2 pages/≈550 words
Business & Marketing
Chinise Market Economy (Essay Sample)
the task was about giving an overview of the impact of Chinese successful economic transition on the U.S basing on the concept of mercantilism assumptions.source..
Chinese Market Economy
China is the 4th largest nation worldwide subsequent to Russia, Canada, and the U.S. having a population of about 1.3 million people. However, it has experienced magnificent economic transition over the preceding two decades which has enabled it become the 2nd most powerful economy worldwide after USA. All this has been attributed to China’s communist victory of the year 1949 and the outstanding Cultural Revolution that took stage during the 1960s period. Generally, China has made remarkable strides in extending its economy to meet diverse market demands of the international trade policy (Wu 214).
When Mao Zedong was in power, China was a communist country where the impacts of its economic ties were not felt with outmost market reception. However; with Deng Xiaoping taking power in the year 1978, china began to experience an amicable market rule that enabled its GDP to have a positive turn. According to a research on Chinese market economy, the nation has been able to achieve a 73% economic marketization as per the conditions set by the E.U and the U.S. Strangely enough, the economic transition of china has resulted to a negative impact on other economies such as the U.S. In this regard, this literature will give an overview of the impact of Chinese successful economic transition on the U.S basing on the concept of mercantilism assumptions.
Mercantilism is a theory related to Realism. It states that, international systems are principally different from the domestic economic systems. Incidentally, the theory advocates that; power is often used to defend the domestic system of the economy from international competition, power enhances the competitiveness of most domestic manufactures in the global market against foreign rivals, and lastly it concludes that power controls natural resources by the use of force at time. The Chinese government has predominantly improved their economy at the expense of other nations. It is true that the form of leadership in China approves for Mercantilism thus other nations should realize that they are being antagonized economically.
It is important to note that china is currently an investor’s destination nation with more that 67% foreign investors. This is largely because of its economic and socio-political stability. This has led to the creation of millions of jobs and an improvement in the national infrastructure. As a result, China has become the leading manufacturer and exporter of textile products as well as electronic products. Above all, china revalued its Yuan by 2.1% with respect to the US dollar in the year 2005 leading to an account surplus of about U.S. dollars 180 billion (Tisdell 297). This revaluation of its currency is very minimal and adversely affects the U.S economy in several ways. First and foremost, it has led to a decrease in the U.S’s Balance of Payment since exports from U.S to china and other countries such as India have reduced significantly. Moreover, the Current Account Balance of the U.S. has been reduced by 190.5 billion U.S. dollars thus reducing the national GDP by an estimated value amounting to 288.7 billion U.S dollars. In this regard, the federal financial statement debit is projected to increases by U.S dollars 875 in a period of ten years (Finn 34).
Consequently, domestic firms in the U.S such as Wall-Mart have seen their product sales reduce significantly due to China’s Policy in Revaluation of the Yuan. In 2012 financial year, the company experienced an unexpected decrease in its sales by about 1.4% due to difficulties of demands on shoppers. Moreover, this was entirely due to undervalue of the Yuan which made most of Wal-Mart products not to be exported to China.
Some nations antagonize other nations for their own economic interests. It is evident that the Success of the Chinese economic...
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