Trade which means the exchange of goods and services for money is very important for the growth of any country’s economy. This business industry has continually changed over time. This can be clearly seen because a long time ago there was barter trade which is the exchange of goods with other goods or services. Initially there was no medium of exchange but later money was introduced. Traditionally, trade was also conducted within boundaries of countries that is local trade. However the arena has completely changed nowadays. This has been caused by the fact that the transportation of goods and services is easy.
People, goods and services can be transported through air, rail, water or even road. This in turn means that space otherwise known as distance between the producer of goods and services and the consumer is not an issue. There is therefore a free flow of services, people and goods from one country to another. This means that there is international trade. However, international trade is affected by the domestic policies of the country as well and the politics of all other countries involved. This paper will study the effects of the politics of globalization in China.
Yanrui argues that the economy of China has changed since the economic reforms which took place in 1978 (1). According to the National Bureau of Statistics of China, her economy comes third. United States is ranked first followed by Japan. China’s economy has been growing very rapidly. It has been having a constant Gross Domestic Product growth rate of more than 10per cent. Her per capita income has also been increasing with time. Her economy is continually improving because she concentrates in ensuring that there is equitable sharing of resources as well as aiming at lowering the poverty levels.
Additionally, (Dadush 1) notes that China is doing considerably well in the international market as she is the leading exporter and the second largest importer of services and goods. On the same note (Yanrui 2), states that there are two major factors responsible for the economic advancements in China. The first factor is growth of investments which between 1979 and 2004 grew at a rate of 12 per cent. The high growth of investments was caused by many foreign organizations investing directly and also the high rate of savings. This means that the foreign organizations invested in China as citizen and thus this is corporate citizenship.
The organizations in turn save some money in the country. He observe that there was a very high increase in the ratio of domestic savings and Gross Domestic Product. The figure had increased up to 74. 8 per cent in 2004 compared to 10. 1 per cent in 1979. (Yanrui 2) continues to emphasize the fact that china’s economy has improved due to her increased exports. The exports rates were 18 per cent between 1979 and 2004. Yanrui continues to state that another factor to be considered in measuring the growth rate of China is the domestic consumption. The number of people acquiring cars increased at a rate of 24.
1 per cent per year between 2001 and 2004. This shows that they have money and thus the economy is doing well. It clearly indicates that due to the improvement in the country’s economy a lot of people had the purchasing power due to low prices of commodities and the taxes levied on the goods and services had reduced and hence most people could buy them. The economy of a country is highly affected by her politics Keohane (2). He continues to argue that the domestic politics of a country in turn affects the world economy. It is therefore necessary to consider how domestic politics, globalization influence each other in China.
In China in 1949, the government used to control the prices of commodities, control some important policies such as the banking and financial policies. This hindered economic development and as a result her economy was not growing at a fast pace. After 1978 the Chinese government controlled only a few industries such as the one dealing with air travel. The Chinese government ensures that the activities in each sector of the economy are controlled by institutions or organizations such as Ministry of Finance, Ministry of Agriculture among others. The operations of some other organizations are supervised by the State Council.
The State council has offices in other locations nearer to the institutions it supervises. The state council implements the policies regarding the economy. This is done by controlling financial operations of the organizations, ensuring that some resources such as transport, labor and raw materials among others are equitably shared and they also control the tax issues. Taxes can lead to a poor economy because they make the prices to shoot upwards if they are high. This in turn lowers the demand for the goods. Zhiyue (1) states that it is of paramount importance for China to attain democracy.
However it is a hard task to decide which democracy model should be implemented in China. He (145) notes that there are four democratization models that china could use. They are: social capital theory, modernization theory, negotiation-pact and the modernization theory. Each of these will be elaborated. The social mobilization theory states that democracy is not achieved by mere economic advancement (He 147). The modernization theory on the other hand (145) advocates for the fact that if a country is economically developed it is most likely to achieve high levels of democracy.
The third theory which is negotiation-pact stipulates that the learned and the political leader are very important in order for a country to achieve democracy (He 153). He also notes that it is viewed as the most secure model for transition. He (154) continues to elaborate that for a country like China to attain democracy various factors which include the culture, her economic development, the politicians and the social classes have to be considered. In addition to considering these factors any other important issue should be put into consideration.
A balance should be stricken between the various factors in order to achieve democracy without violence which could lead to unnecessary loss of property and lives. Therefore in attempt to answer the question it is worth noting that China’s economy is doing well. This means that there is increased trade, income and saving are high, the prices and inflation rates are low. This basically means that the economic arena is good. However, China has not yet attained democracy. Yanrui (2006) observes that globalization is the ability of the Chinese economy to interact profitably with the international business community.
He additionally states that a country’s level of globalization can be gauged by looking at how the international business affects its economy. China has made use of the international trade and thus her exports rose to 593. 4 United States billion dollars in 2004 up from 9. 8 billion United States dollars. It is at this point that I would like to note that the domestic politics of a country affects her globalization. The political system of a country determines whether there will be free flow of goods, capital, services and people in and out of the country.
As has already been stated above for a country to be considered internationalized it has to engage in international trade. Thanks to the Chinese government which discovered this earlier and implemented the 1978 reforms. This encouraged international trade which has made her economy to improve dramatically. However, this should not cause the countries to lose their political identity in the name of being internationalized. China has an edge over any other country that has not reached her level. (He 139) notes that the China is almost developing to the level of the developed world.
He also observes that though China has developed in terms of trade she still lacks in the democracy (140). This is therefore a clear indicator that China has a democratic deficit which is caused by its communist system. It is therefore important for China to look for a suitable democratic model which she should implement in order to avert the democratic deficit. He adds that ninety per cent of the people in China feel that they should have democracy (145). China has become a very important destination for any organization in the world.
The Economists intelligence Unit (10) notes that there is no serious multinational that can afford to ignore China in its business operations. It continues to elaborate that the emergence of a stable market which is easily accessible makes China a preferred market for many multinationals. To ensure that the multinationals adhere to the expected standards China has introduced laws and regulations to cater for the organizations. Global Corporate citizenship is whereby a multinational company registers in a particular country such as China in order for it to conduct business in the host country.
This is done in China and it is important because those companies who conduct business in China are conversant with her laws and hence security is maintained despite there being foreigners in China. The foreigners feel part and parcel of the country. It is important that each and every country discover that though the economy could be doing very well they should also ensure that they attain democracy. They should consider the democratization theories and and come with a model that will favor them. Domestic politics should ensure that country develops economy wise.
The factors of production as well as the resources should be distributed equitably for the benefit of all citizens and any other party willing to conduct business in the country. Works Cited. Dadush, Uri. Global outlook: Not your average Crisis. Massachusetts, International Economic Bulletin, 2010. Economist Intelligence Unit. Coming of Age: Multinational Companies in China. Hongkong, Russell Reynolds Associates Economist Intelligence Unit,2004. He, Kai, and Huiyun, Feng. “A path to democracy: In search of China’s Democratization Model
Vol 32, No. 3, 2008. Keohane,Robert, and Helen Milner. Internationalization and domestic politics. United Kingdom,the press syndicate of the University of Cambridge,1996. MIT department of political science. Politics of globalization. Cambridge, Massachusetts Institute of Technology 2009. Yanrui, Wu. Economic growth transition and globalization in China: advances in Chinese Economic studies. U. K: Edward and elgar Publishing Ltd. , 2006. .Zhiyue,Bo. China’s model of democracy. Chicago, Political Science Association, 2009.