Cooperation, as the competent department of the government, gives active support and guidance to the work of the Chamber of Import and Export, as well as supervision and inspection. The duties of the Chamber of Import and Export are to provide services related to foreign trade in production, marketing, information, training, etc.
, to play a coordinating and self-discipline role, to apply for foreign trade remedy measures in accordance with the law, to safeguard the interests of members and industries. The department reflects members' suggestions on foreign trade and conducts foreign trade promotion activities. The Import and Export Chamber of Commerce shall not concurrently engage in import and export business. Since then, China has experienced 15 years of difficult and tortuous applications for the resumption of the status of the GATT countries and negotiations to join the WTO. From the preparation to the final realization of "re-entry" and "accession The first phase was the brewing and preparation phase (early 1980s to July 1986). The Third Plenary Session of the Eleventh Central Committee of the Party established the policy of reform and opening up and made ideological and theoretical preparations for China's application to resume the status of the GATT.
The domestic economic system has continued to develop in the direction of marketization, which has enabled China to initially have institutional conditions for joining the multilateral trading system. In January 1983, the State Council approved a report on China’s application for the restoration of the status of the parties to the GATT. In October 1992, the 11th working meeting of the Working Group on the Status of China's Parties made a decision to end the review of China's economic and trade system, and China's "re-entry" negotiations took a critical step. The working group is ready to move to the drafting and negotiation phase of the protocol. The third stage is to join the WTO multi-bilateral negotiation stage, the substantive negotiation stage (October 1992 to September 2001).
From October 1992 to January 1995, the Chinese working group held eight meetings and established the basic content of China's "re-entry" negotiations. On January 1, 1995, the World Trade Organization was established. " In May 2000, the EU also reached a bilateral agreement with China. Mexico is the last country to reach a bilateral agreement with China. Under the direct promotion of the leaders of the two sides, on September 13, 2001, China and Mexico signed a bilateral agreement in Geneva. So far, China has ended nine years of arduous negotiations and finally reached an agreement with all WTO members on the scope, time and extent of market opening in the years after China's accession to the WTO. In July 2000, the focus of China’s accession to the WTO negotiations turned to multilateral negotiations.
China has adhered to three principles: First, the GATT is an international organization. If China does not participate, it is incomplete. Second, if China wants to participate, it is undoubtedly participating as a developing country. Third, China’s participation is based on the balance of rights and obligations. Joining the WTO is a major event of historical significance in China's reform and opening up process. At that time, China’s foreign accounting transactions were divided into two categories: one was the accounting settlement with the Soviet Union and Eastern European countries. For the liquidation of account A; the other is the accounting settlement of developing countries in the third world, called clearing account B, which accounted for 70% of China’s international settlement business.
For the realization of the first five-year plan, It has played an important role in strengthening China's friendly cooperation and exchanges with the socialist countries and the third world countries. However, due to political and economic reasons, its scale is getting smaller and smaller. In these accounts, there are still many problems left. Next, local governments at all levels, the Bank of China, the People's Bank of China, and the Overseas Chinese Affairs Commission have become the main developers, implementers, and implementers of local remittance policies. After the founding of the People's Republic of China, the implementation of the remittance policy implemented by the state has achieved remarkable results, meeting the basic needs of the state for foreign exchange, balancing China's international balance of payments, maintaining the daily life of the overseas Chinese, and promoting the development of the production and life of the overseas Chinese.
In order to successfully complete the "one reform and three reforms" in the future, China has played a positive role (Quangeng 40-44). Trade foreign exchange management has developed with the development of China's foreign trade. In the early days of the founding of the People's Republic of China, in order to break the imperialist embargo, China adhered to the principle of equality and mutual benefit in foreign trade, and tried to use some third-party ports to conduct entrepot trade. However, the investment in people, finances and materials in the tertiary industry is less important, and heavy industry is lighter, and accumulation is required. Some service functions and links are often attached to the industrial sector and industrial enterprises. Under the historical background and planned economic system at that time, a "big and complete" and "small but complete" production and service management model was formed, which hampered the normal development of the tertiary industry.
By the end of the 1970s, China’s national economy was seriously out of balance, agricultural products and consumer industrial products were seriously under-supplied, and the development of basic industries such as raw materials, energy, transportation, and infrastructure was seriously lagging behind. In 1979, the central government put forward the policy of “adjustment, reform, rectification, and improvement”. After the 1990s, with Comrade Deng Xiaoping inspecting the South in the spring of 1992 and the 14th National Congress of the Party in October of that year, China's economic system reform entered a new stage of establishing a socialist market economic system. The main feature of this stage is that the reform has shifted from the old breakthrough of the old system to the comprehensive establishment of a new system, from policy adjustment to institutional innovation, from individual reform to comprehensive supporting reform.
The unprecedented achievements in opening up to the outside world have formed a pattern of “open-off-edge-by-river-inland areas” in all directions and open to the outside world. Along with the reform and opening up, economic development has once again entered the fast lane, showing a new momentum of vigorous development. Under this background, China's tertiary industry has once again ushered in new development opportunities. Encourage industrial enterprises that should be shut down and transferred across sectors, industries, and regions in the tertiary industry; actively encourage administrative personnel to separate from the organs. Engaged in the service industry; promoted the institutional reform of labor and personnel, gave the third industry enterprises the autonomy of employment; followed the law of value, reformed the price system, solved the problem of insufficient value compensation for the long-term existence of the tertiary industry; encouraged the expansion of international operations; and utilized finance and taxation.
Such economic means support the development of the tertiary industry; simplify the examination and approval procedures, change the difficult conditions for the opening of the tertiary industry; strengthen the legal system construction of the tertiary industry; and strengthen the planning and management of the tertiary industry. Driven by the "Decision on Accelerating the Development of the Tertiary Industry", China's tertiary industry has achieved rapid growth. This is an important feature of industrial development during this period (Peijun et al. Not only that, in order to quickly restore economic development, the central government has also vigorously carried out urban and rural material exchange campaigns, actively expanded the purchase and sale of agricultural and sideline products, promoted the small business hawker network communication between urban and rural areas, opened up a broad market for urban industry and commerce, and quickly resumed the development of private industry and commerce.
Since the second half of 1950, all parts of the country have carried out the work of adjusting industry and commerce according to the spirit of the instructions of the Third Plenary Session of the Seventh Central Committee of the Communist Party of China. State-owned businesses put the main force on wholesale and let about 30% of the retail business to regulate the market and stabilize Price. At the same time, further loans were granted to private businesses to encourage their development. Chen Yun said: "Expanding the purchase and sale of agricultural and sideline products is not only a rural issue, but also the key to the current active Chinese economy. 08 billion yuan in 1953, and rose to 22. 7 billion yuan in 1956. In addition to the state acquisition, the self-sales of farmers was 9.
07 billion yuan in 1953, 7. 02 billion yuan in 1954, 6. In 1956, the party’s eight major political reports pointed out: “In terms of business. In order to adapt to the new economic situation and the needs of the people, this socialist unified market is dominated by the national market, with a certain degree of national leadership. The free market, as a supplement to the national market, must take corresponding measures to improve the relationship between purchase and sales and market management, and rationally adjust prices to facilitate the expansion of commercial flows and the development of industrial and agricultural production. " Comrade Chen Yun at the conference in his speech, he also put forward the important opinions of "three main bodies and three supplements". These set the tone for Chinese party's market trade policy in the early days of socialist construction (Xianyou 19-20).
By 2010, the amount of offshore business made in China is expected to more than double, reaching $ 5. 6 billion, or 20% of the amount. China has a very large amount of relatively low-cost engineers and scientists (although those falling from foreign control international level salaries). Both Chinese and international companies are now using the skilled labour force to create designs that could be too costly to produce in innovative market economies. And Chinese corporations can afford to assign significantly more competent people to design projects than their international competitors, which makes them quicker results. One foreign investors descend into China; there is an increase of foreign currency in circulation. Not only does this create favorable balance of payments it also means that funds are available for investment.
Foreign investors also bring in employment opportunities; unemployment is a major issue curbing the growth of the Chinese economy. Foreign investors provide jobs for Chinese citizens thus endowing them with wages and royalties, which in turn raises the standards of living and gross domestic product. Furthermore, the introduction of new products in the local market brings about positive competition for local industries. This causes a shift to the negative in balance of payments since consumption of imports shall be more than domestic product consumption. Once Chinese citizens are unable to produce their own local products due to unfair competition, local industries shall stagnate. Foreign investment also carries the risk of eroding the Chinese beliefs and ways of life. This is evident in the urban and more developed cities in China.
Although the Chinese government tries to maintain its authoritarian form of governance and avoid foreign influence on Chinese culture, westernization is hard to curb. Since the exploration stage that started in 1949 to this day, China has benefited greatly from investing in foreign countries. Although china is well endowed in natural resources, there are some that cannot be found in the country, by investing and forming trade relations with nations in possession of these resources Chinese industries able to obtain raw materials that are not indigenous to its country. This form of relationship is mutually beneficial especially in developing countries which may lack the necessary technology to fully utilize their natural resources (Lifang 20-22). The going global strategy via the belt road initiative is quite advantageous to both China and its partner nations.
This new Silk Road means that the Chinese government bankrolls the development and construction of modern infrastructure in the participating countries. Opportunities The opportunities under this strategy are numerous. The fact that China is heavily endowed in raw materials gives their industry a characteristic advantage over other firms worldwide. Other factors such as the availability of a cheap skilled labor force and government incentive only encourages industries to venture out into the global market. Chinese investors have all the backing and strategic advantages in order to start and successfully run competitive firms on an international scale. It is also an opportunity for the countries in which China’s investors venture into, they bring in vast foreign investment projects, they create employment opportunities and boost ties between the participating nations (Wangbin 33).
7 Billion USD in August of 2012. Historically, from 1986 until 2012, China Balance of Trade averaged 2 Billion USD reaching an all-time high of 40. 1 Billion USD in November of 2008 and a record low of -66. 0 Billion USD in December of 1989. Export growth has continued to be a major component supporting China's rapid economic growth. Weaknesses The major demerit of the increasing levels of exportation of China’s products is the depletion of her natural resources. Heavy metal pollution is rampant in china and puts the health of her citizens at risk. In order to curb these adverse effects the government has to use large amounts of money to control and eradicate these harmful gases. Over-mining of natural resources is another serious factor that is detrimental to china’s economy and natural splendor.
The Chinese topography consists of natural hazardous features such as volcanos and the country suffers from earthquakes and tremors. Economic reforms Strengths Positive economic reforms and policies allow the economy to proceed positively without any negative government influence. The first reform under the Chinese government was the de-collectivization of agriculture and the opening up of the country to foreign investment. More reforms followed such as the privatization of numerous state owned industries, lifting of price controls, regulations, and protectionist policies. This lead to the advancement of the private sector so far as to account for 70% of China’s economy by 2005 (Reijun et al. The implementation of strong development focused reforms has brought about decrease in poverty, an increase in the standards of living among the Chinese people and reduced the inequality gap.
Economic reforms are easily rolled back especially under a communist government. In a bid to reassert, their control over the economy leaders and policy makers can easily do away with liberating reforms. Conclusion Since starting business sector changes in 1978, China has moved from a midway intended to a more market-based economy and has encountered quick monetary and social advancement. Gross domestic product development has arrived at the midpoint of about 10% every year—the quickest continued extension by a significant economy ever—and in excess of 850 million individuals have lifted themselves out of destitution. China arrived at all the Millennium Development Goals (MDGs) by 2015 and made a significant commitment to the accomplishment of the MDGs all inclusive. China additionally faces statistic weights identified with a maturing populace and inner work relocation.
China's fast financial development surpassed the pace of institutional advancement, and there are significant institutional and change holes that it needs to deliver to guarantee a manageable development way. Noteworthy arrangement changes are required for China's development to be economical. Overseeing auxiliary changes and related dangers won't be direct given the multifaceted nature, size, and worldwide significance of China's economy. China's thirteenth Five-Year Plan (2016-2020) addresses these issues. , Xue, X. , Zhu, A. , & Ge, Y. The Key Driving Forces for Geo-Economic Relationships between China and ASEAN Countries. Sustainability, 9(12), 2363. "The Comparison of the Financial Markets and the Financial Centres in the International Rankings. " Digital Economy: Complexity and Variety vs. Rationality: 359. ” 商务历史网站, http://history. mofcom. "The fDi Report 2014 - Asia Pacific. " fDi Magazine. 25 June 2014. Retrieved 17 July 2014.
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