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... the last twenty years. A main sign of these progresses has been the retreating significance of the state sector. Previously the state sector was the dominating the Chinese economy. Nowadays, the proportion of the state sector in the whole economy has decreased harshly.
One of the important aspects in analyzing economic situation of China in the recent years is the fact that in the year 2001 it joined the World Trade Organization (WTO) which now plays major role in defining the external policy and ways of development and improvement not only in the foreign trade, but in the Chinese economy as a whole. 3 Before China had joined WTO in November, 2001, many experts forecast the possible decrease of export volume in China, as after having joined the organization, the country had to take over a number of limitations for the export of its products to other countries - WTO participants for the whole period of its trade economic system transition in accordance with the WTO rules, and to refuse from allocating investment support for the export goods 3 Kent, Ann. (2002): Chinas International Socialization: The Role of International Organizations. Global Governance vol. 8, issue 3 343 - 347 production. Before China had become the member of WTO, it was suggested that this participation will unconditionally set negative influence on the export and will restrain its volumes, as well as the volumes of production, especially during the first years after joining the WTO. However, upon the expiry of the first three years it became clear, that during this period there has occurred fast growth of all macroeconomic indices together with the international trade of the country. (Xie 2006, p. 47). As it can be seen from the table, the quick growth of Chinese economy continues. It is displayed not only through the high GNP growth rates, but international trade and attracted foreign investments volumes.
The main inner factor of development is the deliberate economic policy, which is directed not at fast privatization of the state enterprises and the total liberalization of prices in the country, but at the inner demand expansion and the transition to the active financial and moderate monetary policies. While developing economic policy in the recent years, the main attention was paid to the changes in the aggregate demand, which was the main factor of forming tendencies in social and economic development of the country. As a result of such theoretical approach, the average annual GNP growth rates in comparable prices since 1975 until 2005 equaled to 9. 9 %, which is considerably higher than average annual growth rates of the world economy as a whole 3. 8 %. Thus, at the beginning of the 21 st century China was able to reach a new economic line 18. 232 trillion Yuan in 2005, which is much higher than $ 1 billion according to the currency exchange at the time. (Xie 2006, p. 46) The main external factor of Chinese economic growth has become the drastic export increase as a result of joining WTO in 2001. The volumes of international trade have grown 3 times during the period of 2001 - 2005. Simultaneously, export growth rates were higher than these of import.
These processes were taking place on the background of the constant GNP growth (8 - 10 % annually), together with the growth of international trade portion in the GNP, which constituted only 43. 3 % in 2001, having grown to 63 % in 2005. (Lloyd 2006, p. 392) It is also possible to speak about the constant increase of investment into Chinese economy. Direct investments constitute the bigger portion of the whole investments amount, and the considerable part of Chinese investments is also made into foreign economies. Investments here serve as a part of international trade structure, as the object of trade here is capital. 4 According to Han, the deputy director of the commission's Department of General Affairs, China has reasons to maintain rapid economic growth over the next 20 years, although the rate may decline slightly, " 4 Thus, the economic growth of China at the beginning of 21 st century is not accidental. It has been well designed and based on theoretical economic knowledge with excellent practical realization of the created ideas. The model of reforms in China allowed providing steady and stable growth of economic indices, the increasing standards of living and the growth of demand for the goods produced inside the country. To achieve this success there have been used not only inner factors, related to the presence of natural resources and a big amount of excessive labor force, but also external factors, connected with creating the privileged export regime for the Chinese products, competitive on the world market after joining WTO in 2001.
In these conditions there is a question, which stands for Europe and the whole world how to respond to the challenges thrown by the growing Chinese economy: either to enclose from it or to develop the cooperation with it in various forms. 5 4 Lloyd, Peter. (2006) Economic Theory and International Trade. Economic Record vol. 79, issue 246: 387 - 395 5 Newspaper article. Chinas Growth Seen as Positive Influence. Manilla Bulletin 8 March 2005: 11 - 12 Conclusion The policy of economic development witnesses that China is denying the autarkies course, which has existed in the country before, having replaced it for the policy of active foreign ties expanding and attraction of foreign capital. The development of the Chinese economy should be performed on the base of its own efforts combined with the international organizations cooperation.
To improve the Chinese international trade there should be followed three principles, based on the economic theory and knowledge of economic processes. First is that the development of various forms of ownership and forms of entrepreneurship, with the privileged condition for those, who deal with external economic relations. Secondly, state (planned) management over the forming and development of market relations and strict government control over all macroeconomic indices, as this policy has proved itself to be effective. And the third is that the open door policy should be kept as the leading one, because it fosters the inflow of foreign capital. Foreign trade and economic policy of China can be characterized by the following disadvantages, which should be eliminated. First is that significant extent of state involvement into entrepreneurship; secondly, too many priorities in different economic and foreign policies.
The next is the absence of national currency convertibility and the last is the absence of the right for land sale. These disadvantages should be softened and compensated step by step, without any drastic changes, through the thorough development of the state policy which will be aimed at expansion and support of international trade as an essential part of the Chinese GNP, as well as the support of state owned enterprises which deal with export or import. To keep the growth rates of international trade high, there should be created and saved the following conditions: the state should not have any big external debts; the state must provide inner social and political stability, the integral system of foreign investments stimulation, and privileged tax regime in particular; economic transformations should go evolution way, and not take the form of shock therapy; any policy should be directed at finding rational balance between export and import, which should lead to the equilibrium in economy and thus make the country attractive for potential investment and partnership. So, to our pleasure, some areas of China have productively fulfilled the party's policies and that therefore have resulted in the economic development, social stability and full employment. This can be traced, for instance, in most parts of Zhejiang Province. If to go there and analyze these areas, the causes why they have reached such accomplishments can become obvious.
It is not because that these regions have got definite privileged treatments from the government, but for the reason that they industriously fulfilled the party's policies, particularly in the areas of SOE reforms and the development of multiple forms of ownership structure. Generally speaking, these areas set a sound institutional foundation for economic growth. If this region of China can implement the task of improvement, other regions will be able to get the same or better conditions. From this viewpoint, China's future is very hopeful. Works cited (1) Bhagwati, Jagdish. Should China Be Allowed to Join the World Trade Organization?
Insight on the News 1 December: 1997 (2) Garnaut, Ross & Song, Living. Chinas Third Economic Transformation: The Rise of the Private Economy. New York: Routledge, 2005 (3) Kent, Ann. : Chinas International Socialization: The Role of International Organizations. Global Governance vol. 8, issue 2002 (4) Lloyd, Peter. Economic Theory and International Trade. Economic Record vol. 79, 2006 (5) Pei, Mini.
Dangerous Denials: Chinas Economy Is Blinding the World to Its Political Risks. Foreign Policy January: 2006 (6) Wang, Xiao jun. Banking Reforms and Monetary Policy in the Peoples Republic of China. China Review International vol. 10, 2003 (7) Wong, John.
The Chinese Economy in Transition: From Plan to Market. Pacific Affairs vol. 72, 1999 (8) Xie, Andy. Measuring Chinas Economy: An Inside Glimpse of Capital Investment, Deflation and Foreign Trade. International Economy: 2006 (9) Newspaper article. Chinas Growth Seen as Positive Influence. Manilla Bulletin 8 March 2005: 11 - 12 (10) Wang, Shaoguang.
Learning by Debating: The Changing Role of the State in Chinas Economy and Economic Theories. Policy Studies Journal vol. 23, 2002
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Research essay sample on World Trade Organization Chinese Economy
