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Economic growth in China and its impact on American economy - Essay Example

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Economic growth in China and its impact on American economy

The Golden Age of the China started soon after its amalgamation with World Trade Organization. The membership of World trade Organization has been of economic and industrial benefits for the country. Secondly, the normalization of the Communist China's diplomatic relationship with United States, have further boosted the momentum of Chinese economic activities. These two events are important because they signify the recognition of Chinese economy by United States and the world economic community as an equal partner. Since its membership, the country has become an important member of the world economic community and plays an important role in the global economy.
The partnership with WTO has increased the scope of China's market for international trade and investment, and has opened up the World economy for unrestricted China's exports. Economic analysts have viewed the so far progress positively, and considered it as a positive force for China's economic development, however others believed that the competition of foreign imports and foreign enterprises in China might destroy important domestic enterprises in China's agricultural, manufacturing and service sectors. WTO membership will hasten the relative decline of the agricultural sector and the relative rise of service sectors dealing with financial services and telecommunication. Secondly, the state sector will decline relatively to the non-state sectors and efficiency in Chinese enterprises will increase with foreign competition when tariffs are lowered and foreign firms can enter the Chinese market.
Although the concerns of the analysts have come up to be true, however the Chinese government's investment friendly policy and availability of local, cheap and skilled labor has turned the country into hub of industrial progress and development. The positive impacts are limited and controlled because the provisions of the WTO membership are limited in scope. 'The effects are expected to be gradual not only because the terms of the membership agreement are introduced gradually but because economic, legal and political institutions are difficult to change' (Solow, Robert M. 1956. "A Contribution to the Theory of Economic Growth": Quarterly Journal of Economics).
The open trade agreement is likely to develop social changes which have taken place in China since 1978. The changes have been as rapid as the Chinese people could absorb. Symbolically, China's position in the world economic community is openly recognized. China's entrance into bilateral and multilateral trade agreements have served as a blueprint for China's institutional changes. In the mean time, the scope and level of economic activities helped the Chinese leaders to project a better image of themselves in the world community; this has further improved their own confidence to govern. The psychological effects resulting from the status of international trade agreements, responsible for industrial growth, has pushed the Chinese leaders to adopt democratic reforms and has made the Chinese citizens more interested and patient in following their leaders in guiding the gradual political changes in China towards a more democratic government. (Lemoine Francoise. 2000. FDI and Opening ...Show more

Summary

China has emerged into economic and industrial hub, the investment friendly policies of the country has accelerated the economic growth of the country. The country has abundant resources, and is rich in terms of trained and skilled labor. The availability of the cheap labor, valuation of Chinese Yuan, and the entire system of the country has captured the attention of international companies, particularly from North America and Canada…
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Economic growth in China and its impact on American economy essay example
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