CHINA & GLOBALIZATION CHALLENGES

China & Globalization Challenges

China & Globalization Challenges

Introduction

For China, globalization is often seen as a double-edged sword that brings both, opportunities and challenges, advantages and disadvantages. How to turn disadvantages into advantages in the tidal wave of globalization depends on formulating the correct policies and strategies. If the policies are correct, challenges can be turned into opportunities. China has learnt many lessons and accumulated rich experiences in dealing with globalization from its practice of reform and opening-up.

Global Financial Crisis, Required Reform and China

At present, the world faces several types of 'global challenge' in the fields of economy, security and, lastly, the environment, natural resources and public health. Among these, economic global challenges have been drastically highlighted by the current financial crisis and recession. This storm broke in 2008 and swept throughout the world with extraordinary speed, demonstrating disastrously the inherent pathology and regulation 'vacuum' of globalization. Globalization has developed to such a degree that world finance, and therefore the world economy, has become so complex as to be extremely difficult to understand accurately, predict successfully and regulate effectively. In this situation of emergency, most governments reacted in similar fashion, with little prior international consultation, that is, remedial state intervention and government regulation as the first priority, while they and their people still hope more than ever to overcome the severe global financial disorder and trade malfunctions through international cooperation and multilateral structure.

China has turned out to be one of the very few countries admired because of its substantial economic and trade volumes that have enormous global impacts, combined with its foreign exchange reserve (the highest in the world), and potential capacity for global financial succor. (And for many it is also because of China's huge trade surplus with the US, EU, Japan and several middle economic powers.) Existing international multilateral structures in the area of finance, whether the International Monetary Fund (IMF) and World Bank or G8, and the formal and informal multilateral rules on international investment and financing are far from compatible due to their narrow reach and obsolescence arising from the changing world financial balance, a consequence of China's rise. Moreover, notwithstanding their continued dominance on the world stage, these institutions are taking increasingly seriously the contributions China could make, and the responsibilities it should bear. There is less discussion about the gains it might obtain and the rights it should enjoy (Ross and Feng, pp 236-248).

On China's side, the situation is not very encouraging, at least in the near future. Domestic economic pressure, which has increased dramatically due to the severe global downturn, together with the quite unhealthy economic growth mode upon which China still depends (in spite of the imperative of 'scientific development' advocated by the political elites in Beijing, which is characterized by balanced economic and social development against 'GDP obsession' and laissez-faire marketization) has led to a serious imbalance of foreign trade (i.e. an enormous trade surplus), which has been mitigated too slowly and ...