Abstract
The chapter points to the most important internal connections and changes in the international environment. These, under the pressure of globalisation, helped restore China’s economy. It highlights the impact of the oil shocks that have triggered both Japan and Asian “tigers,” and China, following the emergence of the crisis phenomena in Southeast Asia and the vast internal reforms. The whole process is explained as the effect of the theory of “flying geese.” Special industrial zones have played an important role in the recovery process, where foreign investors have made use of cheap labour and supportive government incentives to increase competitiveness in international markets.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Moreover, in DMEs, national representations have intensively used all forms of permitted and unpermitted support of these corporations, whether it was related to investing abroad, know-how or transferring entire production lines from domestic factories to the Asian subcontinent. While this often has been at the expense of the employment level in the parent countries or the growing government deficit, they have nevertheless encouraged the TNCs’ penetration into new markets and political development has continued to be under their control.
- 2.
Mainly in Angola, China, Egypt, Malaysia, Mexico and Oman.
- 3.
While the United States relied heavily on the promotion of Reaganomics to restore its position in the field of high-tech applied in the military and service industries, Germany and other European powers have focused on traditional measures related to energy savings and reducing energy unit consumption. Japan, dependent on oil and gas imports, pushed to implement measures related to the growth of labour productivity and the transfer of its technological apparatus to countries with lower costs. The disintegration of the coordinated effort of OPEC to maintain high oil prices was due to the inconsistency of the members of the cartel in promoting high prices and their individual effort to obtain extraordinary benefits by undercutting these prices.
- 4.
Some experts are of the opinion that its rapid development has nevertheless disrupted the order of “flying geese patterns.” It has long been led by Japan followed by the tigers, and the rear section consisted of China. It has been boosted by the massive inflow of FDI since the late 1990s, not only in labour-intensive sectors but also in technology-intensive industries. It still retained the production on a lower technological level. It reduced the economic lag, but enhanced its competitiveness among other members of this flock in the region, reducing their chances to move ahead in this group and take the lead (White Paper on International Trade, p. 14).
- 5.
Since its establishment in 1949, Taiwan has been a politically and economically extended centre of political, military and economic interests of the United States. For this reason, a significant proportion of FDI have been expanding their Asian activities to this island during this period. In principle, this was a modern country that offered all the necessary benefits to foreign investors. Over time, several of them moved to Hong Kong, which became part of the People’s Republic China (PRC ) in 1997. In this way, they avoided the risks resulting, for example, from unresolved political relations with China.
- 6.
This was relatively modern and pragmatic approach in the Communist Party of China, and it was built on the effort to use any possibility in the market that could occur without any ideological prejudice. It is characterised by, among other things, the statement of Deng Xiaoping, delivered during the first US official visit: “It doesn’t matter whether a cat is black or white, if it catches mice it is a good cat.”
- 7.
The first was the decollectivisation, in which the restoration of family farms in rural areas in the first phase raised the agriculture and food production sectors. Other elements were concentrated mainly on the external environment of the world economy—greater openness to foreign investment, more liberalised conditions for private business and the creation of new jobs in the industry.
- 8.
The lowest GDP growth rate was only 4.2% (1993). In 1995, GDP recorded the highest growth rate compared to the previous year—30.2%. In 1997–1998, the Chinese economy was under the influence of the financial crisis in Southeast Asia, which also reflected in GDP. High GDP growth also continued in 2007-28.8% and 2008-29.4%. (WB, 2011c).
- 9.
From the speech of the Chinese Prime Minister who ratified China’s WTO accession agreement in Geneva.
- 10.
There were tens of mil. of jobs bound to the primary sector and low prices still provided sales of many kinds of materials abroad, which had a positive impact on the trade balance and the self-sufficiency of many companies in financing their modernisation, and the like.
- 11.
By this name, the so-called Mainland China is distinguished from its economic satellites. Some institutions such as HSBC or authors, for example, Ch. Rowley and Lewis (1996) do not include Singapore into this group, others do because of its intense involvement in the promotion of China’s economic interests.
- 12.
By the end of 2002, investors had raised more than $25 bil. in this zone, of which 60% came from Hong Kong. By focusing on the area of services and trade, it has become one of the richest places in the world, mainly because it has increasingly benefitted from the role of mediator between China and the rest of the world (T.C. Fishman, p. 81).
- 13.
Unofficial data also suggest that this centre also serves to launder the money of Chinese from corruption or the black economy (Hospodářské noviny, 2016, p. 16).
- 14.
Their significance has greatly reduced the remnants of the occupation of China during the Second World War, Nanjing massacre or mass murder of the domestic population, especially in Manchuria, etc. Similar to the arrival of the second group of tigers, Japan was “in the right place at the right time.” If its investment initiatives had come to China one decade sooner or later, their rate of success in this country would likely be much lower. These bilateral positions are neither questioned by the growing dispute over the Spratly and Paracel Islands in the South China Sea, which are also claimed by five other neighbouring states.
- 15.
Japanese companies deployed their production capacities to the UK and Spain in the early 1980s, mainly in the automotive industry. Domestic workers, however, were unable to collaborate long term in robotic workshops, and therefore the conversion of these investments into European production habits was very complicated. Much more effective were Japan’s achievements in China, where the use of production systems was successful. One of the results of the activities of colossal Japanese family companies (keiretsu) occurred in the vast majority of international markets regarding trademarks, which changed from Made in Japan to Designed in Japan.
- 16.
The FDI has also returned to NICs1 and NICs2 countries, but each for very different reasons. In the Korea’s case, it was particularly in the form of acquisitions of bankrupt financial and insurance companies; in the case of Hong Kong, the financial capital has been strengthened and in the case of Singapore, it came in the form of the services sector. Ultimately, the change in the structure of these FDI has had a direct impact on the future position of these countries in the long-term strategic plans of the PRC. In the case of Indonesia and Malaysia, part of the businesses were taken over by Chinese entrepreneurs and, in a relatively short period of time, they acquired most of the retail and the production of specialszed parts for automotive companies operating in the EU and their new branches deployed there.
- 17.
UNCTAD (2010) recorded a tremendous increase in global FDI flows from around $200 bil. in 1990 to $1.4 tril. in 2000, $2.1 tril. in 2007 and $ 1.6 tril. in 2010. This triggered extensive discussions about the impact of FDI on the economy of the host country. Most studies prove its positive effect on short- and long-term economic growth through capital accumulation (P.Basu) or transfer of technology and knowledge, especially under the free trade regime. Some studies (M.Carkovic) show that these effects can be negligible, even negative, due to potentially crowding out the domestic capital or the reduced production of own economic enclaves. There are also opinions that TNCs tend to locate their investments in rapidly growing countries or regions, so the inflow of FDI can be triggered by just the economic growth and growth of domestic markets. The causality between FDI and GDP growth can therefore be mutual (Rodriguez and Rodrik).
- 18.
Another survey conducted in foreign-owned enterprises showed that 27% of businesses have already made redundancies and 67% are considering redundancies (Zábojník & Verešová, 2008, p. 6).
- 19.
Since 2001, the EU has also protected its textiles and clothing market by implementing the Multifibre Arrangement, which has practically until 2008 allowed for quantitative measures and tariffs to be used against growing textile imports. This so-called elegant protectionism, however, was discontinued in accordance with WTO rules.
- 20.
However, this process was also gradual because most of the EU countries were not ready for the invasion of these goods, neither legislatively nor by consumer habits. It is a fact that EU, especially in the retail sector, have long been reflecting that the competitiveness (marketability) of consumer products is about 80% based on price.
- 21.
In 2016, exports of goods and services from Greater China exceeded $4.2 bil. (3,882 bil.—China, $474 bil.—Hong Kong, $338 bil.—Singapore) (UNCTAD, 2017).
- 22.
In 2015, Japan’s GDP growth was only 0.6%, EU—1.8%, and United States—2.5% (Pravec, 2017, p. 26).
- 23.
This is confirmed by the fact that, in the case of export-oriented production, the value added in domestic firms was estimated at 84%, but only 3% in the case of foreign-owned companies. Yet in the first 11 months of 2010, exports from foreign companies located in China reached $779.1 bil. while their trade surplus amounted to $112.5 bil., which was about two-third of the total Chinese trade surplus (Obadi, 2012, p. 119).
- 24.
Hong Kong was the 7th largest exporter ($550.3 bil.) and the 14th largest importer ($547.3 bil.), while Singapore was the 14th largest exporter ($373.2 bil.) and the 16th largest importer ($282.9 bil.). Hong Kong with 7 mil. permanent residents (area of about 1,100 km2) and Singapore with 5.3 mil. permanent residents (area of about 720 km2) were an important part of Chinese business (Statista, 2018).
- 25.
It has to be taken into account that about four-fifth of the export of textiles in the world originates in Asian countries. China itself exported about half of the textiles and garments to the world markets and together with Vietnam, nearly 50% of all leather and sports footwear. As a result, the production in these sectors in most EU countries and the United States practically ended.
- 26.
M. Klein was CEO at Citigroup Markets, Inc. (O. Shenkar, 2006).
Bibliography
Adams, F. G., & Ichimura, S. (1998). East Asian Development: Will the East Asian Growth Miracle Survive? Westport: Praeger.
Adams, F. G., & Vernon, H. (1999). Recovering from the East Asian Crisis: Are Thai Firms Making the Necessary Adjustment? Asia Pacific Journal of Economics & Business, 3(2).
Akamatsu, K. (1961). A Theory of Unbalanced Growth in the World Economy. Weltwirtschaftliches Archiv. Review of World Economics No. 86.
Baláž, P., & Zábojník, S. (2012). Strategy of the Chinese Economy Development and the Role of Education [Stratégia rozvoja čínskej ekonomiky a pozícia vzdelania]. In Studia commercialia Bratislavensai. ISSN 1337-7493. No. 20.
Chen, E. K. Y. (1989). East and Southeast Asia in the World Economy: Issues, Problems and Prospects. The Copenhagen Journal of Asian Studies, 4, 7–31.
Cihelková, E., Štěrbová, L., Hnát, P., & Zadražilová, D. (2014). Governance v kontextu globalizovamné ekonomiky a společnosti. Praha: Professional Publishing. ISBN 978-80-7431-134-5
Cumings, B. (1984). The Origins and Development of the Northeast Asian Political Economy: Industrial Sectors, Product Cycles, and Political Consequences. International Organization, 38(1), 1–40.
Fishman, T. C. (2006). China.Inc. Ako Čína drví Ameriku a svet. Praha: Alfa Publishing. ISBN 978-80-86851-44-3.
Fung, H., Pei, C. H., & Zhang, K. (2009). China and the Challenge of Economic Globalisation: The Impact of WTO Membership (Vol. 29, No. 1298). M. E. Sharpe Inc.
Graham, E. M., & Vada, E. (2007). Foreign Direct Investment in China: Effects on Growth and Economic Performance. London: Oxford University Press. Retrieved from http://pdfcast.org/pdf/foreign-direct-investment-in-china-effects-on-growth-and-economic-performance
Hospodářské noviny. (2016). Praha. Retrieved from https://archiv.ihned.cz/c1-64070670-a-prece-se-toci
Kasahara, S. (2004). Flying Geese Paradigm: A Critical Study of Its Application to East Asian Regional Development. UNCTAD Discussion Paper No. 169
Kohout, P. (2017). Poučenie z krize-deset let poté. Praha. Retrieved from http://neviditelnypes.lidovky.cz/ekonomika-pouceni-z-krize-deset-let-pote-ff0-/p_ekonomika.aspx?c=A170813_170312_p_ekonomika_wag
Kwan, C. H. (2002). The Rise of China and Asia’s Flying-Geese Pattern of Economic Development: An Empirical Analysis Based on US Import Statistics. Nomura Research Inst. Ltd. Retrieved from https://www.nri.com/en/global/opinion/papers/2002/pdf/np%20200252.pdf
Menzelová, K. (2016). Čínsky Bilderberg. Lidové noviny, Praha, August 13.
Midler, P. (2011). Made in China. John Wiley & Sons, Inc. Prag. ISBN 978-80-7252-577-5.
Mikoláš, R. (2011). Rok draka. Slovensko v roku 2012. Bratislava: Trend. XII. 16th.
Obadi, S. M. (2012). Vývoj a perspektívy svetovej ekonomiky: Medzi stagnáciou a oživením. Bratislava: VEDA SAV. ISBN 978-80-7144-197-7.
Pravec, J. (2017). Éra globalizace končí do světové ekonomiky opět vstupují hranice. Ekonom, Praha, July 26. Retrieved from http://ekonom.ihned.cz/c1-65599870-era-globalizace-konci-do-svetove-ekonomiky-opet-vstupuji-hranice
Quing, K. G., & Wang, A. (2012). Hu Promises Economic Reform, Higher Incomes. Dubai Gulf News, November 9. Retrieved from https://www.reuters.com/article/us-china-congress-economy/chinas-hu-promises-economic-reforms-higher-incomes-idUSBRE8A707U20121108
Roubini, N. (2012a). Čína môže naštartovať svetovú krízu. Retrieved from https://finweb.hnonline.sk/financie-a-burzy/425708-cina-moze-nastartovat-novu-svetovu-krizu
Roubini, N. (2012b). Sun 60% sanse sa inceapa noua recesuine. Retrieved from http://www.ziare.com/economie/recesiune/roubini-sun-60-la-suta-sanse-sa-inceapa-noua-recesiune-1117916
Rowley, C. H., & Lewis, M. (1996). Greater China (Political Economy, Inward Investment and Business Culture). London: Routledge. ISBN 0714642967(pbk).
Segal, P. (2011). China’s Labour Power is Not the Threat. The Wall Street Journal Europe, November 29.
Shenkar, O. (2006). The Chinese Century. The Rising Chinese Economy and Its Impact on the Global Economy, the Balance of Power, and Your Job. Upper Saddle River, NJ: Pearson Education, Wharton School Publications.
Sin-Proh, Ch. (2011). Druhou najväčšou ekonomikou sveta je Čína. Medzinárodné vzťahy. Aktuálne otázky svetovej ekonomiky a politiky. Ekonóm, Bratislava. ISBN 978-80-225-3172-6.
Statista. (2018). Retrieved from https://www.google.sk/search?q=top%20exporters&ved=0ahUKEwiov_KCgancAhUiOJoKHftBDzUQsKwBCCwoADAA&biw=1717&bih=854
UNCTAD. (2010). Investing in a Low-Carbon Economy. World Investment Report. New York and Geneva. Retrieved from http://www.unctad.org/en/docs/wir2010_en.pdf
UNCTAD. (2012). Towards a New Generation of Investment Policies. World Investment Report. New York and Geneva. Retrieved from https://unctad.org/en/PublicationsLibrary/wir2012_embargoed_en.pdf
UNCTAD. (2016). UNCTADSTAT. International Trade in Goods and Services. Retrieved from http://unctadstat.unctad.org/wds/TableViewer/-tableView.aspx
UNCTAD. (2017). FDI Database. World Investment Report. Retrieved from http://unctad.org/en/
Valtr, P., Hofman, J., & Ježek, J. (2012). Současná Čína a my: Megastát—megapole—megaprojekty—Expo 2010—globální koexistence. February 7.
WB (World Bank). (2011c). GDP Growth (Annual %). Retrieved from http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG
WB (World Bank). (2012). Merchandise Exports, Washington, DC. Retrieved from http://search.worldbank.org/data?qterm=Merchandise%C2%A0exports+%28current+US%24%29+china&language=EN&format=html
WB (World Bank). (2017b). Washington, DC. Retrieved from http://databank.worldbank.org/ddp/home.do?Step=3&id=4
WTO. (2002). World Trade Statistical Review. Geneva. Retrieved from http://www.wto.org/english/news_e/pres01_e/pr243_e.htm
Zábojník, S., & Verešová, K. (2008). Udržateľnosť ekonomického rastu a determinanty v budúcom vývoji čínskej ekonomiky (No. 3). Bratislava: Studia commercialia Bratislavensia.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2020 The Author(s)
About this chapter
Cite this chapter
Baláž, P., Zábojník, S., Harvánek, L. (2020). China and Its New Position in the World Economy. In: China's Expansion in International Business. Palgrave Macmillan Asian Business Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21912-3_1
Download citation
DOI: https://doi.org/10.1007/978-3-030-21912-3_1
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-21911-6
Online ISBN: 978-3-030-21912-3
eBook Packages: Business and ManagementBusiness and Management (R0)