China as the New Mixed Market Economy

China is an Asian country with strong economic influence today. The Chinese economy has an impact on the global economic decisions and activities. This is because China is a major exporter of technological and industrial products as well as skilled man power. The growth of China’s population is decreasing because the women are now bearing less children. This means that eventually the number of people in China will reduce making it small enough to earn China a large GDP. Eventually, with the continual decrease in births, the per capita income is rising at the rate of between 8 to 10%. This is an indication that the society in China is moving the country towards economic success. The GDP growth over the last three decades has seen china grow to out-do the United States by having a contribution of as much as 17% beating the United States at 16%. These are the statistics as per the year 2014 as documented by Nake M Kamrany and Frank Jiang (Kamrany & Jiang, 2014). The economy in China has grown immensely by focusing on industrial growth where most of the products were for export. Going forward, China is looking to focus on development that is inward looking. This will have China develop and independence in most aspects of production.

The greatest competition for China has been the United States and Europe. However, after growing as it has, China has challenged other countries like Japan and India whose growth cannot be undermined. The United States is a strong competitor because the money she spend on imports is relatively less than the money earned on exports. This means that the country always has more income that it spends. This is because China and Europe are growing behind the success of the United States. This is a situation that pits China against Europe in competing for partnership opportunities with the United States. China is winning in this competition because the population of China has been improved immensely through technology and science. The same applies to Europe but the difference between the two economies is the fact that they are different in political and economic strategies. Once China was able to accept the American inspired approach to growing the economy, they modified it and fit it into their political structure. This resulted in a very strong China that was able to maneuver the newly found economic awakening. China, as it stands has a greater manufacturing capability compared to Europe. This is easy to see from the production of smartphones to production of other machinery in China being greater than in Europe. This is after China importing the knowledge from Europe and uses the same in production of bulk which had made Europe the greatest consumer of Chinese export.

The sales values for China indicate that between the years 1990 and 2017, the curve has been positive all along. This can be indicated in the graph below which documents the gradual growth all the way to the 1st of December 2017.

The figures used to prepare the graph are from the Federal Reserve of St. Louis Data (Federal Reserve of St. Louis Data, 2017). All these money china has been able to generate from retail sales of their products. A country with a strong retail sales index is a stong country in terms of production and means the industries are active and productive. 

The Economy of China is modern socialist. This is because it has incorporated aspects of capitalism to boost production and growth. However, the governemnt is still in control of most of the production meaning that it is cenrralized. The political class is in charge of development in the economy. a succesful politician in China has to improve the economy significantly so that his role is taken seriously. This type of the econoy in China can be said to be mixed. This is because the goverenment regualtes but does not run all the bsuiness aspects of the economy (Li, Thomas, & Zhang, 2012). The fact that the governemnt was first to accept capitalsm in China means that it is automatically a mixed economy situation whereby competition is allowed but within the regulations of the government.

A market ecnomy is the type of economy where the market forces control the economy. this is a situation where perfect competition controls the economy. it is important that an economy as big as China incorporates the market economy as well as the closed economy. this helps in enabling the government to protect both consumers and the producers because they can easily control the market policies and at the same time take part business. This is the perfect economic model for a start up company because there is no monopoly in the industry as would be the case with a closed economy. at the same time the saturation of the market would not be a stumbling block for a new manufacturer to set up shop as long as they have a strategy (Nee, 1992). In a market economy, saturation is enough reason to den new market entrants from establisng their base. Therefore, the mixed market economy in china will be conducive for launching a new electronic branch like Samsung and go on to produce phones, television sets and many kitchen and household items as well.

The Credit conditions in China over the last five years have been easy on borrowers. This means that more people have been able to access loans and set up businesses. That is set to change after the growth of China showed signs of slowing down and the stability of this economy was questioned. The result was that the Chinese currency the Yuan grew weaker in relation to the US dollars. This means that a tech-business that would grow by selling technology appliances like smartphones and other household machinery would find it hard to compete internationally when the Chinese currency is weak. A situation that would force the Chinese government to inject money for circulation in the economy would result in reduction of the reserves and lower interests’ rates.

The central bank of china plays the roles of all central banks. It is the body that regulates plays the monetary and fiscal control roles in China. China has had financial regulators who monitor the financial institutions like the Central Bank of China and their operations. The Central Bank of China is referred to as the People’s Bank of China. This bank currently carries out fiscal and monetary controls of the economy. The coordination of the Chinese economy and, therefore, the Central bank needs to be given more power to be the overall regulate to bridge the gap in coordination and communication.

China has well developed universities and colleges where people get training for their jobs. This has enabled the Chinese nationals to take the knowledge they get from the European countries and turned it into their national fortunes. The Chinese nationals would study in Europe and take the technology back to China where they trained their fellow country-men. This means that education in china is equally advanced as the economy is.

China may have had challenges in international production because of being seen to be part of the Soviet Union. The United States played a big role in changing the mentality that people have towards china. The United States showing approval for China made the world more receptive of China and their Products. The political status of China, however, is a challenge to growth and development. This is because the president is in charge of everything. As a result, being in the Chinese government requires that one is a visionary leader who can inspire change. The level of control that the government has on the economy is not comfortable for many foreign investors looking to invest in China. This is an additional challenge that China has to deal with. 

The supply chain may have additional challenges in China due to the different regulations they have put in place. For instance, a new company may find it difficult to pass all the required security checks for products. This is something that people in the cosmetic industry have had to contend with. This is after some brands were denied the Chinese market because they had not been tested on animals but only humans. Such are the challenges that will eventually slow down the growth of China in terms of retail industries and how to appeal to the market. This means that it would be possible to produce some products in China due to the availability of man power and availability and access to foreign markets. This is an opening for companies to focus of export production and the Chinese people do not get the best products even when they are produced within their country.

Conclusion

The Chinese economy has the potential to grow and surpass the United States in many capacities. This is especially because the United States has a burden of maintaining a big and strong military. This means that the society in China has not been allowed to have a total market economy where competition is perfect and is allowed to set the prices and the operation terms. It is also an economy that is gradually adapting capitalism as a means of production and market operations. This is the approach that has the growth of the Chinese economy move steadily over the last thirty years up to the point where China was able to produce a larger GDP than the United States (Robins, 2010). China can easily be part of the world’s economic powers where the country gets the chance to call the shots in setting prices. As it stands, China is the leading producer of agricultural products. It is important that China sets the world process for the agricultural products because she is the leading producer. Setting up a tech company in China is going to have competitive advantage over similar companies in other markets because the China has a broad domestic market for starters. This means that at no point will the companies will face losses in the process. A tech company with an operation formula similar to that of Samsung in China is bound to be a success.

References

Federal Reserve of St. Louis Data. (2017, December 1). Value of Total Retail Trade Sales for China. Retrieved from Federal Reserve of St. Louis Data: https://fred.stlouisfed.org/series/SLRTTO02NQ189

Kamrany, N., & Jiang, F. (2014). China’s Rise to Global Economic Power. Retrieved from The Worldpost: m.huffpost.com/us.entry/6544924

Li, L., Thomas, W., & Zhang, N. (2012). The Effects of the Global Financial Crisis on China’s Financial Market and Macroeconomy. Economics Research International, 1-6.

Nee, V. (1992, March 1). Organizational Dynamics of Market Transition: Hybrid Forms, Property Rights and Mixed Economy in China. Administrative Science Quarterly, pp. 1-27.

Robins, F. (2010). Asian Business and Mangement. China: A New kind of mixed economy?, 23-46.

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