Globalisation speech
- 1. In our increasingly interconnected world, the impact of globalisation is becoming progressively more and more prominent in every country. Globalisation is defined by the World Bank as the “growing interdependence of countries resulting from the increasing integration of trade, finance, people, and ideas in one global marketplace”. In this speech, I will examine how China has been notably impacted by this worldwide integration. I will specifically focus on how globalisation has influenced this emerging economy’s economic growth… development… as well as its policymaking. -‐‑ China’s economic growth has been dramatically impacted over the last 20 years alone. According to Dixon, economic growth is the “sustained increase in real GDP over a period of time and thus increases in the productive capacity of the entire economy.” Under revolutionist Deng Xiaoping’s reforms, China liberalised or opened up its market to foreign investment in 1978. Today, it finds itself as the largest trading hub in the world. With some governmental control, China’s state capitalist economic system is much freer and has an international trade-‐‑orientated focus. It has: expanded exports rapidly; overcome key deficiencies in areas -‐‑ such as transport and communication; invested in industry, and most importantly allowed foreign investment to occur. The Chinese government even sets the Yuan exchange rate at artificially low levels to ensure that exports are relatively cheap. This increases injections into the circular flow of income mode thus promotes higher levels of economic activity. Joining the WTO in 2001, China is now the biggest exporter in the world and has enormous inflows of foreign investment (with $101 billion in FDIs last year alone). It currently has a balance of -‐‑ trade surplus of $260 billion. Transnational corporations are profiting from China’s comparative advantage in having a large labour force & low wage rates. It has signed countless free trade agreements with nations such as our own. For the past 20 years, China’s GDP growth has averaged at a booming 8%-‐‑10%. In the midst of the GFC, despite slowing in growth, China was one of the only economies in the G20 that did not have a period of negative growth. It invested $586 billion into its economy to
- 2. refocus a`ention on domestic consumption. Globalisation can thus clearly be seen to have many positive impacts on China’s economy. The level of economic growth also has a tendency to affect the level of economic development of a nation. The World Bank defines Economic development as the “incorporation of all aspects of individuals’ well-‐‑being, from their health status to their economic and political freedom.” Since 1990, China has had a massive improvement in living standards: Its life expectancy is now 5 years above the world average, citizens are more literate and being educated longer and real incomes have risen dramatically from $1,500 in PPP terms to $11,500 over 25 years. Further, 400 million people have also been alleviated from poverty and China -‐‑ is well ahead of the targets set by the Millennium Development Goals. China’s HDI rank fell from 104th in 2001 to 81st in 2005. Technological advancements, especially in infrastructure have meant there has also been a mass urbanisation across China. This has further allowed a shift in job sectors from principally agriculture to now manufacturing and services. The world is clearly seeing this mass change in China’s development and hence allowed it the right to host the 2008 Olympics Games. Being so concerned with economic prosperity, China is still yet to -‐‑ resolve some crucial issues in its society. Such high growth has led to enormous inflation. Special economic zones in which trade is greatly stimulated has also promoted rising income inequality. With a Gini index of 47, this disparity is caused by the separation of the industrialised coastal cities and inland rural farming areas. Existing policy also prevents labour mobility from rural to urban areas. Densely populated cities exhibit: poor sanitation, poor access to safe water, child labour, and many other external diseconomies of scale for industries such as bo`lenecking. 100 million people still live in poverty and over 35% of the Chinese -‐‑ population lives below $2 a day. With an ever-‐‑aging population, a large gender imbalance due to its 1 child policy, as well as drastically increasing unemployment, social class division is rife across China.
- 3. Rapid industrialisation has also had a huge impact on China’s environment. China has some of the highest pollution rates in the world. In 2000, China emi`ed 3.5 billion tonnes of CO2, however, 12 years later was emi`ing almost 3 times this figure, so much so that it is almost doubling the next highest producer being the USA. China consumes more energy than it produces, 70% of which is produced in polluting coal power stations. Currently only a meagre 1% of GDP is being spent to solve this critical environmental issue. China needs to find a sustainable way to profit from globalisation without destroying its environment. Upon opening itself up to the effects of globalisation, China has had mass economic growth and vast improvements in economic development. China’s most recent 5-‐‑year plan understands it -‐‑ must address undesired impacts globalisation is having on social class divisions and the environment. It is therefore aiming to reduce growth to 7% to focus on these domestic issues. Aside from these social costs, without opening up China’s market, globalisation could never have had such a revolutionary impact on a once poor farming nation. Without the impacts of globalisation, China would never be as developed as it is today. -‐‑ sez foreign investment westernized