The economy of China is particularly interesting to look at, because China was still over two decades ago a very poor country, whose planned economy didn't allow any improvement for its citizens' standards of living. But after a series of reforms oriented towards the market and initiated by Deng Xiaoping in 1978, China has become one of the greatest examples of economic successes after World War II.
Its economic growth has reached an average 10% per year since then, and the considerable growth of Chinese export in the global market is the most spectacular illustration of China's economic success these recent years. China is a major demographic power, with 1.3 billion inhabitants, and the third largest economy in the world in terms of GDP (US$2.6 billion in 2006) . Even if the country is now facing the global economic slowdown due to the aftermath of the financial crisis, its GDP grew 9% in 2008 from the previous year .
Since the middle of the 1980s, China has liberalized its policies related to trade and foreign investments. Its economy is now almost as open as most of WTO's countries. The country entered this organization on December 11th 2001, after a long negotiation process, which marked the outcome of its opening strategy on the world market. Thanks to both increase in the Foreign Direct Investment (FDI) and the growing China's participation in international trade, the country has known an outstanding economic development. So much so that China no longer belongs to the group of low-income developing countries in the world and, since the end of the 1970s, some 400 million people have been lifted out of poverty, according to the IMF.
We will study here the economic reforms that China performed to make this possible, then we will examine China's export activities in the world trade and the reason why it has become a major export country, and finally we will look at the stakes this country is facing in this crisis context.
[...] The government seems no longer to try to reduce pollution and income inequality as top priorities, but “leaders are casting for new strategies to spur domestic demand and wean the Chinese economy off its dependence on rich countries swept up in the global financial crisis.[14]” According to Yardley, the export slowdown is starting to show its impact on Chinese manufacturing plants. Indeed, these recent months, about 7,000 small and medium-sized plants have already shutdown in Shenzhen and Guangdong. And, according to the mayor of Shenzen people have lost their job in the city by November 2008. [...]
[...] Therefore, it gave China a considerable competitive advantage on the global market, because these businesses have been able to offer commoditized goods at very low prices. But the share of this kind of products in China's exports has tended to decline because of the growing exports of hard manufactures like electronic goods, computers and appliances. Nevertheless, large component of this export growth in machinery has largely been due to growth in processing trade - the practice of assembling duty free intermediate inputs[7]”. [...]
[...] So much so that China is likely to become the first export country in the world in a few years, taking over Germany. The considerable increase on China's exports and its ability to attract FDI has enabled the country's economy to grow dramatically, with an economic growth consistently reaching 9 or 10 percent every year. So we can say without any doubt that China's opening policy has been a very impressive success over these past thirty years. On the other hand, the global crisis that is now affecting most of the world's countries is showing that this model may be reaching its end, because of the general decrease in global demand for Chinese goods. [...]
[...] China's activities in the global market: a major export country Thanks to these export-oriented economic policies, China's export growth has reached 500 percent between 1992 and 2005, from US$ 84.94 billion to US$ 525.48 billion[4]. This exceptional growth has enabled China to become the second largest export country in the world, following Germany which is still the leader by now. In 2007, China accounted for 8.73 percent of world total export share of merchandise, with US$ 1.2 billion[5]. This was accompanied by a trade surplus which rose in 2008 "to a record $457 billion at an annual rate in the fourth quarter--50% bigger than in the same period of 2007”[6]. [...]
[...] this possible, then we will examine China's export activities in the world trade and the reason why it has become a major export country, and finally we will look at the stakes this country is facing in this crisis context. I. A brief summary of the economic reforms that China implemented to integrate in the global economy and the world trade. As we've seen in the introduction, China's economic growth has been outstanding for more than two decades now; thanks to the efforts its governments have made to gradually open the country to the world market and to participate in the world trade. [...]
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