Drivers of the Economic Globalization and Its Impact on China’s Development
1. Introduction:
In economics, a broad definition of globalization is that it is the convergence of prices, products, wages, rates of interest and profits toward developed country norms. Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets. The International Monetary Fund
notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread diffusion of technology.
Facing the trend of accelerated economic globalization, China opens wider to the outside world with a more active attitude, which constitutes an important step of China's energetic participation in the economic globalization. China further open the market of trade in goods, trade in services and other areas, gradually advance the opening up of commerce, foreign trade, finance, insurance, securities, telecommunication, tourism, intermediary services and other fields. China has a huge market with big potential and wide prospect. With the ever deepening of China's opening drive and the ever improvement of our economic strength, Chinese economy will be more closely linked to the world economy, the huge market potential that China enjoys will be turned into realistic purchasing ability and more business opportunities will be provided to industrial and commercial communities of all countries in the world. (HUNG-GAY FUNG, CHANGHONG PEI and KEVIN H. ZHANG. China and the Challenge of Economic Globalization)
As a matter of fact, since the economic reform started at the end of 1978, the PRC has become the most dynamic economy in the world. In the period of 1978-2003, PRC’s GDP growth rate reached 9.4% per year and that of international trade 16.0%. The size of PRC’s GDP and international trade increased respectively 9.4 times and 41 times in those 25 years. Currently PRC is the seventh largest economy in the world measured by official exchange rate and the second largest economy in terms of purchasing power parity and is the fourth largest in the world when measured by nominal GDP. Its economic output for 2006 was $2.68 trillion USD.[1] Its per capita GDP in 2006 was approximately US $2,000 (US $7,600 with PPP), still low by world standards (110th of 183 nations in 2005), but rising rapidly. ( China's GDP grows 10.7% in 2006, fastest in 11 years. ChinaDaily (2007-01-26).)
The foreign direct investment (FDI) in China has increased from a negligible amount in the late 1970s to US$ 60.6 billion in 2004, making China the second largest FDI recipient country in the world, next only to the United States. (China's foreign trade to top US$ 1.75 trillion. ChinaDaily (2007-01-02).)
PRC is also the third largest importer and the fourth largest exporter in the world in 2003. Especially, PRC’s trade dependent ratio, that is the export and import as a percentage of GDP, reached 60% in 2003, the highest among the large countries in the world. With this rapid growth, Chinese people’s living standard improved significantly. It is noteworthy that the number of people living under extreme poverty reduced from 250 millions in 1978 to 29 millions in 2003, making an important contribution to the world’s effort of poverty reduction. (Fighting Poverty: Findings and Lessons from China’s Suc
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