Sample Paper On China’s Growing Economy Essay
In the last two decades, China has been on a transition in the market economy and has been following up on a development path. This approach has made it possible for China to combine market mechanism with the cardinal public ownership system and bring in an epoch of unparalleled progress. Its Gross Domestic Product on average has been advancing on a 9.3% margin every year. The economic transition was not a radical undertaking, rather it was a calculated step by step move, and this has proved to be a successful method since it has limited negative impact on the reforms to a tolerable extent and avoided social unrest. The restructuring of the economy started with the rural areas, and then advanced gradually to the cities and urban areas. The success that was achieved from the rural areas gave rise to the very much-needed experience to introduce the same to the urban areas (Goldstein & Pevehouse 464).
Currently the non-state economies bring in more than 40% of the country’s GDP; whereas the state owned corporations have some of the frontline sectors that are used in running of the country. Such sectors include transport, energy, the arms industry as well as telecommunication. The market mechanism was initially introduced to replace the rigid planned economy, but the Chinese government decided to take steps to become accustomed to its role and come up with an effective macro-control system that worked with the economic structure. The reforms were particularly enforced on the financial system thereby strengthening the central bank’s power to take charge of the market and safeguard the stability of the currency. It also put into practice a practical fiscal policy to maintain a stable economic growth (Wang 200). This approach is referred to mercantilism, which is an economic doctrine where the government controls the economy of the country. This kind of doctrine demands that there is a positive balance of trade (Naughton 149).
China phased out so many of its explicit subsidies so as to be a member of the World Trade Organization, the mercantilist system remains in place. The government administers the exchange rate to maintain the manufacturer’s profitability and as a result there are maximum trade profits. There are export-oriented firms that have continued to benefit from tax inducements. Most common features in a mercantile policy run economy is the high tariffs on the manufactured goods, but there is also the issue of building a network of overseas colonies which is also a policy of the same. A mercantile policy economy does not allow the payment of any kind to be made in the form of gold and silver, and there is also the monopolization of the markets (Naughton 149).
From a liberal perspective however, the subsidies deprive the Chinese consumers, and on the other hand benefit consumers in the rest of the world. The opposite of this is a mercantilist approach the losses and gains are simply costs of building an economy that has modern strappings as well as setting the stage for long term prosperity. The Chinese economy has managed to have steady growth in the last six decades by applying the different forms of mercantilism; this is by protecting the home market as well as a proportioning intellectual property. China also manages its currency and subsidizes its producers.
Goldstein, Joshua S, and Jon C. Pevehouse. Cram101 Textbook Outlines to Accompany International Relations, Goldstein, Pevehouse, 7th Edition. S.l.: Academic Internet publishers, 2007. Print.
Naughton, Barry. The Chinese Economy: Transitions and Growth. Cambridge, Mass: MIT Press.
Wang, Mengkui. China’s Economy. Beijing: China Intercontinental Press, 2004. Print.