New Chinese Economy

New Chinese Economy

Introduction

“China may not matter quite as much as you think.” This is how starts this article published and written by editors of The Economist Magazine on October 28th of 2010. The introduction of the article talks about the impact that a Metallurgical company of China is going to produce in the town of Alpha. A small town in Australia that has only 400 residents including one part taxi driver, one fireman, and one policeman. But during the next few years the population of this town can increase up to 2,000 residents, thanks to a $US 7.5 investment by an Australian exploration firm company and a metallurgical corporation of China. According to the article it is very difficult to contradict that the Chinese impact in the world economy is tremendous, as it will account for a fifth of world growth this year, as it accounted for 49% of the consumption in 2009, as this year is going to sell more cell phones in its market that the Europe, Americas, and Africa together. The impact of the Chinese economy in small and big centers is really big. According to the authors of the article “China will make a sizeable contribution to world growth this year”, but they also set a really interesting question about whether China can make an important contribution to the rest of the world's growth (“Dependence on China” Para 2”). China is the biggest market for exports for countries such as Japan (18.9%), South Africa (10.3%), Brazil (12.5%), and Australia (21.8%); however, the number that exports to China represent in GDP is small. In the best case, it represents only 3.4% of GDP in Australia. As state in the Economist Magazine most of countries in Europe and Americas registered less trade balance between from 2001 and 2008, it represents a negative contribution compared to the years before (Hoekman 2001).

Discussion

The article close with pointing how the Chinese economy can influence the world, and what would happen if China suffered a “Hard landing”, or until what point the Chinese are indispensable for the economy. In some cases such as in Philippines, South Korea, and Taiwan their economies depend more in the demand of Chinese that demand of Americans. Exports and imports is not the only way that China contributes to the World's economy. Investment and presence of China companies in other countries play a major role. I believe that there is no doubt that most if not all articles about China's economy relate to the concepts that we have covered in class. First of all, the major role that China is playing around the world would not be happening without globalization. Globalization brought change for all countries but especially for China. China had one of the most closed economies around the world before 1978; its main trade partner was the former Soviet Union and its main imports were some raw materials and food consumer products (Tung 8). Right now three decades later, its total goods trade counts ...