The People’s Republic of China is in thenorthern hemisphere portion of Eastern Asia, having land borders with 14countries including 2 from BRICS, Russia and India.
It comprises a land mass of9.388 million square kilometres (WORLDOMETERS 2018), being the 2nd largestcountry in the world. (Gray 2017). There are 56 different ethnic groups inChina, 92% of these being from the Han population. Many smaller ethnic groups live in the remote areas ofchina to the North and West. (Lilly 2009). While the Chinese populationcontains most world religions and folk religions, Buddhism is predominant with approximately14%, or 185 million people adhering to the faith.
(Briggs2011) The climate andlandscapes of China vary greatly amongst regions, representing both mountainousand arid environments. Thisnotion of contrasts extends to its economic environment where poverty andwealth can be seen in this extreme system of labour,China has become a manufacturing and exporting hub (market based) from a centrally-planned closedeconomy in the 1970s. (Royal Geographical Society 2017) This majorstructural change began in 1978 where it initiated market reforms that havegone on to bolster 10% gross domestic product (hereafter GDP) growth over thisperiod until 2010, with growth in recent years slowing to 6.8% in the lastquarter of 2017. (Trading Economics 2018) These growth reductions have seenChina focus more heavily on improvements to standards of living, China reachingall of the Millennium Development Goals by 2015. (The World Bank 2017)The current statistics for China’s economicperformance are detailed in the table below.
These outline the overall growththat China has seen in 2016 through moderate inflation (2.003%) on par withAustralia’s 1.8% (as at 6 December 2017). (Reserve Bank of Australia 2017)(International Monetary Fund 2016) With a population of 1.383 Billion, Chinahas access to a large labour force granting it competitive advantage in theworld markets for manufactured goods. This has allowed its economy to grow tobecome the first ranking country in the world for GDP adjusted to purchasingpower parity (hereafter PPP) (The World Bank 2017) and second in terms of realGDP behind the United States.
(The World Bank 2017) GDP is dominated by China’s majorindustries, being manufacturing, agriculture and services. The manufacturingindustry is the largest of the economy, with the services sector second. (Ross2015) High levels of foreign trade and investment as well as technologicalinnovation in recent times of globalisation have continued growth rates above6% through 2017. (Royal Geographical Society 2017)Congruent to the size of the manufacturingindustry in China in 2016, the top five exports are displayed below:(Trade Map 2016)Each of these export categories are the largestin value for any global economy, proving Chinese dominance in manufacturedgoods. A testament to the size of manufacturing inChina, its top two exports exceed the value of total exports for Australia of$330 billion in 2016. (Tang 2017) Thus despite Australia being an advancedcountry and China considered to be ‘developing’, the forces of globalisationhave enabled the latter’s economy to harness comparative advantage andout-compete in exports on an international stage. China’s five primary trading partners indescending order in terms of value of exports are the United States, Japan, SouthKorea, Germany and Vietnam.
(Trade Map 2016) In terms of imports, monolithicintegrated circuits, petroleum oils, gold, iron and parts of electricalapparatus for line telephon were the largest in 2016 with these coming predominatelyfrom within the Region (South Korea, Japan), the United States dominating outer-regionimported goods. (World Integrated Trade Solution 2016)This trading is largely fuelled by foreigndirect investment and is remaining strong after reaching an all-time high of $1262.67US in 2015 and having continued at this level throughout 2017 as shown in thegraph below.(Trading Economics 2018)These levels of investment were initiatedin 2001 when China acceded to the World Trade Organisation (hereafter WTO),causing the removal of pre-existing trade barriers to foreign corporations. (THEWALL STREET JOURNAL 2017) These foreign firms have then been incentivised bythe comparative advantage that china has over many other countries due to itsability to harness their abundance of labour and utilise cheap yuan to reduceproduction costs. (Yu 2015) Joining this agreement also triggered andaccelerated China’s internal domestic reform causing the major industries oncedominated by state owned enterprises (hereafter SOE) to be exposed to theforces of globalisation through direct trade. (Royal Geographical Society 2017)The effects of this are that as of 2016, SOEs accounted for 30% of all Chineseenterprises and produced 45% of revenues, up from an 80% SOE dominance in 1978.(Wu 2016) This SOE dominance contributes to the inequalities experienced bymany of the Chinese lower class because a lack of consumer and laboursovereignty does not allow marginalised to establish reliable sources of incomeable to adapt to the high rates of inflation often observed in special economiczones (hereafter SEZ).
The SEZs in China are established by thestate to adhere to economic regulations that are set by individualgovernmental bodies rather than the Chinese central government in Beijing. Thesix SEZs in China allow trade and foreign investment to operate at acceleratedrates by introducing tax and business incentives to foreign enterprises. (Rodrigue2017) This can further exacerbate existing inequalities, contributing to China’s status of a developing economy despite itshigh rates of economic growth. This classification can thus be placed upon thedifference between economic growth rates and quality of life indicators – economicgrowth corresponding to an increase in GDP and per capita income and economicdevelopment corresponding to quality of life indicators such as life expectancy,human development index rating and infant mortality rates. (Surbhi 2015) A greatdisparity thus exists between their economic growth rate and quality of life, shownclearly where they rank first in the world for GDP adjusted to PPP and yet areranked 90th for the human development index, as shown below. (UNITED NATIONS DEVELOPMENT PROGRAM 2016)However, improvements in China’s HDI havebeen made over time since 1990 as demonstrated in the graph below, this trendline not following that for economic growth over the same period.
It istherefore evident that China’s focus is progressing towards an economy with thequality of life of its participants as a priority rather than being solelyfocused on economic growth. This is summated with president Xi’s “China Dream”of a “new normal”, a revisited economic system that strives for stable, qualitygrowth and quality of life over a purely expansive model. (South China MorningPost 2015)(UNITED NATIONS DEVELOPMENT PROGRAM 2016)Another, more subjective way of determiningquality of life in an economy is through the Cantril Self-AnchoringStriving scale.
Here, respondents rated their lives from 0 to 10 based on thesatisfaction of each person towards their individual quality of life. Theresults have then been tallied and each value from very satisfactory to unsatisfactorywere given a numerical value (1 through 4 as there are 4 categories ofsatisfactoriness) and the average score for each year determined. Clearly shown above is an upwards trendline from 2001 when the WTO was joined, trade and associated labour workingconditions then being linked to how people rate their quality of life.
(Hsu, Zhang,Kim 2017)(Crabtree, Wu 2011)The final figure (above) depicts China asone of the lowest countries in the Southeast and East Asia regions in terms ofself-determined ratings of quality of life. The opposite relationship with theregion is present in terms of economic growth rates which suggests that despitemany years of economic growth, the actual quality of life of the citizens hasremained sub-par until recent times where the focus on growth has switched withPresident Xi Jinping’s “new normal” initiatives in the recent decade (fromsatisfaction rating trend line since 2001). (South China Morning Post 2015)Although improvements have been made inaverage quality of life, there still remains a 3.
3% impoverished population in2016. Household income by percentage share painted a similar picture of anextremely disadvantaged lower class and wealthy upper class with the lowest 10%of households having 2.1% of total income and the highest 10% of householdshaving 31.4% of income. To further reinforce the unequal distribution of incomethat China has, their 2016 normalized Gini index rating was 46.5.China is thus the 120th worst country in the CIA fact book fordistribution of family income. (The WORLD FACTBOOK 2018) Clearly standards ofliving vary greatly in China, many rural communities continue to live throughsubsistence farming where 14 million in 2012 practiced open defecation (WorldHealth Organisation 2012) and 4% of the Chinese people, approximately 55.
3million, had no access to clean drinking water in 2015. (The World Bank 2017)These issues remain largely due to the lackof sufficient social welfare programs in the country. The 17thNational Congress of the Communist Party of China outlined a need for improvedavenues for social welfare in the country in order to lift quality of life forthe nation. This report determined that social welfare should “ensure that allcitizens enjoy the right to education, employment, medical care, elderly care,and housing”, (Wang 2017) yet actual application relative to advanced countrieswas questioned in the following 19th National Congress. Here, a “newnormal” approach was determined to involve deeper inclusion of zones outsidethe SEZs in economic growth and stability – this thought to in turn bringhigher quality of life in these rural regions. (Brown 2017)A large concentration of transnationalcorporations (hereafter TNCs) establish themselves in Chinese SEZs due to therelevant incentives. More private enterprises from China are entering the listsince 2001, this being a clear sign of the economic restructuring brought aboutby globalisation.
(Haojun 2017) These changes have established China as 2ndon the 2017 Fortune Global 500 for over half a decade with 115 TNCs in 2017, 15firms behind the United States. Chinese companies are the 2nd, 3rdand 4th largest firms in the world, run by the State AssetsSupervision and Administration Commission. (FORTUNE 2017) These firms differ from otherTNCs because of the conditions placed on their operation by the state – domesticinvestment often driving growth and allowing the firms to secure top 5 spots onthe list. (Guerrero 2016)The strategy that is taken to determineinvestment in domestic firms over the next 5 years is dictated in the 13th5 year plan (hereafter 13th FYP). Here, a de facto interest rateliberalization policy involving removed ceiling on time deposits for domesticbanks and removal of restrictions on upper interest rate limits for foreigncurrency deposits exists. (WORLD TRADE ORGANISATION 2016) The foreigninvestment climate thus remains restrictive with China reluctant to provideneutral polices regarding domestic firms vis-à-vis international competitors.These inequalities protect and promote state-owned and domestic firms byproviding employment subsidies, preferential financing with restrictions onforeign firms through equity caps and limits to foreign participation oncompanies’ board of directors leading to corruption, weak adherence tointellectual property rights, discriminatory and non-transparent anti-monopolyenforcement.
(The International Trade Administration 2017) These protectivemeasures can also take the form of trade policies to include incentive schemesand liberalization in the eleven existing Free Trade Zones – extending togranting unilateral preferences to 33 least developed countries in the form ofduty-free treatment on 97% of tariff lines. (Reuters Staff 2017) Although, in a2016 dispute with the United States over prohibited export subsidies, Chinascraped most of the export subsidies still remaining on its products. Thisdecision was conducted by the WTO in order to “level the playing field forAmerican workers and businesses in the many affected sectors”. (Office of theUnited States Trade Representative 2016) One of the remaining export assistancepolicies is China’s “food and agricultural export quality and safetydemonstration district” program, assisting domestic agricultural exportersto reach international standards and break into international markets. (HunanUniversity 2017)The 13th FYP also includes progressin the implementation of value-added tax and the removal of double taxation.
These changes are accompanied with a list of goods subject to statutory andinterim export taxes, quotas or bans, issued by the Ministry of Commerce eachyear. Corresponding to this list, acquisition of export licences and payment ofspecial export duties ay also apply. An example of this policy in effect was inDecember 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. (FoxBusiness 2017) This process was able to be largely streamlined due to the intertwiningof the Chinese judicial and governmental systems (contrary to Western systemsof governance).
Likewise, due to this intertwining, both legal reform andpolitical power have been cemented due to a leading party able to take and conductpolicy to their goals without immediate threat to communist rule. President XiJinping reinforces this thinking where he envisions to “safeguard nationalsecurity and social stability” with China’s legal system, remaining aligned tothe political agendas of the party. The chief justice of China’s SupremePeople’s Court also rejected judicial independence, stating that China “shouldnot fall into the trap of the West’s erroneous thinking and the independence ofthe judiciary”. (Liao 2017)Where China’s economy has been able to growat fast rates, the political agenda coinciding is to gain internationalinfluence through membership of international economic organisations, enhancingpower and status in the global economy as well as accelerating its rates ofglobalisation and modernisation. As such, China holds a permanent seat on theUnited Nations Security Council (providing veto power) and is an active memberof numerous United Nations organizations (hereafter UN) as well as otherinternational organisations.
These include the UN General Assembly and SecurityCouncil; UN Conference on Trade and Development, Asian Development Bank, AsiaPacific Economic Cooperation, Association of Southeast Asian Nations (dialoguepartner), Bank for International Settlements, Group of 77, InternationalChamber of Commerce, International Monetary Fund, World Tourism Organizationand World Trade Organization. (Baker 2016)Membership of these organisations alsopresents globalised goals for social and environmental wellbeing. As in thecase 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. (EmissionDatabase for Global Atmospheric Research 2017) This intervention catalysed the ratificationof the Paris Agreement, building of the $25 billion Three Gorges Dam projectand establishment of emission and clean energy goals in its Nationally DeterminedContribution for 2030.
(Climate Action Tracker 2017) These environmental goals coincided withthe 13th FYP where a push to modernise the Chinese agriculturesector by implementing advanced capital equipment and agriculturalsocialisation service systems was present. This was aimed at lessening thedependency that China has on its large labour force as the country looks atmore sustainable and ‘advanced-economy-typical’ levels of population and GDPgrowth. (King & Wood Mallesons 2016) This movement included the “One Belt,One Road Initiative” where facilitation of the “new normal” will involvegovernment urbanisation and infrastructure investment with particular attentionon regional China. This will be accompanied with the coordination of regionaldevelopment in road, rail and port infrastructure aimed to simultaneouslyimprove the country’s environmental footprint. (King & Wood Mallesons (2016)In terms of Social and Economic Development, the 13th FYP for outlinesa middle class in China that demands health care quality improvements andresponds with the “Healthy China” initiative. This incentivises investment intohealth care by the private sector and seeks to integrate the two public andprivate systems into one cohesive solution to the current poor standards in theindustry.
(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 educationstandards in China, the generation of 1982 having 65.51% of the nation literatecompared to the 96.36% literacy in 2015.
(Statista 2015) A nine-year compulsoryeducation policy has likewise enabled the population to become literate,increasing overall employability. These nine years are provided free bystate-run institutions – yet has created the possibility of student sovereigntywhen it comes to sources of education. (China Education Center Ltd 2018)