Impact of Globalisation on China

What is the difference between economic growth and development?

Growth: the rise in real GDP; Development: a broader measure of wellbeing (health, education, income), measured by the HDI.

What is the overarching argument of the China essay?

Since 1978 China moved from central planning to a "socialist market economy", becoming the second-largest economy (~140 trillion yuan, ~US$20 trillion, 2025); strategies outstanding for growth, mixed for development, leaving it investment- and export-heavy and now slowing.

List China's main growth and development strategies.

(1) Open Door Policy and SEZs (1979) (2) Trade liberalisation and WTO accession (2001) (3) 12th Five-Year Plan and Made in China 2025 (4) 14th Five-Year Plan: common prosperity and infrastructure (5) Rebalancing toward consumption (15th plan) (6) Exchange rate management (7) Environmental policy (8) Belt and Road Initiative (2013)

Open Door Policy and SEZs: how did they drive growth (theory)?

Low tax (15% vs 33%), duty exemptions and cheap labour drew FDI into a capital-scarce, labour-rich economy with high returns on capital (Solow, 1956); FDI lifted I and X (AD) in the short run; economies of scale and specialisation shifted AS out in the long run

Open Door Policy: what growth stats?

GDP ~10%/yr (1980–2010); largest goods exporter (2009); GNI per capita ~US$200 (1980) → ~US$13,000 (2023)†: conditional convergence, "factory of the world"

Open Door Policy: what are the development success and cost?

Success: ~800 million lifted out of extreme poverty (World Bank); HDI 0.484 (1990) → 0.788 (2022)†; Cost: coastal-led growth and hukou created a dualistic economy: urban income ~2.3–2.5× rural, Gini ~0.47†

What is the hukou system?

A household registration system that ties access to public services to place of birth, limiting rural migrants' access in cities.

WTO accession (2001): theory and stats?

Specialisation (Ricardo, 1817) and scale lowered costs and grew AS; WTO locked in access; average tariff ~41% (1992) → ~10% (2010); trade surplus over US$1 trillion for the first time (2025)†; cost: exports fell ~16% in the GFC (2009)

US–China trade war: what happened and what was the effect?

April 2025: US tariffs peaked at 145%, China's retaliation 125%; May 2025 truce cut them to ~30% and 10%; exports diverted to the Global South: US share of China's exports fell to ~10% (2025), yet the surplus still topped US$1 trillion†

Why did China need to move up the value chain (12th FYP / Made in China 2025)?

As surplus rural labour ran out (Lewis turning point; Lewis, 1954), wages rose and China risked the middle-income trap, so it targeted "strategic emerging industries" (EVs, batteries, solar, rare earths).

Made in China 2025: success and limit?

Success: new-energy vehicles over half of new car sales (2025), led by BYD; ~80% of world solar panels†; Limit: 70% semiconductor self-sufficiency target missed by ~50 points and dropped from the 15th plan

14th Five-Year Plan (2021–25): theory and stats?

"Common prosperity" and inland infrastructure to reduce rural–urban inequality and raise mobility; high-speed rail ~48,000 km (2024), ~two-thirds of the world total†; life expectancy ~79 (2024)†; left heavy local government debt

Why has rebalancing toward consumption failed (theory)?

High precautionary saving (weak safety net) and an investment-led model keep household consumption low, leaving growth reliant on exports and property.

Failure of rebalancing: what are the stats?

Household consumption ~39% of GDP vs OECD ~54%; property crisis since 2021: Evergrande liquidation ordered by a Hong Kong court (Jan 2024), liabilities over US$300bn; 15th FYP (2026–30) makes consumption a priority with a growth target of only 4.5–5%, lowest since reform

Exchange rate management: theory and stats?

An undervalued RMB boosted exports but lowered household purchasing power and caused friction; July 2005: 8.28 USD peg → managed float against a basket (~2% revaluation); ~6.1/USD by 2014; ~2% devaluation (Aug 2015); CA surplus peaked near 10% of GDP (2007)†

Environmental policy: theory and stats?

Growth-first policy pushed China up the EKC (Kuznets, 1955); ~30% of global CO2; emissions flat or falling since early 2024†; peak before 2030, carbon neutral by 2060; Ebenstein et al. (2017): coal-heating pollution north of the Huai River cut life expectancy ~3 years; 15th plan weakened the carbon-intensity target

Belt and Road Initiative (2013): theory and stats?

Secures markets and resources, uses overcapacity, spreads RMB, but can burden partners with debt; Sri Lanka leased Hambantota port for 99 years (2017) after struggling to repay, then defaulted on external debt (2022)