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Assignment no 1

Current Business Affairs
China s Road to progress

Shumaila Shakeel (9792) MBA-4C 03 MARCH 2011

Before this. China has gone under profound and. China was the largest economy on the planet until the early nineteenth century.8 times higher.42 trillion US dollars by 2007. export processing zones. averaging 8% growth in Gross Domestic Product (GDP) per annum. The per capita GDP of Western Europe was 7. This is so much so that China might leap over several stages of development to transform itself simultaneously from a traditional society to a modern society. accelerated transformation. In the era of the globalized. reaching 3. and the GDP per capita of the United States was 18. China stands at a lowly 107th out of 179 countries. In the last 30 years the rate of Chinese economic growth has been almost miraculous. After the founding of the People¶s Republic in 1949. foreign investment. In the terms of both population and GDP. knowledge-based society. and its economy experienced a long period of decay from 1820 to 1949. It lost its lead with the Industrial Revolution. from a predominantly agrarian economy to a knowledge-based economy. . After more than 20 years of modernization. According to the analysts. export-lead development opportunities. and from a planned economy to a modern market economy. among the highest rates in economic development history. China¶s process of industrialization and modernization began. In per capita income terms. Communist revolution came in china in 1949. its continued success remains far from certain. In 1952 China was one of the poorest countries in the world. the people of the world did not know much about the people of china. foreign advice. foreign loans. Though China¶s economic performance so far has been a true miracle. indeed. Global economic factors. China now ranks as the sixth largest economy in the world. As a latecomer to modernization. China¶s successful economic transformation focused mainly on GDP growth and economic reforms that have since achieved per capital economic growth of 8 to 10 percent annually." and the examples of successful export-led economic development by Japan and by the four Asian "tigers". include global economy trade opportunities.Introduction: Emerging Economy One of the biggest giants that ever emerged in the economy is china. China has had no choice but to chart a new path in catching-up with the rest of the world and achieving a modern economy. investment and assistance by Chinese from Hong Kong and other parts of "greater China. 1978: A New Stage of Economic Development Since 1978. China¶s Path to Modernization Communism is the base on which china made great progress in every walk of life.15 times higher than that of China. Its economy is huge and is expanding rapidly. crucial for China's post-1978 growth. china has been the biggest economy after United States and some of them predict that it would be the largest economy in the world.

China also became the world¶s second largest Internet user (after the United States). potential-for-conflict areas. and financial services. Foreigners would also be permitted to participate in joint ventures with Chinese companies and eventually to be able to open wholly owned companies under Chinese regulations in selected areas of the Chinese economy. China also benefitted from having a very large pool of domestic savings to draw from to finance investment when reforms were begun. and issue-related factors. Moreover the economic reforms. educational levels and use of science and technology have also played an important role. Improved productivity increased growth and generated funds used for new investment. which has been a major source of China¶s capital growth. The second factor is foreign direct investment. China currently has the world¶s largest mobile phone network and one of the fastest-growing markets. and international . China replaced Japan as the world¶s second-largest personal computer (PC) market. the Chinese government continued to own and to control most major Chinese industrial and economic sectors. Foreign direct investment (FDI) is another vital engine of domestic economic growth. In 2004. energy. communication. China¶s large labor supply has already resulted in it being the production center for global consumables. capital. The areas include institutional. and a free market was opened up to small business people and those providing consumer goods and services. Why Is China Growing So Fast? There are several factors explaining that why china is growing so fast. China surpassed Japan as the world¶s third-largest trading economy. such as consumer electronics. which included the decentralization of economic production. led to substantial growth in Chinese household savings. The third factor is the increase in the productivity. Private control of agricultural land was made possible through long-term leases for farmers. it is argued that this capital is used much more efficiently (much domestic saving flows to state owned enterprises). Indeed. natural resources. High-tech industries have become the engine of economic development in China¶s coastal areas. social. manufacturing. China¶s trade and investment reforms and incentives led to a surge in foreign direct investment (FDI). mining. and level of science and technology determine the durability of economic growth. and thus makes an outsized contribution to economic growth and much of the FDI going into China has gone into export-oriented manufactured goods. Negative Aspects of Chinese Economy There are many challenges the Chinese economy has faced and is facing. Although small relative to domestic saving. Positive Aspects of Chinese Economy The success of reform over the last 26 or so years has proved that Chinese leaders possess adequate policy-making ability. in 2002. Its huge population also means that it is an enormously attractive market.After 1978. Firstly is high savings and investment. China has now begun to enjoy comparatively mature economic decision-making. A country¶s human resources. including transportation.

backward economy to the world¶s second-largest economy (on a PPP basis). others have viewed it with alarm. its forest resources are less than 12. it is clear that in upcoming years China would be the giant ruling the economy but the key questions concerning the future of China¶s economy are whether China¶s faster economic growth is a reality. including efforts by Chinese companies with substantial state ownership to take over major U. corruption is mainly institutional. Pollution has grown along with GDP. signed an agreement with IBM Corporation to purchase IBM¶s personal computer division for $1. Is China a Threat to U. While no country has been able to stamp out corruption completely. Furthermore the demand for commodities and natural resources is another channel through which China¶s economic development might affect the U.issues. the acquisition was completed. economy. a myth. or just a bubble. In addition to this. China also has a widely damaged natural environment.S Economy? China¶s rise as an economic power has raised a number of concerns among U.S. . China¶s drinking water resources are less than 25 percent of the world average. contending that China¶s rise as an economic superpower threatens to undermine the U. Although many have welcomed China¶s prosperity and integration into the world economy. China has gone from a poor. On April 30. companies such as Lenovo Group Limited.S. Moreover trying to establish an economic market system has negatively impacted social justice.S. a computer company primarily owned by the Chinese government. and whether China can continue to sustain high growth rates for the foreseeable future or not. as the catching-up strategy has paid little attention to environmental protection. and its grassland resources are less than 50 percent. policymakers.75 billion.5 percent. Conclusion China¶s economic ascendency over the past 30 years has been described by some as an economic miracle. In China. 2005. the extent of this ill varies widely. with some ecologists regarding China¶s present ecological environment as a nightmare. Another problem that the economy has faced is rampant corruption. Apart from all the discussion above.S. economy.

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