Difficulties disabling growth of market oriented system in China
The total achievements of the ongoing social economic reforms in china are very astounding, China from among the poorest nations up to 1976 when Mao Zedong died. Since then, the economy of china has grown rapidly to assume the second position of the biggest economy in the. The rapid growth of the china’s economy has brought sufficient resources to the government to further development and also has rescued million citizens from abject poverty. It is amazing to see the success and speed of the china miracle. The rapid development in china has attracted attentions worldwide in the recent years. The consequences of various aspects of the rise of china ,starting from its military muscles and expanding influence to its expanding energy supply demand, are be mostly debated within china and the international community. Thus it is crucial to correctly comprehend the achievement of china and its wide path toward higher development (Harry J Waters, 1997).
China has continuously faced many challenges to accomplish its performance in developing as in other developed states. Since 2001, commercial banks have been poorly allocating its funds disorderly. This has been a severe problem in china. The Chinese banking system has been a problem on the way has allocated funds.. The private business has relied on the informal finance for a long time. This has affected the success of the private sector. This situation is caused not only by banking system but also is due to capital market. The banks could have solved this challenge if it had lent out loans to the private sectors enterprises with a reasonable interest rate. The lack of reliable corporate credit information made it difficult for commercial banks to assess the risk of lending the loans (Wang, 1990).
The china government improved the legal environment, which occurred remarkably. China made changes to this legal system in accordance with the country’s accession. Even though, the law was so good in the country did not mean that market system was in phase. In fact, the banking system was deteriorating on the way was performing their duties. The senior executive specified some issues basing his argument on banking sector such as absence of regulations and rules on credit registry, the underdeveloped businesses liquidation law, the inability in criminal investigation for financial theft and irregularities(Rotberg, 2008). The PBC senior executive also launched the study project with association of World Bank and other monetary financial institutions (Wang, 1990). The main task was to propose a series of reforms to attain a new framework on the market system. The private sectors concerning the law on the banking system proceeded to the court with an aim to get loans from commercial banks with reasonable interest rates (Wang, 1990). This did not even succeed as planned by the complaints.
Nowadays when the commercial banks require enforcing their bill of rights to the collateral, they face many challenges. This occurs when they try to register some projects system, which they have to intervene with the court. The banks lack motivation of reconciliation therefore has to intervene with the court. They usually face trouble enforcing court decisions due to local government interference (Rotberg, 2008).
China has faced numerous challenges affecting the whole government and even the development of the country. In china, there has been fraud reports and corruption in banking sector. It is not of necessity whether financial frauds are on the increase or whether more crimes are reported and uncovered. There are three main challenges facing the banking system in China, which are high-technologically financial offences; the use of criminally obtained money to corrupt officials in order to run away punishment and to keep away from regulation, and funds crimes report with a more sophisticated means, global focus. The Chinese government is increasing institutional mechanisms for exposing and eradicating financial crime. This has been a prolonged challenge of fraud and corruption affecting the banking system in China (Wang, 1990).
The Chinese commercial banks’ strength to vie with foreign banks was posed in the context of three areas. These areas are in the domestic financial markets, in the open and developed domestic markets for future, and in world markets. Therefore, this is not easy for foreign banks to enter into the Chinese market. Banks involve in local currency where its mission does not move forward. This is much more expensive than simply opening branches (Rotberg, 2008). This affected the market oriented system negatively.
China indeed has achieved most of the objectives it set in 1978.it has improved significantly the well being of the citizens although it’s economic development has often been uneven and narrow. The last twenty seven years of growth and reforms has presented to the world the size of its, labour force, purchasing, creativity, commitment to development and the level of national cohesion. The contribution of china to the whole world as a way of growth will be ground breaking after mobilization of all of its resources. China has struggled with economic development mostly because of its population since a small challenge in its social development or economic when spread over a vast population become a huge problem. The most important strategic choice the government of china has made was to accept the economic globalization instead of separating itself from it .during 1970s the great signs of economic globalization and technological revolution was unfolding with huge momentum when Beijing held the trend and overturned the practices of Cultural Revolution (Kiichiro Fakasaku et al , 1999).
Based on the judgment of the development, the president of china alongside other great leaders in the government chose to take up the historic chance and shift the focus of their undertakings on the domestic development and hence tapping in to the international ones .they enforced the system of household contracting in the rural areas hence opening up fourteen coastal cities thus bringing in the economic period take off. Once again, china invoked a strategic because of the financial crisis that was rampant in. Asia and the continued struggles against globalization the decision of china to take part in economic globalization that it was facing was a great challenge .by clearly considering the advantages and the disadvantages related to economic openness and getting lessons from the history, the leaders in china decided to expanded china even more by deepening home economic reforms and world trade organization
The leadership of china has been striving to improve the relation with the whole world as their pursue their objective of rising in peace despite the downs and up the relationship of china and the united states for many years together with other dramatic alterations in the worldwide politics like the death of the soviet union. The leader in china has stuck to the fact that there are more good opportunities than problems for china in the international market today.
With respect to the strategic plans of china, it will take 45 years from today before it can be termed a modernized, medium level grown country. China will encounter several challenges before it get to 2050 mostly because of it’s over population, environmental pollution and lack of coordination among the two key factors of economic and social development. Another great challenge chain must encounter is clearly shown in series of tension that the government officials must deal with. The most common one are the gross domestic product growth and also social progress, between increasing job opportunities and upgrading technology, also the leaders are not sure whether to foster urbanization or expanding agricultural areas and others .to be able to solve all these dilemmas successfully, several properly coordinated policies are required to foster development which is more balanced and faster.
China is continuously losing its ample due to economic development and erosion that has swept the most top layer which is essential for crop production. The government of china is looking forward to add more energy creation capacity from other sources apart from oil and coal and is shifting their focus more on alternative energy development and nuclear sources. The major problem which are associated with setting up nuclear facilities and to maintain them .they are charged with the responsibility of putting heavy boundary the prevent radiation leakage which otherwise would cause terminal diseases such as cancer. Several other factors are converging to decelerate the growth and development .the debt overhang resulting from the stimulus program, slow recovery of the partners trading with china and industrial overcapacity. The economic growth in china has benefited eastern and the southern region more than the region. This has led north to increased disparity between south and north .the agricultural activity in has been left behind. Many farmers are struggling to make cater for their daily bread. Consequently this kind of imbalance has favored migration of workers to south china. It is struggling hard to fix this regional inequality (Shahid Yusuf, 2008).
Fukasaku, K., Mello, L. R., Organisation for Economic Co-operation and Development, & “Decentralisation, Intergovernmental Fiscal Relations and Macroeceonomic Governance”. (1999). Fiscal decentralisation in emerging economies: Governance issues. Paris: OECD.
Waters, H. J. (1997). China’s economic development strategies for the 21st century. Westport, Conn: Quorum Books.
Yusuf, S., & Saich, T. (2008). China urbanizes: Consequences, strategies, and policies. Washington, D.C: World Bank.
Dorn, J. A., Wang, X., Université de Fudan (Shanghai, Chine), & Cato institute (Washington, D.C.). (1990). Economic reform in China: Problems and prospects. Chicago: University of Chicago press.
Rotberg, R. I. (2008). China into Africa: Trade, aid, and influence. Washington, D.C: Brookings Institution Press.