"An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location"(ref. 8 + ref. 9 ).
China and Australia are both major economies that collectively make up 17. 52% of the world's economy. China is one of Australia's closest trade neighbours in the Asia Pacific region and is of political, cultural, and economic strategic importance to Australia.
China and Australia share many similarities and differences demonstrated in their types of economic systems, factors of production and comparative advantage, economic growth (GDP), economic development/ standard of living, unemployment, inflation, and environmental sustainability.
Types of economic systems Australia and China both heavily contrast each other in their economic systems as China has a blend of a planned and capital market as opposed to Australia's open market. Australia's economic system is based on the open market system, an open market withholds minimal restrictions on imports of goods and services. The main advantage of an open market compared to a socialistic or capitalistic market is this allows the country's economy to become dynamic and flexible. China's economic system contained characteristics of socialism and capitalism. Professor Karl Marx's theory of socialism dictated "it is essential for Countries to encounter a period of capitalist growth in order to construct the infrastructure essential for communism to grow" (ref. 3), which has pathed the path for Chinese economic development. The key advantage of socialist and capitalist markets as opposed to open markets is the means of production are controlled and regulated as opposed to being left in the free market, which is a means of increasing efficiency. Australia and China heavily contrast due to the fact their economic systems differ substantially, this is evident in Australia's open market and its limited regulation and China's socialistic and capitalistic mixture of an economic system which is considerably regulated relative to Australia's market.
Factors of production and comparative advantage Factors of production is an economic term that refers to the management of land labour, capital and enterprise in order to make an economic profit. In the diagram below the 4 factors have been linked together. Australia's land has a bountiful amount of natural resources for production as it is the world's leading producer of rutile, zircon, bauxite, iron ore and ilmenite(ref. 17), this is why land is Australia's comparative advantage.
Australia's human input into the production process is very minimal due to its low population being only 23. 13 million. Australia withholds a plentiful amount of capital due to the financial wealth that is held within the country, through companies that are made in Australia such as BHP Billiton, Wesfarmers and Woolworths Limited with combined multimillion status. Entrepreneur...