Economic Growth in China Analysis

Table of Contents

Introduction

With a population of 1.3 billion China has one-fifth of the world’s total population and is still in its developing stage. The country being the third largest trading nation is in the second position in terms of purchasing power. China is considered to be the single largest contributor to global growth over the past five years. Regardless of the economical issues prevailing in China, it has recorded a gross GDP rate of 10.7 percent in the year 2006. Although China has achieved several commendable positions irrespective of its domestic trade constraints, it has a long way to go to be regarded as a developed nation (Central Asia and the Caucasus).

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Main body

According to the life cycle theory related to China’s upcoming market, foreign firms are allowed to set their tactics for the development of the nation. The Economic Reforms and Open Door Policy initiated in 1978 magnetized a large number of foreign investors. Most of these investors were least aware of the Chinese culture and strict government regulations which would limit them in reaping profit. In short of sufficient information and the incapability of anticipating the future apparently, some investors selected the “hit and run” approach. This approach was followed by few small-scale firms while the rest skillful investors identified the situations they need to face and were willing to accept the deal. These were the larger firms with ample resources to play in the market. Unfortunately, the insight of many firms did not work out, and had to leave the market with heavy loss. While many investors achieved success and others lost their money, a critical evaluation of the real fact was made by studying; the Cultural issues, management styles followed, and the initial experience of the new entrants to the market. The studies revealed that foreign firms must be strong enough in shaping the situations and their risk factors. Without a Chinese partner, foreign marketers were finding it hard to survive in the prime stage of the Chinese market. Due to the complex factors such as cultural, legal, economic, political, it was hard to develop a good relationship. The key input of the Chinese partner was restricted to local advantages and cheap labor. The rest of the inputs had to be supplied by the foreign firms. Due to these grounds, the gestation time involved was too long. Within these constraints, the Chinese market was still profitable and the number of competitors was still on the higher side. When the market reached its boom stage, the marketers had to find new competitive techniques to overcome the crisis. The situation was much severe in the maturity stage when the supply and demand share the same graph, and the consumers have much more choices to select from. So from a marketer’s point of view, it is necessary to have a long-term plan for its survival and maintenance of the market share. The foreign style of management and the adoption of strong moral principles were the major factors that were admired by the Chinese. The practice of giving up chances in the short run and gaining it, in the long run, resembled the system followed by the Chinese. An earlier notion on China’s political and cultural differences led to a general idea that, the foreign style of management is not suitable in China. But later the Western Style of management was highly accepted and been successful in China. It is the Western style of goal setting and guiding principles that have been followed by the foreign firms functioning in China (Wong & Maher. 1997).

The Chinese government has applied various economic and political strategies in the fields of agriculture, medicine, infrastructure, and transportation in order to open the Chinese market to the entire world. This in turn led the way for foreign investment from other nations. The immediate change evolved in the economic strategy led to the high pace of growth and development in international trade. The major goal of China’s foreign policy was to develop the Chinese infrastructure. The Chinese Government then decided to reduce the import tariff and take away the necessity of import license of pharmaceuticals to the country. Yet after all the economic benefits the Chinese market stood in the position of a profitable marketplace. While analyzing the political front China is growing with a boom in the field of international organizations. They are trying hard to re-enter the GATT, by creating a positive trading status among the foreign nations. Though China’s foreign policy targets in opening doors to foreign marketers, the agricultural sector has been ignored with the exclusion of certain technical contracts.

Conclusion

The technology used by the agricultural industry is been funded by political parties, financial institutions, and insurance companies. The outcome generated out of the technological know-how is being distributed among these contributors. Since they have invested the money in the new technology they are bound to bear the risk also (China’s Economic Growth Due To Recent Foreign Policies). Studies reveal that China will move inevitably towards a free-market economy in the coming days. There would be acute competition which will be supported by the influence of a foreign free market. Due to China’s environmental, political and economic drawbacks, the development process of the market life cycle will extend for a long ( Wong & Maher. 1997).

Reference

Central Asia and the Caucasus. 2008. Web.

Wong, Y.Y & Maher, T.E. 1997. New key success factors for China’s growing market. 2008. Web.

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China’s Economic Growth Due To Recent Foreign Policies. 2008. Web.

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Paperroni. (2022, June 4). Economic Growth in China Analysis. Retrieved from https://paperroni.com/economic-growth-in-china-analysis/

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Paperroni. 2022. "Economic Growth in China Analysis." June 4, 2022. https://paperroni.com/economic-growth-in-china-analysis/.

References

Paperroni. (2022) 'Economic Growth in China Analysis'. 4 June.

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