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Impact Of China's Growing Economy

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China is on track to become the world's largest economy in coming years. Research the implications of this development and draft a document addressing the following:

What would be the impact of China's economy on:
The world trading system
The world monetary system
Western-based global corporations
How might the concepts of guanxi and guanxiwang come into play? Are there any ethical considerations for a western business?
Discuss three cultural tips for US businesspeople doing business in China.
Support your responses with examples.

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Solution Summary

The impact of China's growing economy is determined. Three cultural tips for United States business people are doing business in China are discussed.

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What would be the impact of China's economy on?

The World Trading System - China already has the world's second largest economy after the United States and recently overtook Germany and the worlds largest export nation; it is also a major importer of raw materials and technology. This gives China significant leverage in whole global trade is conducted as more nations will have to cater to China's needs in order to meet their own domestic economic requirements. China also maintains large trade balances with nations it does business with (Exports more than it imports) and has large foreign capital reserves (estimated at over 2 trillion dollars). All this gives China a distinct advantage when conducting bilateral and international trade agreements and gives them a significant voice in whole global trade is conducted. However China is also a member of the of the World Trade Organization (W.T.O) and World Bank and significant effort has been put into ensuring that they conform to established international standards and rules. In other words the established global players (U.S, E.U and Japan) are trying to ensure that China respects the status quo when it comes to how behave in regards to the worlds trading system. Some of the key issues that need to be resolved when it comes to China and the Worlds trading system are:

-Respect for intellectual property rights- this has been a key contention for China's major trading partners as it has been often accused of patent infringement and industrial espionage
-Market Openness- China has been accused of taking advantage of the international trading system without reciprocating by blocking certain areas of their economy to foreign involvement and protecting domestic industries at the expense of multinational companies.
-Dumping & Subsidizing - Due to the Chinese ability to significantly undercut the labor rates of most industrialized nations they are often accused of dumping their products on the global market. An example of this would be the steel industry, where cheap Chinese steel has led to the ...

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