The Economic Rise of China

The Economic Rise of China

The international system has always been one of anarchy and chaos, as there is no overarching government to rule. Due to the structure of the system being anarchic in nature the international stage is one of constant change. For the past ten to twenty years the United States has managed hold the status of the world leader in almost any facet of the imagination at some point in time during its hegemonic reign. The United States has especially been a dominant economic figure in the international arena, controlling trade, investment, tariffs, offshoring, etc. That hegemonic status of the United States in now being challenged, as one would expect due to the explained nature of the system. The surprise is by whom it is being challenged. One of, if not the most, looming figure who has stepped up to challenge the U.S. is the state of China. China has become an economic power house in the world today as it has evolved rapidly despite the fact it remains to be undeveloped nation. The fact is that China may be a on the rise into a position where they may join the ranks of a world leader. In looking at ChinaÐ'ÐŽÐ'Їs growing economy, visible accounts of this growth are everywhere. Today Ð'ÐŽÐ'othe words Ð'ÐŽÐ'®Made In ChinaÐ'ÐŽÐ'Ї are as universal as moneyÐ'ÐŽÐ'± . China has become a leader in manufacturing and assembling of clothing, toys, shoes, and so on. Not only have they made strides in becoming a producer of these everyday goods, but China is also on the rise in more technologically advanced goods and services. So the questions have now become in what manner has China been able to move up the economic international ladder?, where is this rapid growth leading China? and with new technology and monetary funds rolling into the country how has, and how will, this Ð'ÐŽÐ'onew ChinaÐ'ÐŽÐ'± affect the world international system?

ChinaÐ'ÐŽÐ'Їs emergence into its current position of economic explosion is said to have started in a few different times. We will begin at one of the earliest point in time where ChinaÐ'ÐŽÐ'Їs rise was eestimated to begin, 1978. In 1978, under the reemergence of leader Deng Xiaoping in the Communist party, ChinaÐ'ÐŽÐ'Їs leadership realized opportunities for reform of the state that could lead to major advancement. Xiaoping believed in order to seize this opportunity and move forward, China had to achieve the four Ð'ÐŽÐ'®modernizationÐ'ÐŽÐ'Ї. Ð'ÐŽÐ'oThe four mondernization Den Xiaoping mentioned were the modernization of industry, agriculture, national defense, and science and technology.Ð'ÐŽÐ'± In order for China to achieve these four goals Xiaoping stated that China needed to learn from other countries and accept foreign assistance. The first step in this he believed was to introduce the advanced technology of the time and incorporate it into ChinaÐ'ÐŽÐ'Їs economy. The technology at this point has not fully come, as Ð'ÐŽÐ'oChina lacks some of the latest technology in its manufacturing processÐ'ÐŽÐ'± , but foreign assistance has increased dramatically through foreign investment, as will be discussed later. Xiaoping made one more statement of advice to other leaders. This occurred on October 23, 1985 where Ð'ÐŽÐ'oDeng pointed out to his government leaders that there is no fundamental contradiction between a socialist and a market economy. He noted that an acceptable middle ground was possible.Ð'ÐŽÐ'± The goal of Xiaoping was not and is not to create a capitalist society as in the west, but to Ð'ÐŽÐ'obuild a hybrid along the lines of capitalist socialism, or a free market within a communist society.Ð'ÐŽÐ'± This would allow China to enjoy both its Communist traditions and the benefits of a capitalist economy.

By ChinaÐ'ÐŽÐ'Їs government taking into action the advice of Xiaoping, through economic and governmental reforms of policy China was able to manipulate a planned economy mixed with a market economy to open up doors to the Western world, while allowing the market to guide them in effectively using their comparative advantages to the greatest extent. They began to use the market to create sectors in which they could exploit on the international scene. The overall effects of these economic reforms in China have led to a more influential position with in the international sphere of economics and politics.

ChinaÐ'ÐŽÐ'Їs economic reforms in relation to business structure seem to have been based on two theoretical views, the neoclassical view (also known as the mainstream approach) and the unorthodox view. There transition from the Communist system of political economy has taken from both views to create this highly energized economy. The neoclassical view centers itself on the ideal of small business over large scale business. The mainstream approach believes highly in prefect competition and feels that movement away from could cripple economic advancement. It states that under perfect competition there should be a large number of anonymous firms. These firms, with their large numbers and government regulation make it impossible for any of the firms to exert any influence on the market. By using a large number of firms in the local market, neoclassical supporters say that the economic system will garner a large amount of competition therefore creating prosperity and advancement. This type of small firm competition with added free trade is the neoclassical viewÐ'ÐŽÐ'Їs answer for the occurrence of such economic rise as the Ð'ÐŽÐ'oEast Asian miracleÐ'ÐŽÐ'±. The only downfall of the model is the many assumptions needed for a Ð'ÐŽÐ'®perfectÐ'ÐŽÐ'Ї market economy. However, the use of the neoclassical model has been very useful to the worldÐ'ÐŽÐ'Їs economies and Ð'ÐŽÐ'oremains deeply embedded in the minds of mainstream economistsÐ'ÐŽÐ'± .

In dealing with international trade the line in which undeveloped/underdeveloped countries should take, according to the mainstream approach, is that of being capital-scarce and being labor-abundant. This theory is due to the thought that Ð'ÐŽÐ'odeveloping countries have a comparative advantage in labor-intensive goods but not in capital-intensive ones.Ð'ÐŽÐ'± China has utilized this aspect of neoclassicalism very well. They have done this through their vast highly educated population working at a relatively cheap wage. Through the past two decades ChinaÐ'ÐŽÐ'Їs importation of capital and raw materials