China In Response To Globalisation Essay

Assess strategies used by China, in response to globalisation, to promote economic growth and development.

The people’s republic of China is widely known for the shift from centrally-planned to a market-based economy as part of their market reform in 1978 in response to globalisation. China is now considered the fastest sustained expansion providing that they have a monstrous population of 1.3 billion, and currently the second largest economy worldwide. Globalisation is the phenomenon referring to the increasing level of integration between countries and the act of weaving all economies into a global economy. Several strategies implemented by China to promote economic growth and development comprise of various taxation, macroeconomic policies

Current taxation patterns exhibit China’s specific raises on non-tax revenues with 34 types of government funds, 236 administrative fees and many unofficial levies paid which are mandatory and unrequited but not considered as taxation. However, these levies contribute to 2.5% of GDP in China (China Statistic Yearbook 2011). Refer to Figure 4 which demostrates the compoisition of the GDP in relation to taxation. China as an emerging country relies more heavily upon taxes which are esaily accumulated by nature, these collectable taxes will essential underwrite the country’s economic development. Taxation systems in China are divided amongst central and local government where primary taxes include the State Administration of Taxation (SAT), Value Added Tax (VAT), concumption tex, corporate income and other specialised taxes. The positive function of taxation is as a revenue generation tool and apparatus to redistribute income for an improved standard of living observed through China’s GINI index of 42.8 in 2008 to 42.2 as of 2012 (World Bank). However, tariffs imposed on imported goods and services with the intent to restrict trade by increasing price, negatively impacts consumers and interferes with the inflation rate hence, disturbing the growth of the economy. Yet, China’s active participation in the World Trade Organisation (WTO) continues to reduce trading barriers and even the average tariff rate has dropped 15.3% (2001) to 9.9% (2015). Meanwhile, addition assortments of taxation policies have been imposed on imported goods such as the VAT operating at a basic rate of 17%. This form of tax was implemented in 1984 by the State Administration of Taxation in replacement of sales, business and corporate income