Development and Potential of China in the Global Market

The Chinese thrift has been showing rapid ripening in the past decade and at that place seems to be a potential capitulation for strong offset into the foreseeable future. mainland chinaware has undergone a great vicissitude from a domain that was one of the foundations greatest opponents of globalisation into a committed advocate of globalization. The transformation set in afterward 1978, when Deng Xiaoping and other leaders began to focus on trade-oriented economic development. The Chinese thrift is today far more open than Japan and this has been made practicable erectly due to adoption of the rule of law, of commitment to competition, of widespread part of English, of byside education, and of many foreign laws and institutions (Overholt, 2006).With respect to ease and globalization, mainland chinaware has in effect become an in ally of U.S. and to the s placeheast Asian, supporting freer trade and investment than is grateful to Japan, India and Brazil. Glo bal food grocery storeing is becoming more and more important on the geezerhood with the increasing trend in inter studyization. In the early eighties it dismant take collective farming and allowed private enterprise again.Now it is one of the worlds kick the bucket exporters and is attracting record amounts of foreign investment. However, mainland mainland chinawares transformation is not matched by political change. Having gained entree to the World sell Organisation, mainland chinaware is benefiting from change magnitude access to foreign markets, provided in return it is under an obligation to expose itself to competition from abroad. dealing with affair partners brace been strained over mainland Chinas huge trade superfluous and the piracy of goods (BBC, 2006).Chinas large and rapidly growing market has attracted large volumes of FDI in recent years (US$54 zillion in 2004) as transnational corporations have invested heavily in order to benefit from the sylvans emerging middle class and its higher purchasing business leader (GlobalEdge, 2006). However, there are some hurdles to be crossed if China is to develop to its full potential in the global market. consort to Zhang Lichuan, a Director with the Statistical Department of General Administration of Customs of China, there are four major obstacles to Chinese foreign trade (Peoples Daily Online, 2006) China should deal with pressure from international markets that are gradually becoming saturated. The cost of Chinese exports is increasing, partly because of the higher cost of press and environmental protection. Increasing international trade protection has caused China to pip into difficult territory. In fact, China has been involved in the worlds largest number of anti-dumping cases in recent years. The trade imbalance between China and other countries is acquiring worse. As the Renminbi appreciates, Chinese enterprises will face greater exchange risks in import-export trade. Increa sing pressures from the appreciating Renminbi will create new requirements and challenges for Chinese enterprises engaged in import-export trade.Analysis of the countrys global competitivenessAccording to the CIA World concomitant Book, Chinas economy grew at an amount rate of 10% per year during the period 1990-2004, the highest growth rate in the world. Chinas gross domestic product (gross domestic product) grew 10.0% in 2003, and even faster, 10.1%, in 2004, and 9.9% in 2005 despite attempts by the government to cool the economy. Chinas essential trade in 2005 surpassed $1.4 trillion, making China the worlds third-largest vocation nation after the U.S. and Germany (CIA Factbook, 2005).Export-Import figures Chinas merchandise exports totaled $762.3 billion and imports totaled $660.2 billion in 2004. Its global trade surplus surged from $32 billion in 2004 to $102 billion in 2005. Chinas primary trading partners include Japan, the EU, the United States, South Korea, Hong Kong, and Taiwan. According to U.S. statistics, China had a trade surplus with the U.S. of $201.6 billion in 2005 (CIA Factbook, 2005).China and WTO China has taken important steps to open its foreign trading system and integrate itself into the world trading system. In November 1991, China joined the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in the economic, trade, investment, and technology spheres. China officially joined the WTO in December 2001. As part of this far-r from each oneing trade liberalization agreement, China agreed to lower tariffs and abolish market impediments (NTE Report, 2005). By 2005, average tariff rates on key U.S. uncouth exports wasteped from 31% to 14% and on industrial products from 25% to 9%.The agreement also opens up new opportunities for U.S. providers of function like banking, insurance, and telecommunications. China has made significant shape up implementing its WTO commitments, but serious concerns remain, particularly in the realm of quick-witted place rights protection. China is right off one of the most important markets for U.S. exports in 2005, U.S. exports to China totaled $41.8 billion. U.S. agricultural exports have increased dramatically, making China the fourth-largest agricultural export market (after Canada, Japan, and Mexico). Over the same period (2001-1005), U.S. imports from China have risen from $102 billion to $243.5 billion.Export growth rests to be a major device driver of Chinas rapid economic growth. To increase exports, China has pursued policies such as fostering the rapid development of foreign-invested factories, which assemble imported components into consumer goods for export, and liberalizing trading rights. In its eleventh Five-Year Program, adopted in 2005, China placed greater wildness on ontogenesis a consumer demand-driven economy to sustain economic growth and address global imbalances. The April 11, 2006 U.S.-China Joint Commission on C ommerce and Trade (JCCT) has produced agreements on key U.S. trade concerns ranging from market access to U.S. beef, medical devices, and telecommunications to the enforcement of intellectual property rights, including, significantly, software (CIA Factbook, 2006).Foreign Investment Since the early 1990s, China has allowed foreign investors to bring into world and sell a wide range of goods on the domestic market, and veritable the establishment of wholly foreign-owned enterprises, now the preferred form of FDI. China is now one of the leading recipients of FDI in the world, receiving $60 billion in 2005, for a cumulative total of $623.8 billion. As part of its WTO accession, China has undertaken to eliminate trustworthy trade-related investment measures and to open up specified sectors that had previously been closed to foreign investment. Major remaining barriers to foreign investment include opaque and in undifferentiatedly enforced laws and regulations and the lack of a rule s-based legal infrastructure. Foreign exchange militia were $819 billion at the end of 2005, and have now surpassed those of Japan, making Chinas foreign exchange reserves the largest in the world (NTE Report, 2005).Competitive receiptsA study by GlobalEdgeTM titled, Market Potential Indicators for emergent Markets 2005, studies the market potential of 24 countries identified as Emerging Markets by The Economist. The Emerging Economies are countries that have very high growth rates which doer enormous market potential. They can be distinguished by the recent progress they have made in economic liberalization. These countries are characterized by their increasing need for capital equipment, machinery, power transmission equipment, transportation equipment and high-technology products. An index study is made by MSU-CIBER to help the companies compare the Emerging Markets with each other on eight dimensions (Lopez-Claros et al, 2006)Market Size With regard to market size, China st ands first with India and Russia in the second and third places respectively.Market growth rate, China is third after Venezuela and Malaysia.Market Intensity China is ranked drop dead among all other emerging economies.Market consumption capametropolis China is 12thCommercial infrastructure China is 14th.Economic freedom China ranks 24th.Market receptivity China is 12thCountry risk China is 11thOverall market potential index China is third after Hong Kong and Singapore.Asia Change in percentage of Annual disposable income 1999-2004 (WEF, 2006)China 59.2Hong Kong, China 3.3India 35.4Indonesia 57.1Japan 3.5Malaysia 43.6Philippines 8.2Singapore 37.8South Korea 46.8 Taiwan 15.3Thailand 26.8Vietnam 36.2(Source Euromonitor International from national statistics)The above table shows that of all competing economies in the global market, China has shown the greatest growth within the period 199-2004.Since 2001, the World Economic Forum has been victimization the Growth Competitiveness Inde x (GCI) developed by Jeffrey Sachs and John McArthur. According to the GCI Index in The Global Competitiveness Report 2006-2007 Country Highlights, Chinas ranking has fallen from 48 to 54 in the boilers suit competitive ranking Consistent with the cautious macroeconomic management of its governance and extremely high GDP growth rates, the macro economy editorial of the GCI shows a very high rank, 6th overall in the world.This reflects Chinas low inflation, one of the highest savings rates in the world, and compliant levels of public debt. Chinas ranks in the GCI indicators regarding penetration rates for the in style(p) technologies are actually falling behind. Secondary and tertiary school enrolment rates are better than they are in India, but even-tempered low by international standards. A number of indicators which capture the worldliness of the business community also show lower ranks in 2006 than last year.By far the most worrisome development is a marked drop in the qua lity of the institutional environment, as shown by the sharp drop in ranks from 60 to 80 in 2006 in the institutions pillar of the GCI, with paltry results across all 15 indicators, and involving both public and private institutions (Lopez-Claros, 2006).ConclusionChina has made a dramatic entry into the top position of the worlds economic stage. Chinas robust economic performance can be seen as an inspiration for other developing countries. Within two years after its historic entry into the WTO, China is the worlds fourth largest trading nation after the United States, the European Union and Japan. However, it must be remembered that China is not only a major exporter but also a major importer, and its modernisation programme and export industries have required, and will continue to require, billions of dollars worth of equipment and raw materials.During the first nine months of 2003, Chinas exports rose by 32 percent while its imports surged ahead by 41 percent. Chinas performance shows that developing countries can and do benefit from economic openness and integration. The reduction of tariffs has increased competition in the domestic market with the arrival of new suppliers. This has led to lower prices and larger choice for consumers, and has lowered the prices of essential inputs for many industries, thereby enhancing their competitiveness. In the first two decades of reform, the number of absolute poor in China dropped by about 200 million.Per capita income has grown by sixfold, and farmers and city dwellers are able to live an enhanced lifestyle. However, to realize its goal of image its GDP by 2010, China will have to face up to a number of important challenges. As the Chinese economy shifts from being a rural economy to an urban one, the main challenge for the economy will be to create enough jobs in the industrial and services sector to absorb the surplus labor from agriculture, which generates 17 percent of Chinas GDP and 50 percent of employment. Next, the benefits of rapid development should be spread out to avoid a widening of income differences between rural and urban areas.To urinate its full potential, growth in the private sector has to be matched by an equal development of a stable market-oriented legal framework. China has managed to do by these profound structural changes while ensuring that it sustains a stable social environment. China needs the opportunity of market access and the legal guarantee of consistent and non-discriminatory trade rules that are offered by the WTO. As a fully vaned member of WTO, China should use its position to realize the objectives set out in the Doha Development Agenda.