China Emergence into Becoming a Global Commercial Leader and Its Economic Super Power to Influence the Global Economy

Running head: CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL
LEADER AND ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL
ECONOMY
China emergence into becoming a global commercial leader and its economic super power to
influence the global economy
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CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY1
Table of Contents
Abstract............................................................................................................................................3
Chapter 1: Introduction....................................................................................................................4
1.1 Introduction.......................................................................................................................4
1.2 Background of the study...................................................................................................9
1.3 Aims of the study............................................................................................................25
1.4 Objectives of the study....................................................................................................26
1.5 Research questions..........................................................................................................26
1.8 Structure of the Study..........................................................................................................27
Chapter 2: Literature Review.........................................................................................................28
2.1. China’s Supporting Role during the periods of Economic Instability and Global Crisis...28
2.2. Transformation of China after Economic Reforms of 1978...............................................29
2.3. The effect investment in Technology and Education for shaping the Chinese Economy. .31
2.4. The benefits of Labor Mobility and Foreign Direct Investment.........................................34
2.5. The effect of modern education and government policies to increase the efficiency of
businesses..................................................................................................................................35
2.6. China’s role as a major Merchandise Trading Partner.......................................................36
Chapter 3: Research Methodology................................................................................................41
3.1 Introduction..........................................................................................................................41

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY2
3.2 Outline of the Method..........................................................................................................41
3.3 Research Philosophy............................................................................................................42
3.4 Research approach...............................................................................................................43
3.5 Research Design..................................................................................................................44
3.6 Techniques for collecting the data.......................................................................................45
3.7 Sampling and Sampling Size...............................................................................................46
3.8 Data Analysis Plan...............................................................................................................46
Chapter 4: Data Analysis, Results and Discussion........................................................................48
4.1 Performance of economic indicators...................................................................................48
4.2 Descriptive statistics............................................................................................................52
Chapter 5: Conclusions, Recommendations and suggestions for further work.............................54
5.1 Conclusion...........................................................................................................................54
5.2 Limitations, recommendations and suggestions for further work.......................................56
Reference List................................................................................................................................58

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY3
Abstract
The current paper deals in the study of factors that have caused China to emerge as a
leader of global commerce. China is currently having a super power to influence the global
market and lead the economies due to a continuous increase in GDP that comes from revenue
derived from imports. China plays an important role in commercial market and global trade
because of its leadership in economic sectors and its technological efficiency to produce goods at
low operating cost. This is done by dividing the paper into five sub-sections- Introduction,
Literature Review, Research Methodology, Data analysis and Conclusion.
The country is successfully following the footsteps of US and would overtake US in the
near future. The paper discusses about the reasons that have shaped the Chinese economy to earn
huge revenues by usage of several macroeconomic parameters such as trend in inflation, interest
rates, employment rates, GDP per capita, purchasing power parity and overall GDP. China is
gaining a comparative advantage in the production of goods and provides much of its resources
for the US economy. The paper uses statistical tools to establish the key findings of the paper in
relation with correlation coefficient, sampling, Balance of Payments and interpret the sectorial
growth of China and US in the coming years. At the end, the paper provides with a conclusion
about the reached topic and key findings taken from the data.

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY4
Chapter 1: Introduction
1.1 Introduction
An economy has multiple inherent risks which affect the income, expenditure and the
standard of living of the economy. It is related to the exchange of goods, labor activities,
technology, services, physical and human capital transfer among countries which is properly
defined in terms of monetary value of accounts. A global commercial economy refers to a place
where all the economies interact among themselves and this commercial aspect of the economy
is measured by the foreign trade and investment1.
Every economy has different resources and the allocation of resources, production techniques
and consumers vary among nations. This leads relocation of service activities or production to
economies who can supply the product at a lower opportunity cost such that they have a
comparative advantage in the production of the good. The global trade is anticipated both by
private and government firms in order to extract the maximized surplus. The rapid advancement
of the technologies has raised the overall communications with countries2. Foreign trade opens
up trade relations among the country which benefits them to facilitate with bigger export of
goods.
A global leader means that country can influence other economies to reach higher economic
growth and output levels. In order to become the global commercial leader, an economy need to
1 Morrison, Wayne M. China's economic rise: history, trends, challenges, and implications for
the United States. Washington, DC: Congressional Research Service, 2013.
2 Chiu, Stephen Wing-kai. City states in the global economy: Industrial restructuring in Hong
Kong and Singapore. Routledge, 2018.

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY5
have certain characteristics and skills that is needed to lead the economy all around the world.
Gaining a position in the global economy means that the economy has multiple international
business operations and trade partners. There is need for acquiring a set of skills so as to work
across international, national and regional boundaries. A comparison of traditional global leader
and emerging global leader is elucidated below with USA and China as case in points:
 Sensitivity towards the cultural diversity of the country- The preference of the
residents and international cotraditional untries may vary. US have a strong
understanding about the choices of foreign countries and allocates the good in the
right places in order to lead economies3. Countries must respect the affiliations and
identities as every economy consists of varied cultures and beliefs and they must be
open to creating goods accordingly. China is a diverse economy with 56 ethnicities
and the physical geography ranges from plateaus to low plains and deserts to rain
forests which adhere to the production growth.
 An experience of overseas operations- Overseas experience is required to run
international businesses as they get accustomed to the threats and barriers by
understanding the growth pattern of the economy. Since 1811, US has been involved
in several foreign interventions which paved the pathway for rapid advancement in
foreign trade and investment. China is rapidly increasing its overseas operation with
inflow and outflow of assets from the top multinational corporations (MNCs). This
3 Stahl, Günter K., et al. "The upside of cultural differences: Towards a more balanced treatment
of culture in cross-cultural management research." Cross Cultural & Strategic Management 24.1
(2017): 2-12.

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY6
benefitted China with the rise in employment rates and generation of bigger revenue
margins.
 Global strategic thinking and outcomes- Planning and formulating effective strategies
continuously to develop a deep understanding of the business world and overcome
any threat from its competitors. US calculates the plausible threats and benefits
according to the inflation, rate of growth, unemployment and changes in business
cycle. The Chinese consumer market has shown great potential for facilitating the
expansion of industries due to outsourced technological advancement and
manufacturing growths. The economic appeal in the Chinese market have effectively
attracted companies to increase their market share in the country and enlarge
operations in the sale of current product lines.
 Good negotiator and a deep knowledge about market outcomes- The business world
is continuously evolving and so are the challenges faced by the global economy. A
country needs to negotiate its strong and weak points and constructively deal with
other economies. Countries must appreciate the cultural differences and communicate
actively with other. The Chinese consumer market has shown great potential for
facilitating the expansion of industries due to outsourced technological advancement
and manufacturing growths. The economic appeal in the Chinese market have
effectively attracted companies to increase their market share in the country and
enlarge operations in the sale of current product lines.
 Low income inequality- A country can have three groups of people depending of the
high, low or average income which flourishes the growth of firms. A low-income
inequality means that demand for a certain good is determined by considering the

CHINA EMERGENCE INTO BECOMING A GLOBAL COMMERCIAL LEADER AND
ITS ECONOMIC SUPER POWER TO INFLUENCE THE GLOBAL ECONOMY7
choices of most of the people in the economy and suppliers can maximize profits. The
income inequality in US has been going down since the 1990’s for which US has
continued to be as the global leader due to fall in tax rates up to 35 percent The
difference between income inequalities among various groups in China is similar to
that of US with a wealth gap of $43,0004. When the Chinese economy was stagnant,
the income inequality gap was huge due to poor or no economic growth. With rising
economic growth and new employment opportunities, the income gap started going
down after the economic reforms.
 Productivity and cost-effective advantages- With low income inequality, the country
can invest in learning and research to build new tools for raising the productivity per
person. US have effective technologies that makes work easier along with low costs
and works by capital intensive approach with few labor. However, China had adapted
itself with the changing environment and market conditions rapidly such that China
can now manufacture goods with a 5percent reduction in the production costs,
compared to US. Due to this, many Chinese companies are expanding their
businesses in US5.
 Population density- When a country has that has high population density, with large
number of people in the labor force, provides a positive surplus to the economy. US
has an average population density with greater number of adult population who could
4Zhou, Yixiao, and Ligang Song. aaaaaaaaaa"Income inequality in China: Causes and policy
responses." China Economic Journal 9.2 (2016): 186-208.
5 Song, Malin, and Shuhong Wang. "Market competition, green technology progress and
comparative advantages in China." Management Decision 56.1 (2018): 188-203.