Mar 26, 2020 in Economics

The China’s Economy Globalization

According to, economic globalization refers to a situation where global economies integrate and become interdependent of domestic, regional, and local economies through free movement of goods, services, capital, and technologies across the world borders. Nowadays, every country is influenced by globalization both directly and indirectly, and China is not an exception. As much as countries are benefiting from globalization, they are contributing significantly to this process as well. It has become a standard view that the economy of China receives great advantages from globalization considering the high growth of its Gross Domestic Product (GDP).

Moreover, Chinese companies are expanding at a high rate. Consequently, the country is steadily industrializing and transforming into an economic giant. China’s economy is not only reforming and developing internationally; its growth is apparent domestically as well. Globalization of China’s economy is both an advantage and a detriment. On the one hand, it enables the country’s GDP to grow through the exploitation of China’s comparative advantage in cheap labor. In turn, the country’s industrialization has been impeded mostly by locking Chinese initiatives at the low-end of the world value chain, inhibiting them from advancement along the technological ladder. This paper focuses on discussing the impact of globalization on China’s economy both internationally and domestically. It also reviews the challenges of globalization as well as offer advice to China for better world economy involvement.


Effects of China’s Economy Globalization Internationally

Globalization of China’s economy has contributed significantly to the external environment in many ways including foreign trade, foreign investment, transfer of information and technology as well as free movement of people across the borders.

Foreign Trade

Economic globalization in China has brought ease of trade between the nation and other countries. As a result, there is a free flow of goods across national borders. Over the years, China has been abolishing trade restrictions gradually and encouraging free trade. To do this, the country has changed its foreign trade administration from being managed by the Ministry of Foreign Trade to providing the provincial governments with much independence in international trade as well as permitting private institutions to engage in foreign trade. Nowadays, it is easier to access China’s exports all over the world. For instance, China’s exports have benefited many Americans by affording them premium consumer goods at low prices. As a result, the US-China economic ties have been strengthened.

China offers a vast market for foreign manufacturers and has acquired economic prowess in the process. Import demands to China enable growth in the economy in other countries of the world. Due to this, China has decided to restrict imports, but after expansion of export trade from China, this had to change since other countries like the US are considering putting sanctions on imports from China.

China’s economic growth because of foreign trade is due to several aspects. First is international trade specialization, where China can focus on producing what it has a comparative advantage over, thereby being able to acquire more goods than by domestic production only. Besides, exports are a component of aggregate demand, and when there is an increase in demand, there will be a boost in the country’s national output.

Foreign Investment

Foreign investment as a result of physical capital has contributed to promoting China’s economic growth. Foreign investment due to globalization enables movement of resources between nations. It also facilitates financial investment growth thereby leading to the development of capital markets. Consequently, China encourages foreign investors to invest in its stock markets since it also desires to invest its money abroad (Yeung, 2011).Transfer of financial capital from one nation to another is an example of the free flow of resources to regions where they earn the highest return, thereby increasing the total output of the world.

Transfer of Information and Technology

In addition to the free flow of goods and capital, the transmission of technology and information also matters. China has benefited significantly by upgrading its technology. Even though China is currently importing technology, very soon it will be a leader in this sphere as it is already an exporter of technology to various developing countries. In Asia and Africa, China has offered great assistance in their development by providing them with technology and helping them develop economically in general (Yeung, 2011).In this regard, China is seen to have done excellent work because it has weak areas of its own to develop as well. Mutual respect is the foundation of the Chinese diplomacy, which entails treating a small nation as equal and attempting to offer help to solve its problems where possible. Due to the diplomatic support to these countries, China’s influence on the world scene is increasing just like its rising economic power.

Migration of People

China’s economic globalization has led to the free movement of individuals as well. The Chinese citizens have relocated to various parts of the world in search of jobs, education, and places of residence. As a result, they have been a contribution to the economies of the countries which they have settled in or are visiting. Moreover, individuals relocating to China are benefiting this country as well. The Chinese people acquire the way of life of these people that is desirable. Moreover, these people may help improve the legal behavior and system of China. The free movement of these people is of more benefit to the nations where these people are migrating from and to the host countries than potential harm.

All the factors discussed above entail how Chinese economic globalization influences the country’s external environment. Nevertheless, globalization itself has an impact on the Chinese economic internal environment as well.

Effects of Chinese Economy Globalization on the Internal Environment

In the same way as the Chinese economic globalization had some effects on the external environment of the country, globalization has influenced the Chinese internal state significantly.

Firstly, many opportunities have appeared for China’s economy due to economic globalization. For instance, being a developing country and undergoing reforms as well as having the experience of 22 years of open growth, China’s economy is becoming active in the world. As a result of the constant opening and increasing contacts with other nations, the country itself is promoting its development. Moreover, by tapping from the foreign economies, for instance, capital, technology, and other international resources, the economy of China is now able to enhance skills and qualities of workers, thereby participating in the international market competition.

Secondly, the China’s economic growth mode has improved due to the economic globalization. For many years, China’s economy was relatively close and backward. It mainly relied on the domestic market. However, through economic globalization, China’s economy has broken the self-enclosed form, thereby promoting its integration into the economy of the world. Consequently, there has been tremendous growth in China’s exports and imports respectively.

Thirdly, the living standards of Chinese people have also increased. Previously, China did not have any sources of luxurious products and vehicles. Nevertheless, due to China’s economic globalization that has brought the free flow of goods and services, these items are now readily available making people more satisfied and comfortable with their lives.

Fourthly, globalization of China’s economy has impacted significantly on education as well. Currently, after an individual completes high school education and would like to study abroad, he/she can search for a college or a university without any problem. One can opt to relocate to another country or stay at home and still acquire the preferred education in the school of choice. In both ways, a person can access better facilities and courses as well as excellent lectures since through globalization there is a free flow of expertise. Moreover, this would provide a new experience for the individual who goes to study in another country because of meeting new people and learning their cultures and traditions, which they can bring back home.

Lastly, economic globalization of China leads to the increased competition among the home companies. The reason is that there are many organizations in the world, and the competition grows since every company seeks to acquire a share of the global market. Therefore, due to the increased competition, every firm strives to produce high-quality products with value and affordable prices for the benefit of the final consumer and market share retention. Consequently, the economy of China is the ultimate beneficiary of it all due to the everlasting market activities, thereby growing the GDP (Yue, 2012). Furthermore, as the prices of goods and services are cheap, the people of China are now able to save and utilize the savings for other purposes. As a result, the standards of living are improved and, with time, and the gap between the wealthy and the poor in China will be sealed. Similarly, the increased market activities mean establishing more companies resulting in the wider employment opportunities for citizens of China.

Not only have globalization benefited the economy of China, but it has also brought some challenges. These problems have been discussed below.

Challenges of China’s Economic Globalization

Even though globalization has been of great benefit to the economy of China, it has brought some difficulties to the country as well. Firstly, through globalization production and investment that creates more industries, high pollution is a major problem for the developing countries. Since China has belonged to this type of countries for many years, there is massive industry development that causes high level of pollution. Moreover, as a developing part of the world, China is a victim of waste transportation from developed countries, which is occurring due to massive participation in the international trade.

Besides, countries that are still developing have labor advantages but lower environmental standards. As the levels of economic growth increase due to globalization, the environmental issues also arise. The problem may become more constant, particularly when China is focusing on becoming the fastest growing economy with high rate of development, and the environmental issue may not be of great concern to the government. The problem of air pollution in China is severe as it is contributing to poor environmental quality, which may bring health issues to the people inhabiting areas close to the industrial areas.

The second challenge brought by economic globalization in China is that the owners of these enterprises are outsourcing human capital from other countries to work in the best occupations in these industries with the belief that they are bringing skilled expertise that the indigenous people do not have. As a result, most people in China are losing their jobs and become unemployed. Moreover, this causes the same industries to engage in unlawful practices such as child labor, namely children are working in manufacturing units because the cost of this labor is cheap. Therefore, due to globalization, there is insecurity in jobs in China since the occupations are not permanent anymore. There is competition for jobs that results in decreasing in wages. Because of fear of losing jobs, people are ready to work for low wages.

Thirdly, economic globalization in China has enabled the free flow of foreign tourists. As much as this may be a positive effect on the nation, it is also a disadvantage since these people traveling from their countries to China may bring with them diseases that may be previously typical only for their native countries. These conditions may be hazardous to the people of China. Fourthly, globalization has as well increased chances of human trafficking practices. Due to the removal of strict rules and regulations governing the movement of individuals from one country to another, people are finding loopholes to engage in illegal trades such as human trafficking. Lastly, in the world of economic globalization, there is less involvement of middle-sized and small-scale industry in China. The reason is that multinational corporations and large-scale industries have overtaken their scope.

However, irrespective of several challenges created by economic globalization in China, these issues can be solved as well. It only requires the country to recognize and establish ways of minimizing them if given eradicating them.

Solutions to Challenges of Economic Globalization in China

Currently, child labor is one of the greatest problems in China, and because of globalization; more children are going to work rather than attending school to acquire a proper education that they need. Child labor is the result of the increased poverty level, extended family type, insufficient school facilities, and dishonest employers. For the Chinese government to curb this issue, it has to work on measures of reducing poverty and increasing adults’ wages, so that the need for children to work would be minimized. Secondly, to deal with the issue of pollution from the industries, the government should insist on air purification and waste recycling activities by the industries as well as establish areas isolated specifically for the purpose of industrialization that is far from human inhabitation.

Moreover, the government should provide financing to people living in areas near industries, which can help them buy land elsewhere and relocate. On the issue of human trafficking and movement of foreign tourists, the Chinese government can work on strengthening rules at the entry points whereby people will be required to avail proper documentation to prevent illegal entry as well as medical checks to avoid emergence of dangerous diseases in the country respectively.


Globalization of the economy is an important tool for the growth of the country economy. Economic globalization produces effects on both external and internal environments of economy. In this paper, the China’s economy was the subject of discussion. External effects of economic globalization of the Chinese economy include the introduction of foreign trade, foreign investment, technology, and information as well as free movement of people. The internal effects of economic globalization in China involve disclosing the financial situation in China, improvement of economic mode, and improved education among others. As much as it has brought benefits to the economy of China, globalization results in some challenges as well. These problems include industrial air pollution, child labor, human trafficking, etc. However, there are solutions to these difficulties that the government of China may explore such as eradicating poverty to curb the issue of child labor. Economic globalization of Chinese economy has many influences both positive and adverse. Nevertheless, the benefits are greater than the challenges it poses.


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