In revising, consider the following: Why is China important to the global economy? What are the challenges that China faces in reforming its economy? How is it responding to these challenges?
When we explore current global economical forces, China undoubtedly comes into mind. Since the induction of the open door and reform policy in 1978, it enabled the country to achieve rapid growth. In recent years, China has managed to develop its status as a dominant leader in the manufacturing sector, as well as staking its claim as the world’s largest economy when measured on purchasing power parity. As such, it cannot be denied that China’s expanding growth plays a huge influence in the global markets. However, its economic reform has also brought subsequent concerns. In my essay, I will discuss China’s importance in the global economy, the challenges faced as part of its economic reform, and its handling of the challenges.
Fundamentally, the impact of China’s economic reforms allowed the country to play a significant role in commodity markets over the last decade. As one of the fastest growing economies in the world, its growth strategy relies heavily on investment and exports, and its extensive use of the factors subsequently meant that there is a rise in demand for commodities. According to EIA( Energy information administration) data, China accounted for 55 percent of the increase in global petroleum consumption between 2005 and 2013, and that it now accounts about half of global consumption of aluminum, copper, nickel, and coal. In this case, it not only encourages significant levels of trade, but also allows export opportunities for emerging and developing countries. As well as being a global leader in commodity consumption, China is also a substantial global commodity producer. Fundamentally, the abundance of low-cost labor in China has allowed the country to be a leader in global output of sectors like electronics, Machinery as well as apparels As such, it cannot be denied that China plays a big part in driving market commodities, and contributes to the overall development of global growth.
Moreover, high economic growth has also spurred heavy inflow of Chinese foreign investment in world markets. Primarily, an important factor driving this investment is China’s massive accumulation of foreign exchange reserves. (Morrison, 2015) As a result, Chinese leaders are encouraging national firms to invest abroad, and in recent years made their presence known with a report in 2013 overseeing a staggering U.S. $85 billion of Chinese foreign investment distributed across the world.( Heritage Foundations’ Investment tracker,2013).While it is true that in prior years, China’s investment has traditionally tended to be skewed towards natural resource sectors like oil and minerals to sustain its economic growth, there is now notable diversification across the...