Outline the main features of the 'new normal' phase of china economic growth:
Must Mention/Include about China Dream, OBOR (One Belt One Road), Soft Power of China, Re-balancing, Rostow's stage of growth, Anti-corruption campaign.
The China Dream
China has always had strong trading ties across the globe throughout history and trade with Europe and Africa dates back centuries before European historians documented the trade ties. China has maintained the strong global trading ties and currently classified as being among the most aggressive emerging and developing economies globally. Besides from simply mass production and manufacturing products at low cost, China has also begun expanding its operation business to international markets (Zhu 2013). Today China has been contracted by many African nations to undertake huge infrastructure and road network development contracts.
The Chinese dream is a term which comes into existence in 2013 and the Chinese socialist emphasized on popularizing the term which aimed at improving the Chinese people’s lives and well-being. China has been identified to be very aggressive in business but the socialist political practice has also seen many Chinese communities and families experiencing major poverty and low living standards (Liu 2015). The chine dream would be aimed at changing how the Chinese people viewed their socialist political practice by changing their view which would allow them to improve their livelihood and living standards. Being a socialist country, Chinese people find themselves working for the community which results in certain complications related to wealth distribution. The Chinese dream would focus on changing how Chinese people viewed socialism and encouraged the public to work harder thus help improve the entire community living standards. This would require to be driven by encouraging the entire community to starting up their own small businesses and growing slowly as opposed to only waiting for employment the Chinese dream was not limited to the service class but is aimed at all Chinese people with professionals qualification and skills who have been encouraged to think ahead of their current practice and consider expansion on a global scale. With the Chinese government backing, underdeveloped countries have been the major beneficiaries who have seen a major influx of Chinese companies entering their markets and offering to undertake major projects and contracts at very competitive rates. Offering affordable services and products to underdeveloped and developing economies allows them to develop faster and also offers huge opportunities to (H. H. Wang 2010).
Many of us have also read history books which describe the flourishing number of businesses and settlements on the great Silk Road network. The Silk Road started up with Chinese traders gradually developing tradition ties with their neighbours and gradually moving further to sell their silk. While silk was the main material traded on the Silk Road, the network would gradually see the trade of all tradable commodities and as it developed to become a common and safe route used by traders (Frankopan 2015). 2014 China would revive this trading network which would become known as the road network which would come to be called the one belt one road which would see all stakeholders linked to the Silk Road route being involved in this road network. A free flow traditional agreement would be signed by each of the concerned nations which would see an overland road network interconnecting multiple nations starting from China to Pakistan and several Saudi Arabian nations before reaching out to Africa.
OBOR (One Belt One Road)
Soft power is a concept in which finances and funding are offered to stakeholders who may require the same under less restrictive terms and conditions. It can also involve the tradition of raw materials and natural resources in exchange for development of infrastructure and can be executed both on a political scale as well as in at the consumer scale (Lai and Lu 2012). This concept involves connecting two stakeholders, one with a natural resource or raw materials and the other with financial backing and skill. Both come to a trade agreement and execute the work and both benefits by exploiting each other’s talents, and skills without needing to make an investment. This approach has resulted in giving the Chinese government and businesses access to natural resources in exchange for development. The Soft power approach to business helps tap in to opportunities where people and nations do not have finances to fun development and do not want to commit to loans which results in them referencing opportunities which investment can be made in exchange or resource or where funds can be generated by the investor to repay their investment.
For any business or economy to benefit financially from the public, the target consumer must be able to be economically stable to afford the products or services. Poor consumer is unlikely to be able to purchase products or services thus making it also the responsibility of businesses and economic powers like China to also promote wealth creation among the target consumer groups. While this is not a concept considered by many businesses, it demonstrates a businesses or economies long term goals (Claessens, Evenett and Hoekman 2010). Bigger organisations must therefore also consider drivers which will help increase income generation engines among customers thus allowing the businesses promote customer sustainability among the population.
In 1960 the American economist Walt Whitman Rostow developed the Rostow Stages of Economic Growth in which he described that each economy experienced 5 basic stages of economic change. The cycle is predicted to circulate once the fifth stage has been achieved resulting in a continual evolving economic cycle (Cypher and Dietz 2004). Currently, china is experiencing the take off stage, to maintain consistent economic growth the consecutive stages also need to be understood. The five stages of economic growth include:
This is the involved a population which has grown stagnant due to their being abundant access to the resource which has resulted in encouraging a laid back atmosphere among the society or individual. Parental property and businesses may have been handed down to the individual at this stage thus few understand the importance of working due to the security, assets, and finances provided by their parents. It is classified as the traditional stage as the individuals lack the economic drive and interest work aggressively and generate income or builds their businesses with most registering major economic losses.
Failure, lack of finances and income will usually result in triggering the Preconditions for take-off stage in which the individual is unable to maintain themselves financially which results in them considering finally viable alternatives. In this stage, the individual recognizes their inability to perform and accepts their classification as being traditional before moving on to consider alternative income generation strategies. Income generation at this stage will usually be linked to employment despite the individual having considerable amounts of knowledge and experience which they failed to utilize during their young age.
Soft Power of China
The take off stage will usually involve and seen the transition of the economic stages between two generations. The traditional generation will have identified the problem and stated the preconditions of take off by securing employment and generating a secure source of income via any method. This economic stability will then allow the next generation to consider taking bolder steps which signal the taking of stage of economic growth where ideas are expressed and exploited aggressively to generate income and uplift the business or individual’s financial stature.
As the generation transition again the aggressive take of a stage of the previous generation begins being lost due to the new generation has not experienced any economic struggle which results in them remaining relaxed. This generation continues working as they need to maintain their social status thus they mainly work to be recognized but not aggressively and usually not responsible for any further development. Whatever developments are made are done at a later stage and mainly done to maintain economic stability and linked to personal interest signalling the end of the economic growth and stability.
The final stage of stage of economic growth involves a new generation having been born into an economically stable environment with assets and finances and having never worked to generate the same. This generation is associated with mass consumption and exploitation of previously saved assets and finances without planning to result in economic turmoil. With not planned consumption and no income being generated this signals the final stage of the economic cycle in which the business or family is likely to register major losses and bankruptcy sending the concerned individuals back to the traditional stage before the economies stages cycle begins again.
Corruption is a major problem across the globe and it is triggered by a lake of financial stability which results in officers at strategic positions using this opportunity to generate illegal income. While corruption has been a topic discussed by many economist roots out corrupt is difficult and will take a long-term plan (Bracking 2007). China has set up a long-term anti-corruption campaign which will involve the economic and financial up-liftmen of government employees thus reducing the desire to secure financial income from other sources. To eliminate corruption wealth must be equalized among communities and government employees which will allow the individuals focus more on ethics and gradually root out corruption
China has been able to maintain consistent economic growth even during times of economic crisis. This was observed between 2008 and 2010 during the global recession. While most nations were struggling, china continues registering a positive economic growth which has been linked to several factors. This makes it important for developing as well as under developed nations to also follow suit as this will assist them also overcome economic challenges and assist them develop their economies steadily despite of global economic fluctuations. Each economy must be capable of being self-sufficient and suitable thus allowing for independent and unrestricted economic growth.
The past three decades has seen China experience major increase in global exports which has contributed towards the economy’s growth. Initially china focused on delivering build low cost products which resulted in Chinese products being of low Quality but this has changed during the past decade. To remain competitive on the global stage China has changed it strategy from mass low quality and low cost production to manufacturing high quality products at low cost which has allowed china products to retain their consumer demand. China has also grown more aggressive by going out and establishing business relations in under developed nations using the soft economy approached which has increased trade in exchange for raw materials and resources.
Re-balancing global economies
China had already established is international trading ties with many countries during the 1990 and at the turn of the millennium but Chinese product where associated to low quality. After 2013 Chinese brands would change their trade strategy by focusing on delivering high quality products. This would see a major change to how chines products where viewed and would allow chines brands win consumer confidence globally. This has allowed Chinese brands to deliver on consumer quality expectations which have allowed them to win consumer confidence since 2013. This has been inspired under the leadership of Xi who has changed Chinese manufacturer focus from mass production to manufacturing of international quality standards at low cost. This has attracted brands from across the globe to manufacture in chine at low cost and ship their products globally.
China continues to register the highest economic growth rate globally but china is also facing serious challenges related to climate change, environmental pollution, misuse of resources and healthcare among many more. Many of the challenges are difficult to cater to due to the conflict between economic growth and wealth creation and development. This has resulted in china being unable to address major global challenges such as environment pollution and climate change. This is resulting in china registering rising levels of pollution which is also having a direct effect on the population and likely to affect the nation’s future economic growth.
There is also the challenge of delivering resources to citizens due to rapid urbanization which is resulting in a short fall of energy and water and other basic resources needed for urban residents to live confortable. This is being addressed by developing new plans to develop more urban cities and distribute the pressure on resource and the environment. This is being achieved by china also seeking to establish international relations to begin manufacturing which will reduce the pressure of the challenges facing China due to rapid development.
The term new normal was popularized by the press after China economic growth continued to remain high even after the financial crisis in 2007-08 and global recession in 2008-2012. This was due to China Economy continuing to register an above normal economic growth rate and stability which resulted in the term being developed. It refers to chines new economic growth being above 7% which is now expected to be normal even during the global economic crisis.
The Chinese Government has plays an immense role towards the country’s economic growth and this has been directly due to the efforts to reform the entire political system. This has allowed Chinese brands to transform from simply targeting to mass product but also focus on mass producing high quality products. By emphasising on innovation, urbanization, accelerate to service industries; environment protection China has been able to demonstrate its commitment towards economic growth and development. This has allowed chine to win over most international brands that now turn to china to manufacture and distribute their products across the globe. To win this global consumer confidence the government has had to clearly show its interest towards reforming the entire system to cater to the above mentioned points.
With the largest populations globally, china has also had to develop an action plan which addresses all its population group’s needs. This has resulted in china developing an action plan which focuses on catering to all economic groups and consumers thus creating work for all. These results in chines products and services falling under all categories from budget consumers to luxury all are being made in china today. This has allowed all businesses and manufactures in china target their own consumer group which has allows for uniform growth resulting in stable economic growth.
China is today ranked as being the most aggressive emerging and developing economy but this has not happened spontaneously and the government, as well as the public, has nested heavily to make this dream come true. Nations across the globe must view China as an example and follow similar approaches which encourage economic growth and development for themselves as well as the community as a whole thus helping develop viably and continued economic growth as experienced by China over decades.
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Claessens, S, S Evenett, and B Hoekman. Rebalancing the Global Economy: A Primer for Policymaking. London: CEPR, 2010.
Cypher, J, and J Dietz. The Process of Economic Development. Oxon: Psychology Press, 2004.
Frankopan, P. The Silk Roads: A New History of the World. Bloomsbury Publishing,, 2015.
Lai, H, and L Lu. China's Soft Power and International Relations. Oxon: Routledge, 2012.
Lim, T, H Chan, K Hui-Yi Tseng, and W Lim. China's One Belt One Road Initiative. London: World Scientific, 2016.
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