International Business Article Summary
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According to a June 5, 2013 news article in the MSNBC Post, “China’s strength could become its weakness”, by John W Schoen talks about why China is imbalanced. China economy is based on very little regulations. China is trying to allow market forces to set interest and exchange rates and encourage greater competition from privately owned companies in Beijing. Considering this was to happen, China would then need to look into protection of intellectual property. That’s when it becomes a problem for China because the United States will be affected by debt and the United States debt is diplomatic to China. Hence, China is the largest foreign holder in the United States government debt using vast holdings of trade surplus cash to invest in more infrastructure; expanding state owned enterprises. Until recently, China hit a spark in the nation’s unprecedented pace of double digit economic growth and became a global power ball. The demands for exports shrink tremendously. As the years flew by China though massive state spending and investments may help but the bubble continuously burst. They then created an investment and real estate bubble.
China is now desperately trying to wean its economy from massive government spending, trying to attract fast and easy money to sustain their investments and real estate bubble. Overall, I feel as though the Chinese economy is imbalanced. China’s strengths are there biggest problem. They are so largely expanded; they often can do whatever they want because of their utilities to do so. Although the globalization idea may sound attractive and predictable, China is not the only country that tried it. For instance in Japan and Europe financial openness failed due to the imbalanced situations going on that appeared to be foreign bond investment in European and American countries. It brought about the lack of lucrative investment opportunities in the domestic markets. (Japanese) Every major business jump into globalization and grew from it or didn’t grow from it in some way. In many companies there is some sort of product that is made in a foreign country. The product then becomes a promoted world demand and the globalization bubble continues to grow. Suddenly, many demands disappear and bubbles began to burst. After the bursting of the bubble China begins to be more imbalanced on the dependence of investments and real estate.
Schoen, John. “China’s strength could become its weakness.” 05 06 2013, n. pag. Web. 8 Jun. 2013. <http://www.nbcnews.com/business/chinas-strength-could-become-its-weakness-6C10195586>. “Annual Report on the Japanese Economy and Public Finance 2003-2004.” [Cabinet Office Government of Japan] 07 2004, No Gains Without Reforms IV n. pag. Web. 8 Jun. 2013. <http://www5.cao.go.jp/zenbun/wp-e/wp-je04/04-00301.html>.