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Sunday, September 30, 2007

China: The adoption of

China has maintained a government system decidedly anti market and free trade for centuries; however, within the last ten years they have slowly integrated market economy principles in certain zones, and they have flourished. According to Allen Greenspan, China has grown 11.5% for the first part of 2005, bolstering them to the fourth largest economy in the world. China has been increasing by double digit percentages for five years now. Greenspan indicates that China’s growth will completely determine how our world economy looks in twenty years. He also states that China’s growth along with much of Europe, India and Russia could send us towards a globalization economy. So why is China growing so dramatically?

China has been oppressed by dictators who believed that controlling production and agriculture was the best economy. The former dictator Mao Tse-Tung heavily restricted what people produced and through his redistribution and controlled method of economy he would take most of the products his country was producing in an attempt to reallocate them to other people. However this promotes inefficiency in that people stopped producing, knowing full well that most of what they produced would be taken. Therefore no one in the country produced more than they had to, even when threatened with death. This began to change when the new leader of China began moving them towards a free market economy; allowing trade areas throughout the country. Clearly, when people are allowed to keep most of what they work to produce they will produce to full capacity, and that is exactly what china is doing. They are a huge country with motivated people that have been suppressed and are now given some freedom.

According to Allen Greenspan, “The success of every nation -- big or small -- will depend on the extent to which it allows free trade and open markets.’’ If China continues to move towards a free market economy, and allows open trade with other countries it has the potential to become one of the largest economies in the world. They are slowly recognizing the governmental inefficiencies they were practicing and are slowly becoming more efficient in their countries production and workforce.


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