OPPapers.com

Critically Discuss The Threats And Opportunities For An Economy Of Your Choice Arising From The Growth Of China.

Table of Contents

Introduction 2
Increased labour competition from China 3
Outsourcing 4
Chinese Monetary Policies & Purchase of U.S. Treasury bonds by China 7
Protectionism 10
Conclusion 12
Bibliography 13



Introduction

Globalization is driving international trade and foreign direct investment (FDI). This in-turn accelerates the flow of resources between economies and increases the interdependence of world economies. China is the biggest developing country in the world and America has the largest economy as the business and consumer sectors of these countries remain the main locomotive for the world economy it is only natural to compare the effect of the growth of china on the U.S. economy.
In discussing the threats and opportunities on the U.S. economy from China it is necessary to first define what are the opportunities to an economy and extrapolate the threats. For this paper an opportunity to an economy can be defined as any factor that increases the long term development of a country or any trend that increases corporate profitability and positively affects the stock market , a threat does the opposite.
Even more specifically threats and opportunities can be itemized as follows:
a) Increased labour competition from China
b) Outsourcing
c) Chinese Monetary Policies & Purchase of U.S. Treasury bonds by China
d) Protectionism
In each of the cases sited above there are perceived threats and opportunities to the American economy. Each is complex and will grow increasingly complex are relations between China and America continue to evolve.


Increased labour competition from China

The most publicized impact of a growing China on the American economy can be seen in the increased outsourcing of jobs. There is antidotal evidence suggesting that increased trade with low wage economies such as China’s may have a negative effect on employment particularly in trade-sensitive sectors of the American economy such as manufacturing. This...