Globalisation refers to the increase in the integration between countries and the establishment of a single global economy. China is current the world’s second largest economy and in the past two decades has been the worlds fastest growing economy, sustaining an average rate of growth in real GDP of 10% per annum. The effect of globalisation on China’s economy can be seen in the areas of economic growth, economic development, quality of life, economic stability and environmental sustainability.
Economic growth refers to the increase in a country’s GDP over a period of time. The influence of globalisation on China has been profound with economic growth being sustained between 8 and 10 percent in the past 2 decades. This is due to China moving away from being an ecnomy with a domestic focus to a trade oriented economy, highly integreated with the global economy to take advantage of globalisation. This increased integration has seen China’s share of world exports in goods and services rise to 9.4%, and its share of world GDP estimated at 14.3%. The effect of this increased integration is evident as China is now the worlds second largest economy in the world measured by the nominal value of GDP in US dollars.
Economic development can be measured through growth in GDP per capita as well as other qualitative measures. China’s rapid rate of economic growth has been based on its export oriented strategies financed by foreign investment which has increased substantially as a result of China’s involvement with the global economy. This has resulted in a rise of 9.4% in GDP per capita from 1994 – 2003, and an improvement in China’s Human Development Index from 0.407 to 0.699, which takes into account quality of life measures such as literacy rates and life expectancy. Since 1978, the beginning of China’s opening up period, China has seen over 300 million people be lifted out of poverty, another indicator of the positive effects of China’s involvement in the global economy.
Other the other hand, despite improvements in economic development in China in recent decades, 28.4% of the population are still classified by the world bank as being below the international poverty line of US$1.25 a day. In the last 28 years, China’s GINI coefficient has increased from 0.25 to 0.46, signalling that income distribution has become more unequal. Also, although China’s GDP is ranked 2nd at US$7.2 billion, its GDP per capita is still only at US$5141 in 2011, ranking China 90th in the world. It is evident although globalisation has led to an improvement in China’s economy as a while, China’s quality of life and economic development is still poor and unequal in comparison to other advanced economies.
Another detriment to China as a result of its increased integration with the global economy is its susceptibility to external shock. This susceptibility can be seen in the effects of the recent Global Financial Crisis (GFC) in 2008. Due to the US being China’s 2nd largest trading partner, when the US experience a slow in economic growth, China exports suffer a multiplied downturn. This had a significant effect in 2008 as exports contributed to 35% of China’s GDP. As a result, in January 2009, exports plummeted by 17.5% for the month and imports fells by 21.3% in December 2008, as the downturn in the US took effect. The falling export and import figures are evidence of the negative impact that globalisation has hand on China’s economy.
Also, China’s rapid economic growth has led to environmental degredation and the consumption of much of the worlds resources to fuel this growth. China’s is currently the world’s largest consumer of coal and the world’s third largest consumer of oil. As a result, China’s carbon dioxide emissions were 6200 million tonnes in 2006, 8% higher than the US. Due to this, China also has severe air pollution, having the worlds largest emissions of sulphur dioxide, emittiong 17 million tonnes per year.
Hence globalisation and China’s increased integration with the global economy has led to economic growth and development in China. However, overall enequality has increased and there have been adverse effects on the environment due to the large resource consumption and air pollution. Overall, globalisation has had an expansionary effect on China’s economy, and China’s economy is predicted to continue rising at a rapid rate. However the Chinese government needs to work on environmental management and on spreading the positive effects of globalisation equally throughout China.