ASSESS THE STRENGTHS AND WEAKNESSES OF CHINA'S ECONOMIC AND SOCIAL SYSTEM

  ASSESSMENT OF THE STRENGTHS AND WEAKNESSES OF CHINA’S ECONOMIC AND SOCIAL SYSTEM Student: Professor: Course title: Date:  China is ranked second after U.S in terms of World economy by nominal GDP and purchasing power. In terms of growth, it is the fastest with the growth rate of 10% per annum over three decades. The country with the population of over one billion people is the second largest importer of goods and largest exporter in the world. On the basis of per capita, it was by nominal GDP ranked 87 and 91 in 2012(International Monetary Fund, 2012). The country is much industrialized especially in the coastal regions. The continual growth of the nation’s economy has necessitated more focus by the authorities on maintaining effective measures that enhance that growth (World Bank, 2012). Economic experts reiterate that the development gap between China and other emerging economies such as Argentina, Brazil and India could be attributed largely on China’s emphasis on infrastructure projects that are ambitious. While most of these emerging economies invest a paltry 2% to 6% of their GDP on infrastructure, China invests approximately 9% of its GDP on infrastructure. This substantial spending gap has enabled the economy of China to grow at almost optimal conditions while the Canadian economy for instance suffers from various development conditions such as poor infrastructure, mediocre schools, aging power grids and so on (Eckstein, 1976). The Renminbi, (RMB) also known as the Chinese Yuan (CNY) is the official currency for the people’s republic of China. The Chinese Yuan is subdivided into 100 fen or 10 Jiao. The Chinese Renmibi was in May 5th 2013 trading at 6.15635 against one U.S Dollar (X-rates, 2013). Recently, China has been known to extensively liberalize its economy. The country has departed from its counterparts in East Asia, which have their investment in foreign direct (FDI) so as to protect their domestic industry and the liberal FDI strategy used in Latin America in the same developmental stage since their development state is regarded as eschewed. China seems to be taking a “liberalized two step” which means liberalization methods with regulations that differ across its different sectors of economy. Research and studies on different sectors indicate the perceived strategic value of the sectors. The features in different sectors form ways in the variety of the regulation. Insulated from the political pressures, the state of China has moved from the global control in the aggregate level to selective controls realized at the sectoral level. It has also incorporated a strategy bifurcation in its reregulation (HYPERLINK "http://cps.sagepub.com/search?author1=Roselyn+Hsueh&sortspec=date&submit=Submit"Hsueh, 2013). Presently, there is a huge trade deficit between China and Canada. In fact, the China Trade deficit with Canada in 2012 was recorded as $315 billion. This was an increment from the previous year which also recorded a deficit of $295.4 billion. It is interesting that the trade deficits between the two countries are in existence in spite of the fact that imports by China were regarded as the highest in history during that time. For instance, Canada exported $110.6 billion of products to China in 2012. A Canadian import from China was recorded as $425.6 billion, a figure which was more than $399.3 billion that were imported in 2011. Among the products imported by Canada from China includes clothing, machinery and electronics. Many imports are also made by Canada based organizations that send raw materials to China for cheap assembly and manufacturing. As they are returned to Canada, they are regarded as imports even though those Canadian organizations are the ones that profit the most (Canada Census, 2013). The reason for the huge trade deficit between China and Canada is quite simple. China is very capable of manufacturing products that are needed by Canadians at a very low cost. The reason for the low pricing of goods is two-fold: low living standards in China enables firms to pay low wages to employees plus the exchange rate that is structured to be lower than the dollar. This translates that many organizations in Canada are unable to compete with China because of this low pricing factor. This has resulted to lack of employment for many Americans. This has prompted many legislators to make laws that impose higher tariffs and other types of trade barriers against China so as to create employment opportunities. This translates to the fact that many Canadian organizations are unable to compete with their Chinese counterparts because of the low pricing. Consequently, many jobs are lost on the part of the citizens in Canada. However, if at all this has to occur; consumers in Canada would have to pay a higher price for the products that are locally manufactured. This is one of the reasons as to why the huge trade deficit is unlikely to change. Many people would rather pay low amount to such products as apparels, electronics and computers even if it means that Canadian citizens would lose their employment (Amadeo, 2013) Some analysts have affirmed that the Chinese currency policies are largely the cause of $232.5 billion Canada trade deficit and the loss of employment opportunities for Canadian Citizens since 2000. On its part, China says that it is not ready to let the Yuan trade freely in foreign markets as doing so will result into a financial crisis and adversely affect the Chinese economy (NYT, March, 13th 2013) The unequaled systems of infrastructure in China, coupled with the crucial variations in the accessibility to human and natural resources, as well as the industrial infrastructure has resulted into significant differences in the regional economic grid in China. This development has generally been more rapid in the coastal parts in comparison to the inland regions. Huge capital disparities per capita income can be seen between the two regions. However, it is the rapid economic development of these regions that poses a significant impact on Chinese economy in general. The Chinese economic development policy is devised in such a manner as to remove the barriers of development in thriving regions (DeWeaver, 2012). GDP by Administrative Division In China, there are a total of 31 administrative divisions. The following are the top ones ranked in terms of GDP in 2012. This GDP was changed from CNY to USD by the use of FX rate of 6.20 Rank Administrative Division GDP $ billions 2012GDP per capita $ 2012Population 2010 1Hubei3165,52157,237,7402Guandong9218,856104,303,1323Jiangsu87311,13678,659,9034Shandong8088,43495,793,0655Henan4824,55294,023,5676Hebei4295,97071,854,2027Liaoning3568,13743,746,3238Sichuan3404,22880,418,2009Hunan3174,82665,683,72210Zhejiang55910,27154,426,891 The social systems in China on the other hand have undergone tremendous changes throughout history. The ministry of social security and human resources is mandated with the task of maintaining the social welfare systems. China started to carry out many reforms in 1980s in an attempt to fulfill the society requirements such as education, job creations, child care, housing, and healthcare, which were largely administered through the state owned enterprises, collectives or agricultural communes. However, these systems were gradually transformed. According to the constitution of the nation of China, the government is expected to establish and improve on the welfare system of the population in line with economic growth. In today’s perspective, China has continued to experience a huge decrease in poverty levels of its population since 1990s. For instance, people with a per capital income of less than 668  HYPERLINK "http://en.wikipedia.org/wiki/Renminbi" \o "Renminbi" renminbi equivalent to US$80.71 have typically gone down by more than 10% according to the statistics from the state council of China on poverty reduction. Since 1990s, there have been numerous welfare reforms in China which have included, health insurance, unemployment insurance, maternity benefits, workers compensation insurance, communal pension funds, carbon tax, individual pension funds and universal health care. A bill of increasing the countries minimum wage to 40% was approved this year (2013) (Jie, 2013). Unlike China which is the second economy in the world, Canada is rated eleventh in the world economy. However, Canada is dominated by the service industry, employing more than three quarters of Canadian citizens. Canada is also among the developed countries in the significance of the basic sector, with the oil and logging industries as two crucial industries in the nation. There is also what could be termed as sizable manufacturing industry, which is centered in central Canada. Leading the perks is the aircraft and automobile. The coastal region of this place has a huge sea food and commercial which is rated as 8th in the world perspective (Aquaculture, 2012). Defining social stratification is not an easy affair because of the low status level and fluidity which the social mobility has offered. However, there are four basic social categories in Canada. These include the upper class, middle class, working class, and lower class. Social morbidity is one of the significant features in Canada’s social context. This social morbidity may come from individual achievements or structural changes in the society. It basically refers to an alteration in the social position which happens when an individual changes position in particular moment of his or her time. Recent data on Canadian social aspects indicates that while there is much forward and downward operation on balance not much shift taking place between generations in Canada. Men have been experiencing more occupational inheritance In comparison to women. Further, education is found to be the main element behind occupational mobility in the Country (Gerber, 2010). The Strength of China’s Economy Since 1950, the government of China has been mandated for planning and managing the economy of that nation. In 1950s, the government monopolized the foreign trade systems. Almost all domestic businesses were owned by the state. The government was the controller of prices for basic products, controlled the distribution and level of investment funds, assessed the output targets for major corporations and business enterprises, allocated resources for energy, set employment targets, set wage level, operated the retail and wholesale markets alongside operated the banking systems and financial systems (Cara, 2010) However, government domination in key sectors has lessened in a great deal since 1980s when various economic reforms came into force. The output in state enterprises gradually decline even though there are few corporations such as the airline industry that are still owned by the state. The role of market forces and private enterprises are gradually replacing that of the government in economy management. However, the government still maintains its role in urban economy as well as rural development. The 1982 constitution of that country specifies that the government is mandated to guide the economy development by establishing broad regulations concerning the economy priorities and in the preparation of the national budget and economic plan. The government employs the approach of the top down command chain I its management of the economy with its various sections and departments such as commissions, academies, administrations, bureaus, and corporations being under the state council which is mandated t o deal with the prevailing economic matters in that respective departments. Every economic department in China is supervised by one or more of these institutions include the National development and Reform Commission, people’s bank of China, ministry of Finance, communications, petroleum industry, education, metallurgical industry, railways, water resources, water resources and electric power. Several aspects of the Chinese economy are governed by particular departments which are under the state council. The process of policy making in these state departments involves wide negotiations and extensive consultations. Sectoral Analysis Telecommunications China harbors a diversity of communication systems that connect most regions of the country by radio, television, telegraph, internet and telephone. According to BCC Report of (2010) internet uses in China, amounted to 140 million people by the end of 2010, an increase of 24% from the previous year. This typically makes the country to be t...