Globalization and New Challenges to the World Economy from China

globalizacia ilustracne

Prof. Ing. Peter Baláž, PhD.
EUBA
Bratislava, Slovakia

Transformation of the world economy, which is influenced by extensive developmental discrepancies, is affected by business conditions on all regional markets, whether it is their productivity, accessibility or current price parameters.

 

Product value chains are fragmented more and more and companies are pushed into increased internationalization of their activities, cooperation and specialization of the production process. Globalization as the main phenomenon in these processes has brought, through new territorial distribution of FDI, additional growth potential and positive influences, mainly into labor productivity, unit expenses, innovations, modernization of production and consumption structures, capital accessibility or effects of trade intensity growth.

These factors gain more meaning in decision making processes, as they are cumulatively reflected in the competitiveness of companies which are able to implement them into their production. These development trends have had different dynamics in the last decade, but have been stable after 2010. They have been accompanied by another fast growth in Asia, slowing down the fall in economic activities in industrial capitals. High-tech production and sales increased in its importance. Its expansion has been redirected to Asia, at the expense of USA, EU and Japan. There is no other explanation than that Chinese economy put into use its above-standard long-term growing investments into science and education, as well as its purposeful strategy in science and research support, and successfully increased commercial value of bought foreign patents and licenses. Data about high-tech products export confirm that these tendencies are not short-term, nor accidental. China, together with Singapore, gained the biggest share of the overall world export in 2012.

Forecasters expect that after 2030 more than 50% of world export will come from China. It manages to harmonize the coexistence of cheap workforce with increasing numbers of professionally trained and educated personnel which puts her to a different position from other economies. In 2015, Chinese “satellites” were placed quite high in the international competitiveness rankings (Singapore 2nd, Hong-Kong 7th and Taiwan 15th place). “Mother” ranked 28th, but beat several developed countries. The fact that this “family” represents one economic unit, which creates various synergic effects, will shortly be reflected in results on international markets. The question arises what will this mean for the EU international positions, especially if it is not capable to counteract.

The facts stated above move decisions about granting China status of a developed economy into a very different strategic position. It cannot stay in the realm of local concerns about increase in imported goods, for example, of steel into the European market (the EU market share in its production is about 10%, compared to China’s 50%), or textiles and shoes, which are anyway being produced in China by renowned European and US companies for lower prices. It will be about future distribution of individual continents’ real economic power and wealth of their populations. It will be about the EU ability to adapt to new situation on global markets and to support its own competitiveness. It will bring substantial changes into financing education and science, effectiveness of this process, backing of various synergic effects arising from not yet finished convergence of national economic systems. It will necessitate absolute liberalization of movement of scientific and technological knowledge and scientists’ teams in designing comprehensive research projects from partial pieces of knowledge. Top Asian experts will be gradually input into these teams. This trend could stimulate potential scientific capacities that are not yet visible on a national scale, as well as final effects resulting from this connection.

 

Specific countries share in the overall high technologies export

Projection for 2030 based on data from HSBC, 2014

Projection for 2030 based on data from HSBC, 2014



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