Sample Business Studies Essay Paper on Economic Implications of China’s Demographics in the 21st Century

Economic Implications of China’s Demographics in the 21st Century

Executive summary

China is one of the most strategically located countries in the world that has overtime grown to become a strong power. Its legal system has improved and this has made the country an attractive destination for foreign business. The number of multinational companies that have established business in china is unimaginable (McLean and Zhang 126). Three things explain why foreign investors have sought for foreign trade with China; Growth prospects, market size and low labor cost. China’s integration with other countries across the world has boosted its trade and opened up the country for cross-border trade. The political, economic, social and technological analysis of China is a critical tool that helps in assessing the wider macro-environment factors. No single aspect of china lags behind, all sectors are growing fast (Cheng 38). Being a developing country, it stands a better chance of increasing business prospective with both the developing and developed countries. From the global viewpoint, China has managed to leverage on investment and trade to accelerate economic development. FDI and trade were negligible until and before 1991and 1980 respectively. International trade increased tremendously between 1990 and 2013 by approximately 40 times.  The rate at which China’s economic development has risen can best be described as exponential (Eriksson 101). This paper studies the demographic profile, political environment of the People’s Republic of china (PRC). The objective is to determine its attraction as a foreign trade and investment hub. Political, economic, social, technological and legal aspects are the key pointers that are used in determining the attractiveness of a foreign land. The paper discusses at length legal and political system of governance, market trends and demographic trends that presents china as a foreign trade and investment hub.

 Demographic Description

With approximately 1.38 billion citizens, china remains the most world’s populous nation. The huge population is a big incentive to economic growth. The increasing population has over the past redefined china’s position across the continent of Asia as well as in the wider global economy (Yu-Shan 42). The current population comprises of approximately 160 million immigrants who have settled in China to seek a better life. In the process, this segment of population has supplied the country with cheap labor that acts as a driver for economic growth. The census conducted in 2010 indicated that over 150 million people were over sixty years while over 200 million families only had one child as a compliance with the one-child policy limiting the number of children every Chinese family should have. Today, the world economy heavily relies on china as its global factory. The mortality rate has drastically decreased to a level equal to that of developed economies while fertility rate is at the top notch.

On average, being the most populous country, China has a population density of 137 sq. kilometer. Majority of Chinese people live in eastern region especially in major cities while the northern and western regions have only a few people. Republic of china has 56 distinct and recognized ethnic groups, Han being the major one with approximately 91% people of the China’s total population. 2010 national census indicated that the minority ethnic communities constituted 8.5% of the total population. In addition, the minority groups indicated a higher rate of growth compared to the majority groups since they were not incorporated in the one-child policy. The PRC main spoken language is known as pitonghua. Other spoken languages there includes Mandrain, Hakka, Gan, Minnan, Minbei,Wu, Yue and Xiang. Research indicates that no clear border subsists between the three religions in china; Buddhism, Folk and Taoism. 82%% of the people exercise Taoism and folk, 13% exercise Buddhism, 3% and 2% are Christians and Muslims religions respectively. Urbanization continues increasing at a steady rate following the opening policy and structural reforms. By the close of 2014, approximately 55% of the Chinese total population had settled in the urban region. This rate rose from between 20-30% in 1990.

Political Environment

China is a single party republic guided by socialism system of governance. The ruling party is known as the communist party and its leadership is as enshrined in the constitution. The president of PRC heads the state although he is a ceremonial figure. The prime minister on the other hand heads the government as well as presiding over the vice prime ministers who comprise the state council. The general secretary who is appointed under the communist party is a powerful person who has control over the government and state. The local government comprises of provinces that provide greater autonomy to the regions. The central government oversees the local governments by appointing loyal party cadres. Party secretary and the region’s chairman who is appointed by the people are the leaders of the different PRC provinces. The central government has the power to regularly and liberally transfer the party secretaries to avoid compromise (Wu and Helen 58). The legal system of china comprises of a sophisticated mixture of law and custom. It is however largely concerned with the criminal law. The current Chinese law is impartial, fair and free in its activities.

The government is committed to promoting impartiality by guaranteeing citizens the right to own property. Human rights and freedom has tremendously improved over time making the environment favorable to investors. The government has however limited opposition activities to its rule over time. In order to attain Chinese Nationality, a child must have at least one parent born in china. Other ways in which the government guarantees nationality includes permanent residence as well as marriage to a Chinese. China has maintained diplomatic relationships with a number of countries across the world. It played a big role in championing for free trade area as well as signing security agreements including East Asia summit (EAS) with other Asian neighbors in 2004 and 2005. Much of China’s present foreign policy focuses on peace although few crises have taken place especially in its relations with the United States (McLean and Zhang 133). China is an active participant of most international organizations including APEC, UNESCO, INIDO, WHO, WIPO, UNHCR, United Nations, IMF, UN Security Council, Interpol among others.

Economic Environment

Measured in terms of nominal GDP and PPP, China’s economy is the largest in the world according to the IMF. At the close of 2015, it was amongst the fastest growing economies with an average rate of 10%. Being the largest global exporter, china is also the biggest manufacturing country across the world (Cheng 29). It plays a crucial role in the international trade by actively engaging in international trade activities. On the basis of per capita income, the IMF ranked china number 77 and 89 on nominal GDP and PPP respectively. The internationalization of PRC in 2005 has continued affecting positively its economic prospects. In 2010, china was ranked as the only Asian country that hit $10 trillion GDP mark. Coastal regions of PRC have experienced more rapid growth compared with the interior regions. Like its Asian neighbors, South Korea and Japan, china has experienced growth for over 30 years leading to better lives for citizens (United States. Dept. of Energy 38). PRC current account increased from $5.8 to $72 billion between 1980 and 2004 which was 12-fold.

During the period between 2007 and 2008, the inflation rate rose to 7.1% and registered the highest rate in February 2008 of 8.8%. This was occasioned by storms that resulted into food shortages. By Nov 2010, the inflation rose again to 5.1% due to increased food and fuel prices. During the first quarter of year 2015 the financial markets contributed approximately 1.5% of PRC total annual growth rate of 7%. By June 2015, the Chinese CSI index which comprises of 300 stocks that are traded in both Shenzhen and shanghai stock exchanges rose to approximately 150% for a period of 12 months. Renminbi is the PRC currency denominated as Yuan. It is issued by the monetary authorities, Bank of China. It exists under a floating exchange rate system that is primarily managed against the US dollar (Eriksson 91). A sophisticated relationship exists between china’s level of inflation, trade balance and the value of the country’s currency. USDCNY traded at 6.49 by the end of March 22, 2016. Furthermore, it gained 4.48% from 6.22 that traded in March, 22 2015. In its history, the Chinese Yuan hit its highest in January 1994 of 8.73 and lowest of 1.53 in Jan, 1981.

Works Cited

Cheng, Kevin C. Economic Implications of China’s Demographics in the 21st Century.

Washington, D.C.: International Monetary Fund, 2003. Print

Economic Evaluation on Co-Eor of Onshore Oil Fields in China. Washington, D.C: United

States. Dept. of Energy. Office of Science, 2015.

Eriksson, Tor. Advances in the Economic Analysis of Participatory and Labor-Managed Firms.

Bingley: Emerald, 2010.

McLean, James S, and Zhang Yuqing. “China’s Foreign Economic Contract Law (fecl): Its

Significance and Analysis.” Northwestern Journal of International Law and Business. 8.1

(2006): 120-144. Print.

Wu, Yu-Shan. “Mainland China’s Economic Policy Toward Taiwan: Economic Needs or

Unification Scheme?” Issues and Studies. 30.9 (2000): 29-49. Print.

Wu, Guoguang, and Helen Lansdowne. Socialist China, Capitalist China: Social Tension and

Political Adaptation Under Economic Globalization. London: Routledge, 2009. Print.