The economic expansion of China can be explained by incorporating economic model that helped in tracing the large-scale industrialization project while raising the notion that belief of mangers reflects the industrial development of country. This depicts the trend in management at micro level. China has entered in a new phase of market reform in year 1994 and the reform was implemented by state owned enterprise. Employees of formerly planned economy lost their jobs and the market-oriented sectors become increasingly dominant (Fewsmith 2013).
Before the late 1990, the economic system of China was the state ownership of certain industries and central control over the financial system and planning. This enabled the government to mobilizing the available surplus and this would greatly increase the proportion of the economic output that is devoted to investment. China has experienced an extraordinary income for the past three decades. Despites serious bumps such as foreign transactions after 1989, the economic growth rate averaged to 10% a year (Gonzalo 2016, 41-42). The consumption level that are approaching to the world First standard such as rapid growth of wealthy and middle classes and lifting out of grinding property. Reforming of Centrally planned economy is the approach of China post 1978.
The open door was initiated because it was believed that China’s economic interest would be best protected and promoted by formal agreement on principle of maintaining open door for commercial and trading activities. The policy provided opportunity of maintaining equal trading opportunity for merchants belonging to different nationalities operating in China. However, the idea of open door was threatened by some internal events of China in 1990. The contents of Beijing consensus was debated and it is considered as the reflection of gradualist reform policy of China. Ultra pragmatic of conducting the deliberation of policies has a philosophical movement that is represented by consensus. Chinese have embraced pragmatism and in particular, there is a rapid growth in enthusiasms for Dewey’s philosophy. The secular stress dimensions are stressed by current pragmatism as a way of reminding a growing wealthy class of common goods. Deng Xiaoping gave famous dismissal of economic ideology about pragmatism. Xiaoping ended isolation of China and he built an economic powerhouse and was a pragmatist (McNally 2014, 3-16).
China comprehensive approach of big bang transformation to market transformation was not politically feasible. The attempt of comprehensively replacing centrally planned economy with market institutions would have generated enormous resistance with the Chinese party. Economic success of China was based upon several elements by following a gradual approach (Johnson 2014). The leadership of China demonstrated a firm commitment throughout forwarded by market reforms and grumbled about the abandonment of socialism. In 1979, foreign investment was attracted by the creation of special economic zones. During first half of 1980s, the market-oriented economy of China began to show their potential for raising incomes and output. This served as powerful demonstration of potential of widely gain from the market source entities. In 1985, Chinese authorities approved the dual price system that did not remained confined to the nonstate sector. Reforms of China was beneficial because of mismatch between economic endowment of China and nature of economic situation inside the plan. In early 1990 and 1980s, the economy of China would benefit from market-reformed system. Dual track strategy of China while maintaining the planned economy has initially led to approximately reforming without losers. In 2000, Chinese economies have been organized by market changes and prices (Feng et al. 2015).
The leadership in China is explained by considering culture as a crucial factor influencing the effectiveness of managers. The management process is dependent upon several factors such as legal, social, economic, cultural and educational factors. Under this, the leadership of Chinese government has been explained with the help of environmental factors of China.
The transition of leadership in China after 2013 was marked a new stage in the economic development of China. One of the key policy problems is the economy facing the new Chinese communist party General Xi Jinping. It was indicated by new leadership that the same goal of creation of new development model and rebalancing the economy. The new leadership is faced with the dire global consequences faced with slowing economy. Stated goal of balancing was achieved by relying on investment factor. It was realized in the new leadership under Xi Jinping that the new economic model would change the face of slower growth if the policy statement of 18th Chinese Communist party were anything to go by it. It was recognized that China must find a new growth model. In the first or second year of new leadership, the absence of new gush in the fixed asset investment growth. It Would indicate that pattern has been broken under new leadership depicted by different economic and political cycle (McNally 2014, 3-16).
The features of new normal phase under the leadership of Xi has been explained with the help of behavioral model. Feature of mew normal phase of China has been explained by considering the management practice followed by X.
New normal phase in China refers to socially less costly and more economically sustainable, however numerically lower economy. The vital aspect of new normal phase is the reassertion of moral leadership across all social domains. The public consumption spending has not received much grievances under the crackdown of Xi Jinping. Policies of Xi are focused on controlling inequality of income within the state enterprise and public service. New normal phase of China reflects changes in global order along with changes in the economy and society. The new comprehensive policies of country helped in shaping emerging social norms. Key to building party under Xi’s leadership is to institutionalize management of human resources, public affairs and power.
Opportunities- The new normal is viewed as a combination of vision and reality. New model has been articulated with increasing clarity and force at the highest levels of government of China. Growing leadership in China
Challenges- One of the main challenge under the leadership of Xi is making the party a modernized political force. Challenges are also faced while seeking to double the Gross domestic value of country. The economic transition has impelled certain new challenges intending to maintain a growth rate of 6.5% over the next few years (Li et al. 2015, 11-22). Some of the looming challenges facing the country are reforming the inefficient industries and creation of employment. The core concern in the administration of Xi is to maintain social ability and confidence of Chinese people. Biggest challenge to harmonious development disclosure is the ethnic issues of Chinese communist party.
China has been experiencing slowest growth in more than two decades and slowdown is considered as cause of concern.
The growth rate of China is averaged 10% year for the past three years would diminish. Future growth of China is affected by three factors positive role of government in reforming and maintaining the market institutions, dynamic forces of Chinese market economy and institutional inertia. Total debt of China in the first quarter rose to 273% of Gross domestic product (Zhang 2015, 15-19). Such debt level are much higher as a proportion of national income than in any other developing countries. Speed at which the absolute size of dent is accumulated in China is a matter of concern. China poses growing risks to advanced economies due to increasing link to global financial market and present debt level. It is said by some economists that productive deployment of large amount of capital is difficult within a short period.
The debt ratio of China is approaching to dangerous level. Financial crisis can be addressed in China as it has firepower. Nonetheless, there are hidden debts would expose the breadth and severity of the debt problem. One of the broader debt challenge is the loan guarantees.
The greater financial risk arises from excess debt and the rising amount of debt inflicts the costs of financial distress to borrowers leading to reduced growth. China is standing at the crucial moment in its economic development. Current leadership in China must now encourage engines of growth that will help in securing the rise of country into the advanced economies.
Consumers play a larger demand and supply role in decoupling consumption, making progress and influencing environmental degradation. Environmental concern is great degradation in China and the living quality from environmental perspective has worsened. Consumers has been increasingly focusing on green market development. With the most development opportunities, the largest manufacturer are facing significant environmental burdens and appropriate development of green practice and aid involve joint efforts. Government took efforts to reduce environmental degradation along with the development opportunities (Xuetong 2014, 246-248).
The economy of China was exploited by environmental pollution and environmental crisis is one of the most pressing that has emerged from the rapid industrialization in country. GDP on average is growing at 10% for more than decade and the rise is at the expense of public health and environment (Fewsmith 2013). China is regarded as one of the largest source of carbon emissions and most of cities in country are not able to meet international health standards.
The urbanization plan in China was greatly attached by way of Chinese leadership and it involve extensive collaboration of agencies. Government has incorporated the urbanization plan in twelfth five-year plan, it is strategically focusing on macro level, and it is aimed at directing national policy. Government efforts towards urbanization is directed addressing critical quality of issues of life for urban residents and increasing the population of cities of China (Shambaugh 2013).
With regard to consumerism, Chinese government is now taking efforts for actively engaging the consumers to spend and it is expected that by year 2020 consumption in China will comprise of 60% of Gross domestic product. There is a significant shift in consumption and boost wave of growing middle class. Chinese government has strengthened the environmental laws and the environmental authorities are promised by greater power and giving punishments for polluters (Schneider and C. M 2014).
The government have pledged the state owned enterprises to cut the overcapacity of production for which detailed plan have been made. Efforts are taken by government to reinforce the achievement for reducing over capacity. There has been the structural reform in supply side for reducing inventory, lower costs, deleveraging and cutting overcapacity. Chinese companies are increasingly acquiring foreign companies when they are not able to withstand rising debt level (Liu, Zhu et al. 2015, 335-338). There has been repeated promises on part of government and the reform measures aims at creating favorable environment for innovation and improving competition.
The new plan under the leadership of Xi Jinping is intended to prevent the country from falling into the middle-income trap. Pace of transformation and structural reforms will help in avoiding middle-income trap. It is argued that improvement in the social welfare is considered critical for avoiding middle-income trap. Others are concerned about increasing wealth and income inequality and the pace of transformation has been extraordinary. Middle-income trap are overcome by upgrading industry and urbanization and thereby rebalancing the Chinese economy. Reforms of government has led to more diversified industrial structure for overcoming such trap.
Open system model theorizes that environmental factors influences management and management practices. The task agent in the environment is government and it describes the relationship between environment and organization. Economic bubble of Chin has been self-fulfilling and the leadership in the country has lack of understanding of the magnitude and gravity of risk. There are many aspects of Chinese economy that the central government will have to phase out.
Some of the action plans that should be taken by the government for expanding the economy are related to consumer demand, adoption of innovative and green technologies, deleveraging green technologies and control over capacity. The action plans would serve as a blueprint and roadmap in the harmonization and development of green freight program in context of green technologies.
Diversified and increased consumer demand- China is not experiencing an increase in consumer demand and is struggling through significant structural transition. It is projected that consumer economy in China is projected to grow $ 6.5 trillion by year 2020 (Sørensen 2015). Diversified demand from consumer’s side comes from affluent household and upper middle class that leads to generation of freer spending. However, bullishness in Chinese consumptions arises from demographic trends, increased spending by average consumers and e commerce expansion.
Model for addressing the economic issues of China along with adoption of green technologies:
Solving various, issues of economy of China using the above model. Model formed above incorporates all the macro factors affecting the economic growth.
Increased investment in innovative and new technologies- Innovation capacity needs to be improved for which the organization should emphasize on research and development plan. China is in the midst of consumer revolution and foreign products are leading the way. Therefore, country is required to import high technology products and services should be promoted. Organization in China needs to be aware of increasing use of social media for promoting the brand and introducing the products and services (Schneider and C. M 2014). On other hand, there needs to be surprising increase in imported food product market in China.
Government of China has paid greater attention to address environmental issues and protecting environment is an important aspect of improving quality of life and living standard of people. In year 1980, China has implemented a set of policies, principles, measures and laws of protecting environment. Some of the efforts are as follows:
Green technologies deleverage and bubble bursting- China has five-year plan for tightening the targets of air pollution by solving the environmental crisis of country. The targets incorporated in the action plan is emission reduction from vehicles and coal burning industries. It involves boosting efficient use of coal. This also involves reduction in felid burning and control measures implementation for dealing with air pollution. There needs to be alignment and enhancement of efforts of green freights.
New green freight programs should be supported globally and developed globally. Such programs should incorporate black carbon reductions. China needs to invest heavily in low emission technologies (Lam 2015).
The comprehensive plan of China is a major step in right direction and the plan should set quantified limit on consumption on non-renewable sources of energy. Some advocates placing a cap on consumption of coal for developing effective and enforceable cap policy for China. The productive capacity in China has created a budget which has resulted from export led economy and investment in capital expenditure. The asset price bubbling is worth monitoring having far-reaching negative impacts.
Conclusion:
The share of world nominal GDP of China stood at 12% and robust growth in China would be compensated for some of the losses if the economy were able to achieve mediocre growth in future. Contribution of Chin toward the world economy would be modest in near future. In order for country to become a major consumer goods importer, China should be capable of enjoying higher per capita income. China is a populous country where nation is underdeveloped and there is a possibility of further enhancing the consciousness of nation about environment. Therefore, addressing environmental challenges is an arduous and long-term task, as it will take time in environmental education and publicity. Sustained efforts has been taken by China for protecting environment. Moreover, government has also taken efforts to address rising debts. Various challenges faced by Chines government. Some the economic imbalances are addressed by unveiling economic measures that helps in promoting balanced economic model under new administration. Economic growth of country are fuelled by massive investment projects made in economy that has triggered concepts of excess capacity in some industries.
Reference:
Feng, Juan, Erik Lichtenberg, and Chengri Ding. 2015. “Balancing act: Economic incentives, administrative restrictions, and urban land expansion in China.” China Economic Review 36 184-197.
Fewsmith, Joseph. 2013 “Xi Jinping’s fast start.” China Leadership Monitor 41 1-7.
Gonzalo, Julio A. 2016 “WORLD ECONOMIC EXPANSION: 1945-1990.” In WORLD POPULATION: Past, Present, & Future, pp. 41-48.
He, Kai, and Huiyun Feng. 2013 “Xi Jinping’s operational code beliefs and China’s foreign policy.” The Chinese Journal of International Politics 6, no. 3 209-231.
Johnson, Christopher K., E. Bower, V. Cha, M. Green, and M. Goodman. 2014 “Decoding China’s emerging “great power” strategy in Asia.” Washington, DC: Center for Strategic and International Studies (21.
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Lampton, David M. 2015 “Xi Jinping and the National Security Commission: policy coordination and political power.” Journal of Contemporary China 24, no. 95 759-777.
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