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Globalization in china and its effects
Globalization in china and its effects
The impact of globalization on China
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Trade in China and the Success of its Economy China has come to the forefront of the international finance scene following the East Asian financial crisis for two reasons. First, the post reform Chinese economy closely resembles the other East Asian countries. China experienced significant levels of growth led by exports, with a rapid expansion in labor-intensive exports in its early stage of development. Rapid growth was accompanied by a rapid increase in domestic savings and massive inflows of foreign capital (Perkins, 1986). The banking sector dominated financial intermediation and the ratio of non-performing loans was high. Estimates put non-performing loans at China's four leading banks at 25 per cent -- far higher than in South Korea or Thailand before they fell prey to the Asian contagion. Would China be the next victim of the crisis? (Dornbusch, 1997). The second reason why China came to the forefront of the international finance scene following the East Asian financial crisis is China’s economic performance became the key to the current economic stability of East Asia. During 1997 - 1998, China was the only country in the region to sustain significant growth. In particular, maintaining the stability of the renminbi, was seen as the last hope of achieving equilibrium in the regional currency system and facilitating recovery (Garnaut, 1998). The Chinese government took up the challenge and made a firm commitment not to devalue the renminbi in the short term. China's decision not to devalue in the face of internal pressures has been credited for stabilizing Asia's economic situation. Most economists predicted that a currency crisis was unlikely to damage China’s economy or trade; its macroeconomic fundamentals were healthy and it had the extra insurance of capital account controls. However, surrounded by neighbors in trouble, China could help but be somewhat effected by the larger, regional situation. The rest of the world continued to watch and worry about how much longer China would be able to defend its overvalued currency and still remain internationally competitive on an export basis (Song, 1998). This paper will begin by examining the economic background of China. We will see how China came to be in the position to devalue its currency as well as address some controls that were used to inhibit the devaluation. The paper will continue by ex... ... middle of paper ... ...my, September/October: 20-3, 55. Fong, Y. (2002). Personal interview with former UCLA International Economy Student, April 13, 2002. Huang, Y. (1999). The Last Steps Crossing the River: Chinese Reforms in the Middle of the East Asian Financial Crisis. New York: Graduate School of Business, Columbia University. Lardy, N.R. (1998). “China and the Asian Contagion”. Foreign Affairs, 77(4): 78-88. Mufson, S. (1998) “China not Going to Devalue Currency , U.S. Official Says”, Washington Post, A17. Perkins, D. (1986). China, The Next Giant? Seattle: University of Washington Press. Song, L. (1998). “China”, in R. McLeod and R. Garnaut (eds), East Asia in Crisis: From Being a Miracle to Needing One? New York: Routledge: 105-109. State Statistical Bureau of China. (1999). Statistical Report of National Economy and Social Development in 1998. Beijing and New York: China Statistical Publishing House. Wang, H. (1993), China’s Exports Since 1979. New York: St. Martin’s Press. World Bank (1990). China: Between Plan and Market. Washington: World Bank. Zhang, Z.Y. (1995) China’s Foreign Trade Reform and Export Performance, Singapore: National University of Singapore.
This paper argues that the Mexican peso crisis of December 20 should have been expected and foreseeable. In the year preceding the crisis, there were several indicators suggesting that the Mexican economy and peso were already under extreme pressure. The economy bubble was ballooning to burst so much so that it was simply a crisis waiting to happen.
East Asian Economies have experienced an outstanding record of high and sustained economic growth over the period of 1990s. In the period of 1965 to 1990, East Asia’s twenty three economies grew faster than other economies of all other regions. Most of this success is attributable to seemingly miraculous growth in just eight high performing Asian economies (HPAEs). Among these high performing Asian economies, China ranks as the world's 2nd largest economy after the United States since 2010. It has been the world's fastest-growing economy with consistent growth rates of around 10% over the past 30 years. A major contributor to China’s extraordinary growth has been its economic reforms coupled with the implementation of unorthodox policies.
Vogel, E 2011, Deng Xiaoping and the transformation of China, Belknap Press of Harvard University Press, Cambridge, Massachusetts.
Fairbank, John King. The Great Chinese Revolution 1800-1985. New York, NY: Harper & Row, 1986.
Despite the fact that recent reports have shown that the Chinese currency is currently facing descending pressures, it is, however, likely to improve in the future because of the enhanced terms of trade, current account surplus that is growing, and high net saving. Another reason that will make the Chinese RMB to do well in the future it is because the currency has solid fundamentals and the economy of the country is significantly increasing at a higher rate than the GDP rates. Due to the growing Chinese economy to being the second largest economy, the Chinese currency yuan has been acknowledged by the International Monetary Fund (IMF) as a major global
Gittings, John. The Changing Face of China: From Mao to market. Oxford University Press, 2005.
Xingzhong, LI Daokui David YIN. "The International Monetary System in the Era of Post-Financial Crisis: What Policy Options Does China Have?[J]." Journal of Financial Research 2 (2010): 005
The current trade imbalance is caused in large part by intrinsic features of China's labor market and consumer base. The vast majority of China's 1.3 billion people still live in rural areas. China has, by some estimates, a surplus rural labor force of 120 million people, many of whom migrate to industrial centers to look for factory work, and drive down wages. As long as wages are low, the United States will continue to gobble up products made in China, while Chinese consumers will prefer to buy cheaper, homespun alternatives to American products. The rise in trade deficit with China has come at a cost to jobs in the United States, accordin...
Douglas Reynolds, China, 1898-1912: The Xinzheng Revolution and Japan. Cambridge, MA: Harvard University Press, 1993.
http://www.uoc.edu/symposia/caixamanresa/jornadaeconomia/eng/vicky_hu.pdf> Naughton, B (2007) The Chinese Economy: Transitions and Growth, Cambridge, Massachusetts: MIT Press. Stoltenberg, Clyde D. "China's Special Economic Zones: Their Development and Prospects. " Asian Survey. 6th ed.
Wei-Wei Zhang. (2004). The Implications of the Rise of China. Foresight, Vol. 6 Iss: 4, P. 223 – 226.
The stability of currency values plays a significant role for economic and financial stability. It is not difficult to see the exchange rate fluctuations are widely regarded as damaging. As the movements of the exchange rate have significant and large effects on the trade balance, resource allocation, domestic prices, interest rate, national income and other key economic variables. Then can exchange rate movements be predicted by these fundamental economic variables?
If the development of Financial Market in America is like a sturdy adult, I would say the development of Financial Market in China is just like a child. The history of the U.S. financial market was established and has been growing over two centuries. For China, only twenty year has now passed since the financial market was built and growth. The Chinese financial market seems to be immature compared to the U.S. For example, China’s financial market does not have a thorough monitored stock market. The child is just starting to imitate the behavior and follow the step of the adult. However, the child is too young that mistakes always being made. On the other hand, since the child is in his early growth stage, a high level of growth is undertaking and a large progress might be attained. In today's China’s financial market, it is necessary for China to gather finance professionals in development of financial market. As a recent graduate student, working in the finance field less than a year, it is extremely hard for me in making a tiny positive effect on the growth of Chinese financial. However, to be engaged myself to the development of Chinese financial market is my long-term career goal.
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.
The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades.