The GDP) growth over this period until 2010, with

The People’s Republic of China is in the
northern hemisphere portion of Eastern Asia, having land borders with 14
countries including 2 from BRICS, Russia and India. It comprises a land mass of
9.388 million square kilometres (WORLDOMETERS 2018), being the 2nd largest
country in the world. (Gray 2017). There are 56 different ethnic groups in
China, 92% of these being from the Han population. Many smaller ethnic groups live in the remote areas of
china to the North and West. (Lilly 2009). While the Chinese population
contains most world religions and folk religions, Buddhism is predominant with approximately
14%, or 185 million people adhering to the faith. (Briggs
2011) The climate and
landscapes of China vary greatly amongst regions, representing both mountainous
and arid environments.

notion of contrasts extends to its economic environment where poverty and
wealth can be seen in this extreme system of labour,
China has become a manufacturing and exporting hub (market based) from a centrally-planned closed
economy in the 1970s. (Royal Geographical Society 2017) This major
structural change began in 1978 where it initiated market reforms that have
gone on to bolster 10% gross domestic product (hereafter GDP) growth over this
period until 2010, with growth in recent years slowing to 6.8% in the last
quarter of 2017. (Trading Economics 2018) These growth reductions have seen
China focus more heavily on improvements to standards of living, China reaching
all of the Millennium Development Goals by 2015. (The World Bank 2017)

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

The current statistics for China’s economic
performance are detailed in the table below. These outline the overall growth
that China has seen in 2016 through moderate inflation (2.003%) on par with
Australia’s 1.8% (as at 6 December 2017). (Reserve Bank of Australia 2017)

(International Monetary Fund 2016)

With a population of 1.383 Billion, China
has access to a large labour force granting it competitive advantage in the
world markets for manufactured goods. This has allowed its economy to grow to
become the first ranking country in the world for GDP adjusted to purchasing
power parity (hereafter PPP) (The World Bank 2017) and second in terms of real
GDP behind the United States. (The World Bank 2017)

GDP is dominated by China’s major
industries, being manufacturing, agriculture and services. The manufacturing
industry is the largest of the economy, with the services sector second. (Ross
2015) High levels of foreign trade and investment as well as technological
innovation in recent times of globalisation have continued growth rates above
6% through 2017. (Royal Geographical Society 2017)

Congruent to the size of the manufacturing
industry in China in 2016, the top five exports are displayed below:

(Trade Map 2016)

Each of these export categories are the largest
in value for any global economy, proving Chinese dominance in manufactured

A testament to the size of manufacturing in
China, its top two exports exceed the value of total exports for Australia of
$330 billion in 2016. (Tang 2017) Thus despite Australia being an advanced
country and China considered to be ‘developing’, the forces of globalisation
have enabled the latter’s economy to harness comparative advantage and
out-compete in exports on an international stage.

China’s five primary trading partners in
descending order in terms of value of exports are the United States, Japan, South
Korea, Germany and Vietnam. (Trade Map 2016) In terms of imports, monolithic
integrated circuits, petroleum oils, gold, iron and parts of electrical
apparatus for line telephon were the largest in 2016 with these coming predominately
from within the Region (South Korea, Japan), the United States dominating outer-region
imported goods. (World Integrated Trade Solution 2016)

This trading is largely fuelled by foreign
direct investment and is remaining strong after reaching an all-time high of $1262.67
US in 2015 and having continued at this level throughout 2017 as shown in the
graph below.

(Trading Economics 2018)

These levels of investment were initiated
in 2001 when China acceded to the World Trade Organisation (hereafter WTO),
causing the removal of pre-existing trade barriers to foreign corporations. (THE
WALL STREET JOURNAL 2017) These foreign firms have then been incentivised by
the comparative advantage that china has over many other countries due to its
ability to harness their abundance of labour and utilise cheap yuan to reduce
production costs. (Yu 2015) Joining this agreement also triggered and
accelerated China’s internal domestic reform causing the major industries once
dominated by state owned enterprises (hereafter SOE) to be exposed to the
forces of globalisation through direct trade. (Royal Geographical Society 2017)
The effects of this are that as of 2016, SOEs accounted for 30% of all Chinese
enterprises and produced 45% of revenues, up from an 80% SOE dominance in 1978.
(Wu 2016) This SOE dominance contributes to the inequalities experienced by
many of the Chinese lower class because a lack of consumer and labour
sovereignty does not allow marginalised to establish reliable sources of income
able to adapt to the high rates of inflation often observed in special economic
zones (hereafter SEZ).

The SEZs in China are established by the
state to adhere to economic regulations that are set by individual
governmental bodies rather than the Chinese central government in Beijing. The
six SEZs in China allow trade and foreign investment to operate at accelerated
rates by introducing tax and business incentives to foreign enterprises. (Rodrigue
2017) This can further exacerbate existing inequalities, contributing to China’s status of a developing economy despite its
high rates of economic growth. This classification can thus be placed upon the
difference between economic growth rates and quality of life indicators – economic
growth corresponding to an increase in GDP and per capita income and economic
development corresponding to quality of life indicators such as life expectancy,
human development index rating and infant mortality rates. (Surbhi 2015) A great
disparity thus exists between their economic growth rate and quality of life, shown
clearly where they rank first in the world for GDP adjusted to PPP and yet are
ranked 90th for the human development index, as shown below.



However, improvements in China’s HDI have
been made over time since 1990 as demonstrated in the graph below, this trend
line not following that for economic growth over the same period. It is
therefore evident that China’s focus is progressing towards an economy with the
quality of life of its participants as a priority rather than being solely
focused on economic growth. This is summated with president Xi’s “China Dream”
of a “new normal”, a revisited economic system that strives for stable, quality
growth and quality of life over a purely expansive model. (South China Morning
Post 2015)


Another, more subjective way of determining
quality of life in an economy is through the Cantril Self-Anchoring
Striving scale. Here, respondents rated their lives from 0 to 10 based on the
satisfaction of each person towards their individual quality of life. The
results have then been tallied and each value from very satisfactory to unsatisfactory
were given a numerical value (1 through 4 as there are 4 categories of
satisfactoriness) and the average score for each year determined.

Clearly shown above is an upwards trend
line from 2001 when the WTO was joined, trade and associated labour working
conditions then being linked to how people rate their quality of life. (Hsu, Zhang,
Kim 2017)

(Crabtree, Wu 2011)

The final figure (above) depicts China as
one of the lowest countries in the Southeast and East Asia regions in terms of
self-determined ratings of quality of life. The opposite relationship with the
region is present in terms of economic growth rates which suggests that despite
many years of economic growth, the actual quality of life of the citizens has
remained sub-par until recent times where the focus on growth has switched with
President Xi Jinping’s “new normal” initiatives in the recent decade (from
satisfaction rating trend line since 2001). (South China Morning Post 2015)

Although improvements have been made in
average quality of life, there still remains a 3.3% impoverished population in
2016. Household income by percentage share painted a similar picture of an
extremely disadvantaged lower class and wealthy upper class with the lowest 10%
of households having 2.1% of total income and the highest 10% of households
having 31.4% of income. To further reinforce the unequal distribution of income
that China has, their 2016 normalized Gini index rating was 46.5.
China is thus the 120th worst country in the CIA fact book for
distribution of family income. (The WORLD FACTBOOK 2018) Clearly standards of
living vary greatly in China, many rural communities continue to live through
subsistence farming where 14 million in 2012 practiced open defecation (World
Health Organisation 2012) and 4% of the Chinese people, approximately 55.3
million, had no access to clean drinking water in 2015. (The World Bank 2017)

These issues remain largely due to the lack
of sufficient social welfare programs in the country. The 17th
National Congress of the Communist Party of China outlined a need for improved
avenues for social welfare in the country in order to lift quality of life for
the nation. This report determined that social welfare should “ensure that all
citizens enjoy the right to education, employment, medical care, elderly care,
and housing”, (Wang 2017) yet actual application relative to advanced countries
was questioned in the following 19th National Congress. Here, a “new
normal” approach was determined to involve deeper inclusion of zones outside
the SEZs in economic growth and stability – this thought to in turn bring
higher quality of life in these rural regions. (Brown 2017)

A large concentration of transnational
corporations (hereafter TNCs) establish themselves in Chinese SEZs due to the
relevant incentives. More private enterprises from China are entering the list
since 2001, this being a clear sign of the economic restructuring brought about
by globalisation. (Haojun 2017) These changes have established China as 2nd
on the 2017 Fortune Global 500 for over half a decade with 115 TNCs in 2017, 15
firms behind the United States. Chinese companies are the 2nd, 3rd
and 4th largest firms in the world, run by the State Assets
Supervision and Administration Commission.  (FORTUNE 2017) These firms differ from other
TNCs because of the conditions placed on their operation by the state – domestic
investment often driving growth and allowing the firms to secure top 5 spots on
the list.  (Guerrero 2016)

The strategy that is taken to determine
investment in domestic firms over the next 5 years is dictated in the 13th
5 year plan (hereafter 13th FYP). Here, a de facto interest rate
liberalization policy involving removed ceiling on time deposits for domestic
banks and removal of restrictions on upper interest rate limits for foreign
currency deposits exists. (WORLD TRADE ORGANISATION 2016) The foreign
investment climate thus remains restrictive with China reluctant to provide
neutral polices regarding domestic firms vis-à-vis international competitors.
These inequalities protect and promote state-owned and domestic firms by
providing employment subsidies, preferential financing with restrictions on
foreign firms through equity caps and limits to foreign participation on
companies’ board of directors leading to corruption, weak adherence to
intellectual property rights, discriminatory and non-transparent anti-monopoly
enforcement. (The International Trade Administration 2017) These protective
measures can also take the form of trade policies to include incentive schemes
and liberalization in the eleven existing Free Trade Zones – extending to
granting unilateral preferences to 33 least developed countries in the form of
duty-free treatment on 97% of tariff lines. (Reuters Staff 2017) Although, in a
2016 dispute with the United States over prohibited export subsidies, China
scraped most of the export subsidies still remaining on its products. This
decision was conducted by the WTO in order to “level the playing field for
American workers and businesses in the many affected sectors”. (Office of the
United States Trade Representative 2016) One of the remaining export assistance
policies is China’s “food and agricultural export quality and safety
demonstration district” program, assisting domestic agricultural exporters
to reach international standards and break into international markets. (Hunan
University 2017)

The 13th FYP also includes progress
in the implementation of value-added tax and the removal of double taxation.
These changes are accompanied with a list of goods subject to statutory and
interim export taxes, quotas or bans, issued by the Ministry of Commerce each
year. Corresponding to this list, acquisition of export licences and payment of
special export duties ay also apply. An example of this policy in effect was in
December 2017 where the United States cut corporate tax rates, and in response,
China lowered tax rates to foreign companies in a bid to retain investment. (Fox
Business 2017) This process was able to be largely streamlined due to the intertwining
of the Chinese judicial and governmental systems (contrary to Western systems
of governance). Likewise, due to this intertwining, both legal reform and
political power have been cemented due to a leading party able to take and conduct
policy to their goals without immediate threat to communist rule. President Xi
Jinping reinforces this thinking where he envisions to “safeguard national
security and social stability” with China’s legal system, remaining aligned to
the political agendas of the party. The chief justice of China’s Supreme
People’s Court also rejected judicial independence, stating that China “should
not fall into the trap of the West’s erroneous thinking and the independence of
the judiciary”. (Liao 2017)

Where China’s economy has been able to grow
at fast rates, the political agenda coinciding is to gain international
influence through membership of international economic organisations, enhancing
power and status in the global economy as well as accelerating its rates of
globalisation and modernisation. As such, China holds a permanent seat on the
United Nations Security Council (providing veto power) and is an active member
of numerous United Nations organizations (hereafter UN) as well as other
international organisations. These include the UN General Assembly and Security
Council; UN Conference on Trade and Development, Asian Development Bank, Asia
Pacific Economic Cooperation, Association of Southeast Asian Nations (dialogue
partner), Bank for International Settlements, Group of 77, International
Chamber of Commerce, International Monetary Fund, World Tourism Organization
and World Trade Organization. (Baker 2016)

Membership of these organisations also
presents globalised goals for social and environmental wellbeing. As in the
case of the neglect of the natural environment in China through soil erosion,
fall of the water table and air pollution of 10.4 thousand Mt of CO2 in 2016,
combative measure were mandated by international organisations. (Emission
Database for Global Atmospheric Research 2017) This intervention catalysed the ratification
of the Paris Agreement, building of the $25 billion Three Gorges Dam project
and establishment of emission and clean energy goals in its Nationally Determined
Contribution for 2030. (Climate Action Tracker 2017)

These environmental goals coincided with
the 13th FYP where a push to modernise the Chinese agriculture
sector by implementing advanced capital equipment and agricultural
socialisation service systems was present. This was aimed at lessening the
dependency that China has on its large labour force as the country looks at
more sustainable and ‘advanced-economy-typical’ levels of population and GDP
growth. (King & Wood Mallesons 2016) This movement included the “One Belt,
One Road Initiative” where facilitation of the “new normal” will involve
government urbanisation and infrastructure investment with particular attention
on regional China. This will be accompanied with the coordination of regional
development in road, rail and port infrastructure aimed to simultaneously
improve the country’s environmental footprint. (King & Wood Mallesons (2016)
In terms of Social and Economic Development, the 13th FYP for outlines
a middle class in China that demands health care quality improvements and
responds with the “Healthy China” initiative. This incentivises investment into
health care by the private sector and seeks to integrate the two public and
private systems into one cohesive solution to the current poor standards in the
industry. (King & Wood Mallesons 2016) Similarly to the healthcare system,
education services are also becoming increasingly open to private operators.
This openness to privatisation has contributed to improvement in education
standards in China, the generation of 1982 having 65.51% of the nation literate
compared to the 96.36% literacy in 2015. (Statista 2015) A nine-year compulsory
education policy has likewise enabled the population to become literate,
increasing overall employability. These nine years are provided free by
state-run institutions – yet has created the possibility of student sovereignty
when it comes to sources of education. (China Education Center Ltd 2018)


I'm Neil!

Would you like to get a custom essay? How about receiving a customized one?

Check it out