Discuss the role and contribution of China to the Global Economy.

What are the main factors that have affected Chinas position in the global market? Reference list:

Chinas Growth and Integration into

Prospects and Challenges
Chinas Growth and Integration into the world economy prospects and challenges. IMF Washington DC 2006 Edited by Eswar Prasad
ang Zile, "Foreign Acquisition in China: Threat or Security," China Security, Vol. 3, No. 2 Spring 2007), p. 90. IA, World Fact Book: China, cia.gov.
inas Role in Asia and the World Economy - Fostering Stability and Growth, NDAD, December 2003

www.larouchepub.com www.tradingeconomics.com
hinas role in running the world economy
ebruary 14th, 2011 uthor: Peter Drysdale, ANU

Eg.Robbins, SP &DeCenzo, DA 2004, Fundamentals of management: essential concepts and applications, 4th
n, Pearson Prentice Hall, Upper Saddle River, NJ.

Why Is China Growing So Fast? by Zuliu Hu and Mohsin S.

Khan

China's Role in the World Economy by Dr. Song Hong

Ref (China's Role in the World Economy by Dr. Song Hong)

Introduction:
Theglobal economy, or world economy, generally refers to the economy, which is based on economies of all of the world's countries ,national economies. In other termswhen all the local societies and economies are combined taking in consideration the production, purchase, and sale of goods in a world-wide markets the global economy is formed. At present the global economy in terms of GDP i.e. Gross Domestic Product stands US$74.00 trillion (2010 est. IMF)

Role and Contribution

China formally known as the People s Republic Of China is the second largest economy in the world with a GDP of US$10.08 trillion (2010 est. IMF). Its only predecessor is U.S with GDP of US$14.65 trillion (2010 est. IMF). China's rapid economic growth has made important contribution to the development and prosperity of the global economy, especially to the world economic stability and recovery in recent years. Over the past 30-odd years of reform and opening up, China has witnessed sustained, rapid economic growth, with the average annual growth rate of GDP approximately 9% China's economy has vigorous, sustained and rapid growth it has become a flash point in world economic development and has received close attention from the international community. China evidently holds a lion s share in the world GDP which is as high as 14%. When it comes to contribution to the world economy China has never fallen back it made the most significant contribution in the global economy by giving the world Paper Money . Imagine a single day in life without the crispy notes we use which gives us unprecedented ease and convenience. hina has become the globe's most attractive commodity market. China had emained only as a huge "potential market" for a long time, but now, along with he sustained, rapid economic development, China has become the most vigorous actual market" in the world. Chinese products have kept moving to the world, hile large quantities of foreign products have also been pouring into China. hina's rapidly growing import has created numerous job opportunities for the orld. The tremendous development of China's foreign trade has propelled the lobal free flow and optimized allocation of resources. Being the world's largest

conomies and the fastest growing market in the world China operates a major ystem of imports and exports, proving to be a success by maintaining a umulative deficit free trading relationship with the world. Manufacturing has ecome the prime component in its success.

n 1978, after years of state control of all productive assets, the government of China mbarked on a major program of economic reform. In an effort to awaken a dormant conomic giant, it encouraged the formation of rural enterprises and private usinesses, liberalized foreign trade and investment, relaxed state control over some rices, and invested in industrial production and the education of its workforce. By early all accounts, the strategy has worked spectacularly.

Factors affecting Chinas position in the market are:

The first reason is China's special advantages. China has four important advantages: 1) China's favorable geographical location. China is the geographical hub of the Asian core economies. She is in the neighborhood of Japan, South Korea, and Singapore, and she is the mainland of Taiwan and Hong Kong.The second reason is China's economic policies. China adopted opening up to the outside and economic reform policies since 1978. In the context of this policy framework, China continues to initiate more and more programs and projects to attract FDIThe third reason is the impact of China's WTO accession. Because China wanted to join the WTO, she made comprehensive commitments. 1) China opened up four new sectors for foreign investors. Those sectors are telecommunications, banking, insurance, and professional service. 2) China deepened the extent of opening to the outside world in the already opened areas. For example, full trade and distribution rights were provided to all firms three years after China's WTO accession, no matter what their type. 3) The environment of investment in China has improved dramatically because of China's commitments

hina is becoming the center of gravity of world manufacturing. In recent years, China as been among the top five major destinations for foreign investment, and it is the ain destination for foreign industrial investment in the world. China has been a growth ngine for the imperialist world economy. China consumes some 20 to 25 percent of the

lobal supply of iron, steel, aluminum, and copper. China accounts for one-third of the orlds rise in demand for oil.[1] hina is deeply involved in the world economy. It is the worlds largest non-U.S. holder f dollars

Population (labor force) and poverty

hina's impoverished population (population with daily living cost less than one US dollar) has ecreased by 147 million, accounting for 84.5 percent of the total volume of reduction in the overty-stricken population of the East Asian region. China's absolute impoverished population as also decreased to around 30 million. Poverty has always been a difficult problem plaguing arious countries around the world, it has seriously affected the stability and sustainable evelopment of the world economy. As a large developing country, China has enjoyed ustained, rapid economic development, provided constantly improving living standards for its eople, thus making important contributions to the sustainable development and prosperity of umankind.

International Trade (Exports)

s far as international trade is concerned, it is also different from that of other conomies. Since 1995, the share of processing trade in China's exports has been ore than 50%. And since 2001, the share of FFEs [Foreign-Funded Enterprises] in hina's exports has also been more than 50%. hina's good and cheap exported commodities have not only benefited numerous onsumers worldwide but has also enabled foreign companies purchasing in or roducing in China to reduce their production cost and enhance their products' nternational competitiveness. China in its real sense is the driver of the global conomy; it is the biggest exporter in the world with US$1.506 trillion (2010 st. CIA) worth of exports.

Exports - commodities: electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel,

Private Sector And FDI

Chinas economic boom is attributable in large part to the impressive growth of private sector businesses, a theory which has been confirmed by other studies of the Chinese economy. afavourable regulatory environment has both a stabilizing and clearly stimulating effect on private-sector business growth.

China has FDI of $574.3 billion (2010 est. CIA)

The huge inflow of labor-sourcing, industrial-market-oriented FDI establishes a special connection mechanism between the Chinese economy and the world economy. It is this mechanism which is responsible for the quick, stable, and healthy development of the Chinese economy in the last few years in specific and in the last two decades in general. FDI in China is not M&A, but almost all belongs to the Greenfield category. ecause of this difference, while world FDI suffered during the world economic ecession, FDI inflow into China continues to increase. econdly, the majority of greenfield FDI in China belongs to the category of laborourcing FDI. According to the assessment of Song and Chai (2002), 70% of the tock of FDI in China is concentrated in the manufacturing sector; of this, 70% elongs to labor-sourcing FDI. This type of FDI is induced by the low cost of

roduction, especially local cheaper labor. During the development process of an conomy, along with the increasing level of economic development, the local urrency tends to appreciate.