Free Paper Example: China's Position in the World Economy

China is among the fastest-growing economies in the world with a yearly gross domestic product growth averaging 9.5% over the last few decades. Before the beginning of liberalization and economic reforms about 40 years ago, China sustained policies that held the economy stagnant, vastly inefficient, very poor, static, and isolated from the worldwide economy. The growth in China has enabled them on average, to duple its Gross Domestic Product (GDP) every eight years plus helped in raising about 800 million individuals from poverty (Arrighi & Smith, 2016). This paper discusses the position of China in the world economy and the United States' security and trade policy towards China.

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China is the world’s largest economy, holder of the extraneous exchange reserve, merchandise trader, and manufacturer. As a result, China has become a leading commercial partner with the United States. Currently, China is the most significant import source, the third-largest United States export market, and the largest merchandise partner in the U.S. As the economy of China has matured, its actual growth in GDP has slowed from 14.2 percent in 2007 to 6.6 percent in 2018 and the International Monetary Funds project the growth by 2024 to fall to 5.5 percent (Domm, 2020). In economic planning, innovation is made the top priority by the Chinese government through several high-profile initiatives.

Several factors have contributed to the fast economic growth in China. After years of all productive assets under state control, the Chinese government embarked on a leading economic reform program. In an effort to change the dormant economic state, the government encouraged the establishment of private businesses and rural enterprises liberalized investment and foreign trade, relaxed state rheostat over some prices, plus invested in the education of the workforce and industrial production. However, this worked to change the economy positively becoming the second-largest county with a growing economy. More so, it adopted s dual-track strategy and managed to achieve dynamic transformation and stability (Arrighi & Smith, 2016). Also, since it experienced challenges in its growth, it developed according to the competitive advantage of being trapped in the potential backwardness advantage.

Currently, the United States and China trade relationship supports about 2.6 million job opportunities in the U.S. across several industries encompassing the jobs created by the Chinese company in America (Arrighi & Smith, 2016). As the middle-class people in China continue to expand, the U.S. industries are facing several opportunities to blow into a new as well as lucrative client base that can boost employment as well as economic growth. The economic model in China has many growing difficulties for the United States and globally. The U.S. enjoys the benefits from the goods they import from China at a low price.

Since 2001, after the accession of China to the World Trade Organization, the trade between the I.S. and China has increased from 125 billion dollars to above 700 billion dollars in 2017 (Arrighi & Smith, 2016). In the same period, the economy in China has increased in size, becoming the second-largest country in the economy. As a result, China’s economy is expected to continue growing as the year goes on, and it might even overtake the U.S. economy considering the rate of growth. China’s growth has helped the relationship between the U.S. and China to become strong since the U.S. imports goods from China at a low price, and there are other products that China gets from the U.S. at an affordable price. The U.S.-China trade war has contributed to the tension between the two countries (Domm, 2020). Since 2018, the U.S. president started setting trade barriers and tariffs on China because he wants China to make changes to unfair trade practices.

Conclusion

In conclusion, the relationship between China and the United States has led to various benefits for both countries. After the implementation of the free-market reforms and foreign trade along with investment, there has been a positive change in the country. China is the largest overseas holder of Treasury securities in the U.S. helping in keeping the rate of interest in the United States low and funding the federal debts. China has the prime e-commerce market, and the U.S is supporting its global integration expecting that China will become an accountable shareholder.

References

Arrighi, G., & Smith, A. (2016, June 8). The Chinese Dream- The Ascent of China in Times to Come. Qrius. https://qrius.com/the-chinese-dream-the-ascent-of-china-in-times-to-come/.

Domm, P. (2020, July 23). Market risks are rising as U.S., China tensions escalate toward new cold war. https://www.cnbc.com/2020/07/22/as-superpowers-turn-their-backs-on-each-other-the-risk-for-markets-is-rising.html.