Thursday, December 12, 2019

Changing Global Business Environment

Quetion: Discuss about the Changing Global Business Environment. Answer: Introduction: The global recession in 2008-2009 has assisted China to boost its economic position in the global context. The recession has deteriorated the financial position of the US and several robust European economies. However, the impact of the recession was marginal on the Chinese economy which has advanced its relative position in the international economy. In the present scenario, it is possible that China will attain the position of the global leader but due to several domestic challenges in the Chinese economy, such as unequal distribution of wealth, poor infrastructure and low living conditions in the rural areas It is a challenging scenario for China. In this essence, in this essay, the position of China in the world leadership role is explored. Along with it, the role of 2008 global crisis in the present situation of China and its reluctance to play leadership role is also discussed. The 2008 economic crisis is marked as one of the most important economic event in the recent history. The situations of the global crisis have resulted in huge blow to the US economy and financial infusion from the government prevented the economy from a huge crash. The economic recession also impacted major Asian economies such as Japan, China and India; however, the impact on these economies was relatively lower. Moreover, inspection of these economies shows shifts in the global polity and economy. The opening up of the Chinese economy and the economic modernization programs in China showed promising results and currently China has become a serious threat to the superpower position of the US economy. The Chinese economy is growing with a steady rate of 9 % annual rate and has become the third largest economy of the world (Nato Review, 2009). Due to the economic recession, the importance of the Chinese economy has grown due to its huge foreign currency reserves. It has also invested heavily to combat the impact of economic crisis in the country (Zhu, 2012). The Chinese government is also increasing its military expenditure and developed a strong army in the recent years (Gokay, 2009). Due to the minimal impact of the economic recession on the Chinese economy, it is growing at a phenomenal rate. The Chinese companies have also adopted the business model of assimilating innovative and technically advanced inventions in the western countries and improving them. It results in reduced economy of scale and increased profitability. The growing influence of China can be observed through several of its strategic initiatives such as principal lender in Latin America. It is also a prime investor in Africa, Saudi Arabia and Iran. These investments have increased the importance of China in the African and the Asian subcontinent. China is also known for its labor intensive industry and large manufacturing units. The Chinese products are used all across the globe due to their low costs (Cao, 2004). The Chinese economy is robust and largest manufacturing economy. Reluctance of China to play world leadership role Although the Chinese economy is growing at a phenomenal rate, it is observed that China remains reluctant to play the global leadership role in the world polity. The primary reason for it is that China wants to attain the peak point of the economic growth before actively participating in the economic situations of the other countries. It has a large population and geographical area which are a significant challenge in the economic growth of the country. The unnecessary leadership in global affairs will not contribute to the growth of the economy but will increase the number of disputes and create hurdles in its growth (Linehan, 2016). The country of China is also not psychologically prepared to play leadership role in the global affairs. It has a rigid notion of sovereign rights and problems related to the genocide, climate change and nuclear weapons; therefore, the Chinese leaders remain reluctant in condemning or excessively supporting the foreign policies of other countries. The C hinese government is also adopting the strategy of reluctance to avoid the demonstration of its power to the foreign countries. It will increase fearfulness and acknowledgment of the countrys power which will bring negative as well as positive reactions from the foreign countries (Schell, 2009). Chinas Domestic issues holding it back from the global leadership position There are also several cultural, financial and systematic factors that can prevent the country from holding the worlds leaders position. In the recent years, the economic development of the country has resulted in economic imbalance in the country. The business environment of the country is unsatisfactory for domestic business. There are several overheated markets for example property bubble which are threatened by reduced capital flow of the country. There are significant domestic challenges of the country which are needed to be overcome to obtain the status of economic superpower. The per capita income of the country is very low and is approximately one-tenth of the income in Japan and the USA. A significant sum of the Chinese population still lives in the rural areas without access to the basic living amenities. The rural population is still struggling to access education and healthcare facilities. Due to the oversized population, it is challenging for the county to become a super power. It is an atheist country and all types of religious practices are shunned in the country. It does not a specific political or ideological strategy which will create challenge for the country in establishing relations with its foreign counterparts (Scutt, 2016). Business implications of China becoming a superpower In the recent years, several changes are realized in the international business scenario, the primary of which is the growing power of China in global scenario. It has been predicted that in the upcoming years, the Chinese economy will be able to overtake US economy. Soon, it will also obtain high political power and rule globally. At present too, China holds a supreme presence in several African countries by investing heavily in it (Thrall, 2015). The economists have also stated that China will also be able to capture portions of Europe in a similar manner. However, there are several concerns associated with the growing power of China. One of the primary concerns is the contempt shown by the Chinese leaders for human right and democracy which may undermine the conditions and pay of the workers in the global arena (Obbema, 2015). China is set to become one of the largest economies in the world; however, with it certain changes will occur in the global economic scenario. Even when the China will become a superpower, the USA will also lead the global economy and it will result in bipolar economy. In this situation, the impact on the global economy will be dependent upon the relationship between the two countries. The China will become an influential country in the Asia and will create alliance with the other smaller Asian countries. The Chinese government will also try to make alliance with the Asian countries and make the economic structure independent by creating regional banks and financial institutions. Along with it, China will influence the relation with most of the countries in Central and South East Asia. Moreover, the present Chinese rise to the power can also face the challenge of lack of Imperialist Undertaking (Tsui et al. 2004). The Chinese military is not technically advanced compared to the USA a nd European countries. They also lack knowledge regarding advanced war tactics and strategies. In the recent economic development of the country, China has neglected its war capacity which has increased its vulnerability. Till now, the relations between China and the USA have been calm and peaceful. Both the countries have got along with each other due to their mutual interests. However, as China will rise as a superpower, the tension between both the countries will increase (Cerna, 2011). At present, the global financial system is controlled by the USA dollar and the American domestic and foreign policies. Therefore, China will try to create a global system which is independent of the American interference. An alternative financial system will increase chaos and confusion in the financial system. Changes in International environment with China becoming a superpower Over the last few years, the world has remained stable and peaceful in its economic activities. It is due to the fact that the Asian countries have agreed to work with their Western counterparts and their policies. The Asian countries have agreed as they have perceived that these institutions serve the global economic interest rather than the Western countries interests. However, the USA has taken several actions that have undermined the efficacy of these institutions. When China will rise to the power, it will challenge the financial institutions. It is apparent in the recent development of AIIB and BRICS banks. In addition to it, the Chinese rise to the superpower is different for different countries. For instance, India is neutral to the rise of China as a superpower. It is due to the fact that unlike other countries in South East Asia, it does not need the USA power to resist China. Russia will find the rise of China as a superpower suitable, as it will find a supporter to control the influence of the USA in the world. The European countries might support China silently; however, it is most likely that USA will oppose it strongly (Zhongying, 2016). It can be critiqued that whether the rising prominence of China is opposed or supported, it will play a significant role in the global economy in upcoming years. Chinese economy is also a major growth engine in the worlds economy. When most of the economies are lagging and stagnating at a very low pace, the Chinese economy is growing with an annual pace of 10%. Therefore, the Chinese economy remains a vital aspect in global economic growth. The Chinese economy is rebalancing and continues to shift from low cost manufacturing and exports to services and household contribution (Shaffer, 2016). In these changing circumstances, the global economy may benefit from the rebalancing. It will create aggregated demand which will steady the global economy growth rate. Moreover, China will also attain a governing role in the global economy with its increasing strength. The Chinese leaders will become more confident in taking a leadership role in the global economic and political governance (Hora sis, 2005). Over the last few years, several reforms introduced by the Chinese government have shown their results and the Chinese economy is characterized by advanced technology, infrastructure, innovation and skilled workforce. As per the above discussion, China has driven economic shift in the global context; however, it is not yet capable to become an economic superpower. It is not sustainable power as it is highly imbalanced. In order to become a global economic power it has to change its role and become an active member in economic and political forums (Wolf, 2016). It can be deduced that China will soon become an economic rival of the USA and diminish the status of the USA as the economic superpower. The economic recession of 2008-2009 has also damaged the strength of the USA economy. The Chinese economy is capable of taking up the leading position due to its size and constant growth. In November, 2008, the Chinese government invested three trillion dollars to boost the economic strength of the country. Although there is strong evidence that suggests the growing power of Chinese economy, the country itself has been reluctant to take up the position of the world leader. Therefore, if the stand of China remains same, the growth of Chinese economy will have little impact on other economies. It can be scrutinized by the recent actions of country wherein it has been reluctant to interfere in the political and economic conditions of other countries. In addition, China being a developing country has its own issues and political agenda. Therefore, according to the present situations, there are least chances that the country will become a global leader in near future; however, the global economy may become multipolar due to the emergence of several promising economies. References Cao, C., 2004. Challenges for Technological Development in Chinas Industry. Foreign investors are the main providers of technology.China Perspectives, (54). Cerna, M. (2011). Chinas Growing Presence in Latin America: Implications for U.S. and Chinese Presence in the Region. China Research Centre, 10(1). Gokay, B. (2009). The 2008 World Economic Crisis: Global Shifts and Faultlines. Global Research. Retrieved 2 January 2017 from Horasis. (2005). Chinas New Role in the Global Arena. Retrieved 2 January 2017 from Linehan, M. (2016). Chinas Growing Economic Clout In Asia Challenges US Dominant System. Frontera News. Nato Review. (2009). Will the Financial Crisis make China a Superpower? Retrieved 2 January 2017 from Obemma, F. (2015). We fear China's growing power. But it is morally reprehensible to celebrate the country's woes. Independent. Retrieved 2 January 2017 from Schell, O. (2009). Unless Beijing assumes its global responsibility, the US will be left to act alone. Yale Global. Retrieved 2 January 2017 from Scutt, D. (2016). The imbalances in China's economy that created previous problems are making a comeback. Business Insider. Retrieved 2 January 2017 from Shaffer, L. (2016). The curious case of Chinas remarkably consistent economic growth. CNBC. Retrieved 2 January 2017 from Thrall, L. (2015). Chinas Expanding African Relations Implications for U.S. National Security. Santa Monica, Calif: RAND Corporation. Tsui, A. S., Schoonhoven, C. B., Meyer, M. W., Lau, C. M., Milkovich, G. T. (2004). Organization and management in the midst of societal transformation. The People's Republic of China. Organization science, 15(2), 133-144. Wolf, M. (2016). Chinas future challenge for the world economy. Financial Times. Retrieved 2 January 2017 from Zhongying, P. (2016). What is China's role in global governance? Chin Daily. Retrieved 2 January 2017 from Zhu, X. (2012). Understanding China's Growth: Past, Present, and Future. JOURNAL OF ECONOMIC PERSPECTIVES 26(4), 103-24. 1

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