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中国发展主要催化剂（推动因素）研究essay
作为金砖四国的成员，中国和印度是当今世界上两个新兴市场和经济增长最快的国家。不可避免的比较，在经济学家和商人这两个崛起巨人（舒曼2010）之间做出。他们有许多共同和相似的国情，因为过去20年他们经济快速发展，这被认为是一种经济发展的模式。即使在现代商业社会，随着经济和经济的全球性衰退，许多国家都在放缓经济的增长。中国和印度也为世界经济的发展做出了巨大贡献。根据投资管理和咨询服务公司（2012），在2011年，尽管全球经济放缓，中国和印度将共同继续发展，并占2012年全球经济增长一半以上。然而，中国和印度也无法避免全球经济衰退，有一些证据显示，中国和印度的经济增长速度均开始放缓。这引起了许多经济学家和分析师的广泛关注。
Main Catalysts To Growth In China Economics Essay
As the members of BRIC, Now China and India are two emerging markets and fastest-growing economy countries in the world. In the inevitable comparisons that economists and businesspeople make between these two rising giants (Schuman 2010). They have many common and similar national conditions and they are both known as their model of economic development because of their rapid economic growth in the past 20 years. Even in contemporary business society and with the decline of economy and recession in global economy, many countries are slowing down their economic growth. China and India are also very important and make a great contribution to the world’s economy. According to a new report by an investment management and advisory services firm (2012), in 2011, despite slowing down in global economy, China and India together will continue contributes and account for more than half of 2012 global growth. However, China and India also can not be avoid from the global economy recession, there are some evidences shows the economy growth rate of China and India both start slowing. This caused the extensive concern from many economists and analysts. They want to predict their economic growth trend in the future and also start reviewing and analyzing the main catalysts to growth in China and India in the past 2 decades at the same time. This essay will first simply introduce the growth of China and India. Then, it will identify, discuss and analyze and make a comparison about their catalysts to growth and how they could improve them in the past 2 decades individually. Following this, it will critically evaluate their sustainability and negative aspect for their economic growth in the future. At the end, it will make a conclusion on what are the main and most important catalysts and what extent are these beneficial for increasing the growth in China and India.
China and India were both well-known countries by their population and area in the world before. But with the centre of world economy shit to the Asian and Pacific region, China and India become the two most potential countries and there has increasing people started paying their attention to the economic growth and potential business opportunities of these two countries. Some economists have consequently started a heated discussion and argument about the differences between them and which one is more potential in the future.
The best to illustrate with the example is China. After 1980s, China has a dramatic development in its economy. Its nominal gross domestic product (GDP) had a substantial rising from 3.015 trillion dollars in 1980s to 7.298 trillion dollars in 2011. And now China is the world’s second largest economy by nominal GDP and it takes up 10% of total world output. According to official figures (2011), China’s economy has grown at an average rate of 9.1% during the last decade and its nominal GDP achieved 7.30 trillion dollars in 2010. Research by Frost & Sullivan from Telegraph Media Group (2012) suggests that China is expected to be the largest economy in the world and overtaking the United States in 2025.
Similarity, India also has an unbelievable economic increase and it is the second-fastest growing economy behind China in the major economy. The economy of India is the 10th largest economy by its nominal GDP. And obviously, its purchasing power charity (PPP) is the 3rd largest economy in the world. From the International Monetary Fund (IMF) (2012), India’s economy has grown at an average annual rate of 6.1% during the last decade from 323 billion dollars in the year of 1990 and 1.847 trillion dollars in 2011. Among them, in 2010 their growth rate of GDP achieved 10.4% rather than 10.3% in China. Despite with the decline of global economy, its economic growth rate stood at around 6.5% for the 2011–12 fiscal years. Goldman Sachs (2007) predicts that India will be the world’s third largest economy by 2050.
How China became the dragon and how the Indian elephant has indeed morphed into a tiger are surprisingly questions to many economist and market researcher. Back to the history before 1980s, China and India both had strong pressure by large number of populations, poor infrastructure and poor economy. From the research by Maddison (2010), China only has grown its GDP an average rate of 4.7% from 1952 to 1978 with the poor majority of national development and standard of living, even worse than the poverty line by United Nations and World Bank. Likewise, during the time between 1947 and 1980, India had much slowly growth, Hindu rate of growth compare with other Asian countries, especially four Asian tigers, South Korea, Taiwan, Hong Kong and Singapore. However, in both China and India economic reform started in the 1980s, there has a dramatic change.
In 1978, China and its government has set up and announced the reform and open door policy including the reform for China inside and opening its economic to the world. The Reform and Open door Policy defines China should prior to make some coastal regions develop their export-oriented economy for improving exporting, satisfying the demand of global market and then gradual develop other region, affect and motivate the economy all over the country. Since the reform and open door policy in 1980s, China takes the advantage of foreign capital from other developed countries for their economic growth and keeps it gradual increasing, especially the higher flow of foreign direct investment (FDI) and foreign trade. They are the most important catalysts to growth in China. And FDI plays a main and significant role for the economy in developing countries. It is also the major catalyst to economic growth and development in developing countries. Dr.Gregorio (1992) suggests that FDI can play a positive part and help some country increasing the economic growth. To be more specific, in 1983, China had 920 million dollars FDI inflow. Then it exceeded 20 billion dollars in 1993 and achieved 124 billion dollars in 2011, now China is the second largest FDI inflow of the world behind the United States. It developed its productivity, improved the better industry infrastructure and created more business and job opportunity for increasing its economic growth by these investments.
Moreover, the inflow of FDI also benefits, increases and motivates its foreign trade. In 2010 China had a total value about 2.9728 trillion dollars by its exports and imports. According to the Rank in World Trade, China has became the second in 2010 from 16th in 1990 and 27th in 1978, especially the first in Merchandise Exports in 2011.Now there has more than 230 countries and regions trading with China and it also make investment developing other 160 countries.
Besides, by the year 2001, China joined the World Trade Organization (WTO). This is the specific and effective activity and the development of implementing the open door policy and it is also another main catalyst to growth in China. In 2011, China has entered into WTO for a decade. And its economy and foreign trade had a large increase and became the second largest economy in the world. After China joined the WTO, there are many improvements and advantages for the growth in China. Firstly, it drives China making more foreign trade and an economic reform from planned economy to market economy. Then it also makes a larger increase of exports trade for the global market than before. Importantly, it takes a larger improvement on the environment of China and attracts increasing foreign investor and more inflow of FDI in China. Chen Deming (2011), China’s Minister of Commerce, said, "Foreign companies have participated in economy of China and shared the benefits and opportunities that China has offered. China is now going international, and investing overseas”. This would increase the expansion of production scale and its economic growth. Furthermore, it also increases the GDP growth and creates more job opportunity. They are all the extention and further enhance the advantages of the economic reform and open door policy. Zoellick (2011), the president of the World Bank also evaluates that China joining WTO is not only a trade agreement, but also the catalysts to economic growth and reform in China. As so far, there are about 70% foreign invested enterprises are manufacturing enterprises, and these foreign investments largely promote the export of manufacturing in China and make it becoming the manufacturing plant in the world today.
Similarly, India and its leadership Gandhi, R. has started reducing the limitation of foreign investment, removed the control of price and reduced the tax of enterprise at the same time in 1980s. However, with the disintegration of Russia and the increase of oil price by the Gulf War, India has suffered a large influence and faced with a financial crisis. In 1991, India accepted the reform for its economic institution and got 1.8 billion dollars loan from IMF. Then India started adapting liberal and free-market oriented principles and liberalized its economy to international trade, Under these strong economic reforms, India open its economy, lower tariffs, removed the Licence Raj for set up and run businesses in India, wider free market and relaxed the FDI and allowed more foreign ownership of companies in India and strong focused on developing national infrastructure. This is the main catalyst to growth in India, because as a result of it, there has been a remarkable increase in labour productivity and prosperity and following these, the economic growth of India progressed at a rapid pace with very high rates of growth and large increases in the incomes of people. More exactly, the economic growth rates of India is twice as much as before, its GDP increased at an average 8.8% during between 2003 and 2008 and its per capita income is increasing from 300 dollars in 1991 to an estimated 1,700 dollars in 2011. Moreover, Aiyar (2011) says that this has not only directly raised incomes and employment but yielded a revenue bonanza that has financed huge increases in social spending, anti-poverty programs and infrastructure.#p#分页标题#e#
However, even though China and India have both catalysts of the FDI by reform and open its economy, India started developing their economy in different ways. Compare with the FDI promotes the development of manufacturing in China. India mainly drives the economic growth from the tertiary sector or service industry. In 2000 India was seen as globally com-petitive in services but not industry. Most importantly, India has a continuous increase in its service industry including IT industry, outsourcing and IT-BPO (Business Process Outsourcing) and had about 1000 billion dollars in 2011, account for 51.13% GDP in 2010-2011 financial year and among them, its software and service export achieved 59.4 billion dollars. Besides, this created about 2.5 million jobs directly and other indirect 8.3 million job opportunities. Thus, in the last 20 years, opening its economy, using the FDI to develop its foreign trade by service outsourcing and exporting is the main catalyst to growth in India. Besides, India has a large support for its rapid economic development by its mature and stable market. Last year, the government of India announced that they would develop a series of economic opening activities including relax the control of about market and attracts more foreign investment in retail, financial and other area.
Furthermore, compared to China and facing the shock from foreign market, the domestic economy of India could have less impact, because the domestic demand also promotes the economic growth obviously. The Private domestic consumption accounts for 57% of GDP in India than only 35% in China. And China's exports represented 35% of GDP compared with only 24% for India in 2008. "What we see [in India] is a fundamental domestic demand story that doesn't stall in the time of a global downturn" (Walker, 2010).
For the rapid growth in China and India, GDP is a most significant method that rating the country’s economy. It is composed of the private consumption, gross investment, government spending and net export. Hence some suggested that the bulk of growth in China and India have been driven by their domestic demand rather than FDI. Rothman (2012), Chief China Strategist with CLSA (Credit Lyonnais Securities Asia) also believes that the economy growth in China relies on the foreign trade and FDI is passing away, the domestic demand and the government spending are the main catalysts to its growth. And Anderson (2009) agrees that there has only around 8 per cent labour force of China is actually employed in export industries. Even at the peak of China's recent trade expansion, net exports accounted for only around one-sixth of its economic growth. And others also said India is also driven by its domestic demand and its consumption, because there has about 57% consumption account for its GDP, 20% higher than China.
There is no doubt that domestic demand and consumption are important to the growth in China and India, and the fiscal policy and the change of the role of government are also making contribution to their growth. But most significant, FDI is still the main catalyst to the growth in China and India and it takes many positive ways. After the second half of 20 century, the economy in Asia started developing rapidly. Anderson (2006) thinks that there is no previous phenomenon like the rapid economic growth in Asia in the second half of 20 century including Japan in 1960s, Four Asian Tigers between 1970s and 1990s, then China and India in the world. A noticeable reason for their rapid economic grow are all opening up its economy, taking part in the foreign trade and attracting the FDI to develop their advantage industries, and then starts doing their foreign trade by export substitution strategy. And they are also the significant catalyst to their growth. Many market analysts agreed that FDI as a catalyst for the developing countries always promoting their economy in all ways and rapidly. For a example, even though in different ways, China and India still attracts much inflow of FDI and use these money to largely develop their advantage industry and economy, then export to other developed countries to increase their net export and create much more job for their people than before directly and indirectly. This not only increases its investment and foreign trade, but also would promote their Consumer Price Index (CPI), domestic demand and consumption and make China and India achieving the large GDP growth together at the end. Without these foreign investment, China and India can not increase their economy quickly, especially China. There is much evidenced that FDI has much relations with the growth in China and India. For a simple example, since the financial crisis in the West in 2008, many foreign capital enterprises and investment started removing from China. As a result, there was more than a hundred factories has gone bankrupt, most people loss their jobs and the economics growth largely slowed down. Mirrlees (2011) also suggests that the investment is the main catalyst to growth in China and India.
Nevertheless, FDI would not always take effective at the same time. First of all, even though a large amount of foreign investment and foreign enterprises could make the developing country learn and access the more advanced technology and industry and take part in the global business and trade, there has still make a crash for the domestic enterprises by the multinational corporations. To be more exact, the inflow of FDI would compete with the domestic enterprises in enterprise ability and market environment. And foreign investment would also cause monopoly in some industries and make other domestic small and medium-sized enterprises going bankrupt, even in the domestic industry. For an example: In China, many small and medium-size enterprises can not compete with the MNCs by their less human and capital resource and backward in technique. Besides, as a result of FDI mainly investment in the costal and more developed, this would also cause the unbalanced regional development and a large gap between poor and rich, especially in India. Since India liberalized its economy in 1990s, there has a rapid continue increase in economy and expand in the middle class. However, these still not solve and reduce the gap between poor and rich. According to the official evidences from Indian government in April of 2011, India had about 1.16 billion populations and there were 372 million poverty-stricken populations more than 100 million in last research.
Besides, China and India are both have some different and unreasonable disadvantages for developing their economy through FDI. For examples, China attracts much more FDI than India and developed its manufacturing only. Two much FDI would damage their domestic small and medium-sized enterprise and not bring the actual core technology for China. The main reason for China becomes the manufacturing plant in the world today is its cheap labour force. But now with the increase of labour price and the emergence of other emerging markets, only relies on manufacturing and its foreign trade are hard to continue growing its economy. For India, even though it pays more attention to protect its domestic industry and developed its service sector better than China, India still not develops its infrastructure. Poor Infrastructure becomes the barriers to growth in India. And demographic dividend would also become the huge burden and unstable factors to India.
Furthermore, with the global financial crisis and economic recession in global market in recent years, especially USA, European and some developed countries, there has less FDI inflow and foreign trade. China and India started slowing down the speed of its economy growth. FDI mostly comes from these developed countries. Thus, it direct makes a great influence to the economic growth in China and India even though the government of China and India all announced some fiscal policy or other measures for motivating its economic growth individually. There had two different stimulus programs adopted by China and India to support growth during the downturn. China implemented what Walker calls "the biggest stimulus program in global history”. They invest about 4000 billion RMB to motivate the domestic demand. The stimulus plan worked wonders, holding up growth even as China's exports dropped 16% in 2009. At the same time, India reduced its repo rate from 9% to 4.75% and 6% to 3.25% in its reserve requirement ratio and this means that India invested about 130 billion dollars capital. However, only invest money to motivate economy is also not the most effective ways. Since 2009, with the rapid growth in India, Inflation becomes more and more serious in India. And according to the report from OECD (2012), there has some evidences show that the economic growth begins slowing down in China and India. To sum up, opening economy and attracts more FDI is the main catalyst to growth in the China and India during these 20 years, and foreign trade, fiscal policy and others are also making a contribution to their growth. But as a big economy and for the future, the domestic demand is still always the more stable and more sustainable economy mode for promoting the economic growth.
In conclusion, with the reform and opening its economy in China and India, they are two emerging markets and fastest-growing economy countries in the world and they had both successful creating a better business environment and a great opportunity to take part in global market and foreign trade. It is beneficial for their attracting a huge inflow of FDI and starting developing its manufacturing and services sector separately. And FDI as a main catalyst to their rapid growth, nobody would ignore its significance. FDI inflow would not only increase the capital, but also would largely promote the competence of domestic enterprises, create more job and business opportunities. Besides, FDI also make a contribution to the domestic demand and consumption. Most importantly, they can take the advantage of FDI to develop their core and advantage industry and the have the competitive advantage than other markets, then export to other developed countries to increase their net export in order to make their rapid economic growth come true. However, there are also some disadvantages for China and India. Maybe China is too relying on the inflow of FDI and its manufacturing and can not actual learn the advanced technology from foreign country and continue in the future. And the poor infrastructure and the largest gap between poor and rich are the two important barriers to growth in India. Besides, the inflow of FDI has a large influence by the global market, especially the developed countries. Thus, if China and India wants to keep their economic growth increase, they should not only reply on and some motive fiscal policy, they should adapt their development mode and improve other stable and sustainable measures to develop their economy.#p#分页标题#e#
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