China’s Impact on the World Economy 2000-2025

Overwhelmingly, China is in rapid economic growth. Its “Tiger Economy” went berserk. Considerably, having one-fifth of the world’s population, or doubled the United States, Europe, Japan and other high earning nations (Perkins 1). Now, China has become a middle income nation (Perkins 1).  From a slumbering second world country now has been a threat to become a first world country. In 2004, the official exchange rate of China was 1,300 USD Gross Domestic Product per capita and 1,690 Billion USD as the total Gross Domestic Product (Perkins 1). It is said that it will still rise in an exponential way since the trend follows a seven percent increase and the by 2015 the per capita GDP will be doubled and in 2025 it will be increase again twice of 2015 (Perkins 2). As long as the exports are running great, the China’s uprising can never be an upset. With this uprising, the demand for scarce resources around the world would be high not only for China but for the rest of the world since it is a competition in acquiring resources.

Even if China conserve it would not be sufficient for the welfare of other nations (Perkins). China as we all know, has limited resources (Perkins 2). And once they have emptied their warehouses, they need to find other suppliers and basically it comes from imports. Imports from other nations provide China of the resources they need. There would be an increase in demand for resources that are mainly imports (Perkins 2). With that, China is interdependent to other nations. And this dependency to other nations is being a determinant of their speed to develop. The Chinese Industry is aiming to increase the technological contents of their products (Xinxua 1). With it, the other nations who are technologically advanced are threatened for competition.

The cheap goods that China produces serves well the world market hence it is also profitable. There are terms laid out by the World Trade Organization since the emergence of China (Xinxua 1).  The condition is mainly concerned on the preservation of global multilateral trading since China can hoard their own exports and for a larger exchange on imports. The WTO is preventing China from protectionism because there are also other nations dependent from their exports such as the European Union. The European Union and China has been in free trade for quite some time and EU does not want lose this advantage. Among all of the international issues pressuring China, there is also pressure building within their country. Since there is a desire to maintain the seven to eight percent economic growth rate of China, the Chinese government is willing and able to monopolize that political and economic power to neglect the idea of being democratic and also avoid the decentralization of power (Lockwood 1). The pressure within the Chinese community is highly political hence the problem is to sustain the country’s growth.

China’s emergence in the world economy is considered to be important because of being a powerhouse exporter. It is believed that if the economic growth rate is sustained and continued for a long time then China would dominate the market (Eichengreen and Tong 3). China now currently has $1.3 Trillion in foreign exchange reserves and is considered to be the largest in the world (Metcalf 1).  China has been greatly influential than any other economy in the world (Roach 1). The effort of China to achieve high production with low resource consumption is not only their way for sustainable development but also to serve the global economy. With this line of thinking, other countries would like to follow the trend that China did follow which earned them their success now. The growth of China has become a threat to most of the powerhouse nations of the world economy such as the United States of America and the European Union but regardless of their domination the uprising of China is unstoppable.

With the rise of China, the other nations who are dependent among them would likely to be more dependent than ever since the free trade market is open. China’s monetary unit will strengthen due to this and would entail a larger Gross Domestic Product. Nations like the United States and The European Union want to keep up with China since most of their reserves belong to China now hence they were the first to proliferate rather than China. If China rises the other countries would be falling since there is the depletion of resources and the quick transactions of import and exports due to large scale economy China could offer. Largely, the one would be of great concern with China’s uprising is America because of the large surplus building up as time passes by. If China would dominate the United States, US Dollars will depreciate which will affect the global financial markets and also would sustain trade imbalances due to protectionism (Callen 1). There were efforts by the World Trade Organization and the International Monetary Fund to eradicate protectionism since it entails the global imbalances.

A growth of a country depends on its physical capital, human capital, and labor force (Perkins 3). China having a large population does not have any problems of shortage in man power since their future workers are not trained today and the these are not just workers, these are college titled workers which means that the skills and knowledge that they have are not in mediocrity. With the good quality of future that they will have, the maintenance of their economic growth will not be denied. The depletion of their human resources is said be in more than twenty years (Perkins 1). As long as China sustains it seven percent economic growth rate and its potential workers, there would be a great future for China for the incoming twenty years. The world economy would be astonished to what they have achieved without exploitative conditions.

In 2006, China has become the world’s largest holder of foreign exchange reserves (Zheng 1). China’s strength in the world economy has grown but had created both external and internal pressure (Zheng 1). The external pressures stated earlier are the alignment of other nations to China since their presence in the world economy is being felt, the effort for sustainable development and the reoccurring effects of globalization. The internal pressures that arose are greater corruption, the government is more likely to engage in protectionism since they will benefit more from it, the cultural imbalance that will happen since China is more involved with the Western civilization, and lastly the unstable launch of piracy among the Chinese region since it would be a subject for more profitable consumption. These are the implications of the China’s growth hence it does not matter if it is positive or negative, the fact that, many of the nations are involved shows how alarming the changes must have been. There were no drastic changes to the world economy with China’s economic development; it is just that they have developed (Lockwood 2).

The implications of China’s emergence to other countries are adapting from competition from labor-intensive groups, suggesting reforms to induce marketability, and the accommodation of demands for international capital. On the positive note, China’s emergence is good because it gives opportunities for trade, investment, and international cooperation that promote stability not only to their own economy but also in the world economy (Lardy 1). The emergence of China has both positive and negative implications but their uprising can be thwarted in any other way since it serves the purpose of all the multinational companies and also trading nations as well. The World Trade Organization’s aim for sustainable development is threatened by the awakening of this monstrous country hence the Chinese empire continues to surge with their economic prowess. The gains and losses of China will be incomparable to what have the worlds resources could be. The quest for economic domination will be achieved as it is foreseen but the negative implications of it to our natural resources cannot be compensated.

Long war to be fought by the World Trade Organization and the International Monetary Fund to strive for sustainable development will never be completed if China would not join them. China having the world’s largest population (Perkins 1), will surely become a factor to the world economy. The world economy is not just about trades, transactions and tariffs; it also was designed to gather all the powerhouse nation producers to help maintain the natural resources that we have because it seems to be devastated.  The aim of the world economy is not hinder the growth of a uprising country but it was organized to protect the interest of small countries and make barriers for trade for them in accordance to the World Trade Organization. The role of the World Trade Organization is simply remarkable hence dealing with all the relativistic views of each nation, there is no bias or protectionism that happens.

Protectionism is cannot be tolerated for example, China and European Union are under protectionism then they would monopolize the price hikes in the world economy which could wage conflict between nations. China’s stance to the world economy is in neutral now. They just want to proliferate and prosper among the things that they have. This culturally bounded nation is one of the most amazing growths in the economic sphere hence it did not affect their way of life of being humble and honest. Though, some of my claims may have been refuted, it was not intentional to make biases for Chinese people but I think what made them to be up there, with the seven percent economic growth, came from their sheer talent and hardship. There were depressors of the China back then that is why they are late bloomers. They have been victims of foreign invaders like the Philippines hence it did not stop them from what they became right now. Perseverance was their key for the world economy. Being called as the “sleeping giant”, it serves them well. But now this giant has awoken and is ready to face the world head on in the most simplistic manner.

Works Cited

Perkins, D. China’s Impact in the World Economy. Harvard University from <http://www.jcer.or.jp/eng/pdf/DP1021e.pdf>

Xinxua. China continues to have “enormous impact” on world economy. August 13, 2006. Chinadaily Website. November 2, 2007.<http://www.chinadaily.com.cn/china/2006-08/13/content_663724.htm>

Lockwood. C. China and the World Economy.October 07, 2005 <http://www.tutor2u.net/newsmanager/templates/?a=680&z=1>

Eichengreen, B. and Tong, H. How China is Reorganizing the World Economy. December, 2005.  <http://www.aeaweb.org/annual_mtg_papers/2006/0106_1430_1702.pdf>

Metcalf, G. China. August 13, 2007. Usadaily website. October 31, 2007 <http://www.usadaily.com/article.cfm?articleID=52955>

Roach, S. China’s New Economic growth mode is good news to the world. June 14, 2006. People’s Daily Online website. October 31, 2007 <http://english.peopledaily.com.cn/200606/14/eng20060614_274011.html>

Callen, T. IMF Forecasts Slower World Growth in 2008. International Monetary Fund Website. October 17, 2007. IMF Research Department. October 31, 2007 <http://www.imf.org/external/pubs/ft/survey/so/2007/res1017b.htm>

Zheng, Y. China’s Rapid Accumulation of Foreign Exchange Reserves and Its Policy Implications. 2007. China and the World Economy. Blackwell Synergy Website. October 31, 2007. <http://www.blackwell-synergy.com/doi/abs/10.1111/j.1749-124X.2007.00011.x?prevSearch>

Lardy, N. (1994). China in the World Economy. Peterson Institute for International Economics. 1750 Massachusetts Avenue, NW. Washington, DC 20036

Marquand, R. U.S. Targets Chinese Piracy of US Goods. March 30, 2006 The Christian Science Monitor. October 31, 2007. < http://www.csmonitor.com/2006/0330/p07s02-usec.html>