China and Globalization
...wth, globalization has also impacted the Chinese population in economic development and standards of living. Since 1978 the Chinese income has quadrupled and 270 million Chinese have been lifted out of poverty. In addition, there have been significant improvements in housing, health, education, water supply and food supply. In 2005, life expectancy was calculated at 73 years and the adult literacy rose from 72% in 1998 to 89% in 2005. Additionally, China’s Human Development Index (HDI) was 0.752 in 2005, which has ranked China 86 out of 175 countries in the world, up from 0.721 in 2001. There is a major emphasis on education and training of the workforce which allows the rising productivity and living standards for citizens. Much of the improvements in China’s standard of living reflects the tremendous level of enthusiasm of foreign direct investors particularly the Transnational Co-operations (TNC), who are attracted by cheap labor force and potential size of Chinese market. It has increased demands and receives high level of technology transfers for capital and knowledge-intensive industrial goods. Also, the increased specialization in the Chinese economy reflects improvements as well, as products are produced are at comparative advantage, allowing specialized industries to compete in world markets, leading to economies of scale and revenue. Additionally, the growing number from State Owned Enterprises (SOE) to private sector employment has promoted the adoption of a market based economy, effectively establishing free markets in agriculture and industry in the Special Economic Zones (SEZ), which has raised the efficiency of production and productivity of workforce. Deng Xiaoping’s decision to liberalize the economy and open the doors to foreign investment and trade were designed to improve China’s economic performance through strategies adopted for economic development. Between 1978 and 1994, reforms to agriculture involved the abandonment of the commune system and its replacement by the Household Responsibility System where households could make own production decisions and sell surplus output in free markets. This new system led to dramatic increases in food production, and surplus income was invested in privately run town and village enterprises responsible for light manufacturing and production of industrial goods. Similarly, in 1980, an open door policy was adopted towards foreign trade and investment with SEZ established in the southern provinces of China. These SEZ attract foreign investment through a range of incentives offered such as low taxes, exemption from import duties, cheap labor and power. For China, the importance of foreign capital lies in trade and market access, transfers of technology and the receipt of management and marketing skills. In 1992 cuts to tariffs and other protection were used to encourage greater domestic efficiency through import competition. China’s average tariff rate was cut from 32% to 14% by 2004. These cuts in import protection supported China’s drive to attract foreign investment, hence leading to higher standards of living for citizens. Whilst China’s economic reforms have allowed it to enjoy high levels of economic growth and increase quality of ...