Globalisation and Its Impact on China

Discuss the impact of globalisation on one or more economies, with reference to economic development and environmental consequences.

Globalisation is the increasing economic integration of many domestic economies, including the increased integration of domestic markets into global markets. The rate of globalisation rapidly increased in the 1980’s, resulting in a number of positive and negative impacts on nations. Globalisation has had a major impact on China’s economy in the last few years, especially since its ‘opening up to the world’ period in 1979, and even more so after its entry into the World Trade Organization (WTO) in 2001. The areas in which globalisation has had a great impact upon China are in its entry into the WTO and international convergence, economic growth, economic development and quality of life, unemployment, trade flows, Foreign Direct Investment (FDI) and Transnational Corporations (TNC’s), distribution of income, environmental externalities, market failure, and impacts of the international business cycle.

Globalisation has impacted on China through its entry into the WTO in 2001, which came after 15 years of lobbying. Globalisation has increased the importance of the WTO’s functions and policies, making it essential for China to gain membership in order to reap all of globalisations benefits. China now has to comply with the WTO’s rules and agreements, and faces pressure to comply with its stance of trade liberalisation. This trade liberalisation, along with greater access and links to global markets (also due to membership), has helped China to increase its trade flows. Also, China’s WTO membership along with its “opening to the world” policy has greatly encouraged FDI and TNC’s to China. Finally, the WTO’s influence has resulted in international convergence as economic systems throughout the world move towards more market based systems. This can be seen in China as it has moved from being a planned economy, to that of a socialist...