CHINA : THE RISE OF THE MIGHTY DRAGON

Made By: Amritta Bazray Arpit Setya Beenu Sabharwal Malovika Roy Manas Mani Manu Rai Jain Rahat Dhir Shruti Bamba

THE STORY OF CHINAS ECONOMIC GROWTH FROM 1978

The GDP Growth Rate of China v/s the US : A comparison

From 1978

But What Happened in 1978?

China adopted the reform and opening up policy in 1978 It gradually adopted international trade practices, and established a unified, open foreign trade system compatible with multilateral trade rules. It went from State monopoly to giving Enterprises discretionary management power and making them responsible for their own profits and losses Participation in the international division of labor and competition, introduction of advanced technology, and utilization of FDIs have greatly promoted China's technological progress and industrial upgrading,

THE CHINESE GOODS

THE CHINESE SERVICES

The Changes after 1978 NOW THEN

In 1978 the total value of China's import and export was only 20.6 billion U.S.D It ranked 32nd in World Trade and accounted for less than 1 % of the world's total. Trade was there only in a few regions Economies of Scale was almost unknown in those times as it struggled to meet even domestic needs In the 80s , China mainly traded in Manufactured Goods
In 2010 the total value of China's import and export reached 2.974 trillion U.S.D (144 times as much as that in 1978, averaging an annual growth of 16.8 %.) In 2010, the total volumes of China's export and import accounted for 10.4% and 9.1% of the world's total, respectively. By the end of 2010 China had been the world's largest exporter and second-largest importer for two consecutive years. Trade in China has expanded to EU, US, Pan Asia etc spanning over more than 231 regions China is now known for its Scale which helps it to build its Trade-Competitiveness on Price Differentiation China has formed an all-round and diversified import and export market ,from manufactured goods in the 80s, to light industrial and textile products & M&E products in the 90s to export of high-tech products, led by electronics and information technology commodities in the last decade.

Free Trade Theories

Absolute Advantage
Foreign trade, domestic investment and domestic consumption have become the three major engines propelling China's economic growth. China has gradually developed into a major producer and exporter of industrial products relying on its labor cost advantage, relatively strong industrial supporting, processing and manufacturing capabilities, and increasing labor productivity. It provides inexpensive and quality commodities to meet the diverse demands of the international market. China's advantage due to economies of scale and low processing costs in the global manufacturing industry partially offsets the rising prices of upstream factors of production, playing an important role in curbing global inflation

Comparative Advantage
After the financial crisis broke out in 2008, the Chinese government adopted in time a series of policies and measures to stimulate the economy, expand domestic demand and stabilize imports and exports. In 2009, global goods imports decreased by 12.8 percent, while China's goods imports increased by 2.9 percent, making it the only country to maintain growth among the world's largest economies.

Trade Pattern Theories Theory of Country Size

Land area of China - 9596960 sq km. Population of China - 1.3 billion Chinas per capita GDP (PPP) - 7544.202 in USD from 251.146 in 1980

Trade Pattern Theories Contd.

Factors Proportion Theory In countries where labor is relatively abundant compared to capital, workers tend to be poorly paid; many will attempt to go to countries that enjoy full employment and offer higher wages eg China Factor mobility via foreign direct investment may in fact stimulate foreign trade because of the need for equipment, components, and/or complementary products in the destination country. Alternatively, trade may be restricted by local content laws, or when foreign direct investment leads to import substitution.

Country Similarity Theory Country Similarity Theory says that the country looks at the domestic market for that product/industry and then exports it to culturally similar countries For Ex: Textiles (Cotton, Silk), Toys, Electronic Gadgets etc

Interventionist Theories
Mercantilism A large foreign exchange reserve and a large amount FDI going into China is the proof of China's emergence as a global economic powerhouse. China's rapid rise in the foreign exchange reserve is a consequence of its mercantilist policy, exporting by relying on a deliberately undervalued currency, cheap labor, and foreign investors, particularly those from the United States. Neo - Mercantilism China is itself a developing nation , therefore makes it less of an altruist (akin to high-income earners) and more prone to seeking foreign cooperation. To stimulate its own domestic prospects, as much as that of its partner-nation it would have to rely on balance of Trade and therefore international co-operation

China And the rest of the world

China' s trade with the European Union has been developing steadily in recent years China exports a large variety of consumer goods to meet the demands of American consumers, while satisfying its own need China and Japan are geographically proximate to each other and this is an advantage in bilateral trade. China' s trade and investment cooperation with developed countries such as Canada, Australia, Switzerland and New Zealand also maintain a good momentum of development.

China And the rest of the world contd

It plays an active role in the G20 and BRICs summits, & other international dialogue & cooperation mechanisms. China takes part in the Doha Round' s talks on agriculture, non-agricultural goods, services, rules and other issues, submitting over 40 negotiating texts on its own and over 100 texts with other members. To promote the Doha Round talks, China repeatedly expressed its wish to make constructive contributions suited to its level of development.

References
http://www.guardian.co.uk/business/cartoon/20 10/aug/17/china-japan-gdp-great-wall http://www.gov.cn/english/official/201112/07/content_2014019.htm

http://www.gov.cn/english/official/201112/07/content_2014019_3.htm http://www.imf.org/external/pubs/ft/issues8/ind ex.htm