CHINESE BUSINESS AND ITS POLICIES

QUESTION

Topic 1:

In the context of Chines business and Chinese foreign trade discuss why Beijing Consensus has become an attractive political economy paradigm for many developing economies in preference to Washington Consensus.

 Topic 2:

Every businessperson is a product of that person’s culture. When businesspersons of different cultures negotiate commercial deals there is bound to be a cultural clash. Do you agree with this view in the context of negotiating business deals with the Chinese? Why or Why not? How could such a clash be avoided in business deals with China?

SOLUTION

Introduction

The present essay discusses the factors and advantages of Beijing consensus over the Washington economy, which is the trend of recent economic talks and meetings because of rapid growth of the Chinese economy. The growth took place at a faster pace compared to USA because the country was able to rise from the ashes and the accelerated growth which the country has witnessed made the so popular and well-known Washington consensus to fall apart and the focus was led on the Beijing consensus. The Beijing consensus had its own good and demerits too but the over advantage of the phenomenon over the well followed Washington consensus made it easier to be followed in the world over and another factor which added the fuel in the upbringing of the theory was the importance to the social growth applied by the phenomenon. This has led the political and economic support for the Beijing consensus to be followed and read by the economist around the world over.

The Content of the Beijing Consensus

It may be difficult to find an exact definition of the Beijing consensus and this is because of the fact that it is perceived as the opposite of Washington consensus. It’s been described as an alternative to the Washington consensus and is been described as a new physics of power and development and also it so flexible enough to be termed as doctrine and thus the model is more about social change rather than the economic change.

The basic five policies in which China and Beijing consensus believes are:

1. 1.     Incremental reform: The basic policy of feature in which the country believes is that the phenomenon should be first tested and then implemented in the whole society rather than implementing in the society and not finding it useful. The crossing of river with a staggered set of stones is well documented in the Beijing consensus and by the person who coined the term. This is very important factor of the growth according to the Chinese since the implementation of a reform with testing it in a small population will eventually lead to waste of resources and thus will make the economy weaker even if by some few points and thus the incremental application of the reforms is the basic of Beijing consensus.
2. 2.     Innovation and experimentation: The country believes that innovation is the key factor of growth for any country and it should be laid as the stone for growth for a country since the growth is the phenomenon which will change its meaning with time and is well described by innovation and experimentation in the modern times. Chinese economy works on this phenomenon and this is well evidenced in the Beijing consensus. The other countries of the world are tend and made to follow the path of the growth which China has laid down because the country was able to gain so much economic growth in so less time (Joshua, 2004).
3. 3.     Export-led growth: The policy which made the country a growing economy is the export policies of the nation and the whole economy of the nation has been turned into export oriented economies because the state believe in marketing its products to t he world at a much less prices and competitive quality with approachability so that the world will look forward to the Chinese services and the country will soon grow into a market supplier to the world.
4. 4.     State capitalism: An important policy which the country follows and is well supported by the Beijing consensus is the state owned capitalism. This has led the way for the citizens that they will be able to obtain the needed material for their survival and growth through the state owned companies and shops. The banks are very important part of any economy and these are owned by state in China d thus it pave the way for the growth of the nation since the lending rate s and interest rates are so well balanced so as to get the most appropriate financial planning for the state so that it will develop with equal share to all the citizens of the society. The country still believes that the state owned enterprises will help serve the citizens better and thus will lead them to grow in an environment which is safer then the purely capitalist economy (Dani, 2008).
5. 5.     Authoritarianism: Another policy which is dealt in china at a high pace is authoritarianism and this led the way for success. The people in china are ruled by the government which is capitalist in nature and this has made it possible for the country to grow from a highly destroyed one to the one which world sees today. The Chinese government takes into account that the Beijing consensus can be model of growth for the whole world if the country grows and proves it to be efficient theory of growth for the world to follow and apply it in their own countries. The country believes that the ruling of people will make them work faster and better and thus will pave the way for success and thus the quality of life of the whole nation could be improved after the economic growth for the country is enhanced to an extent that it would cater to the world market and thus will make the country gain the foreign currency and foreign trade and hence leading the society or the country a world power. This is well followed by the other nations around the world and thus been the savior of many drowning economies and societies (John, 2008).

How the Beijing consensus worked?

China is developing at a faster pace and it is important to the world economy and the world societies. This importance of china to develop is more useful and to be focused form a perspective of other countries other china itself because the development if the Chinese economy is far more useful to the other developing nations around the globe. China is making the way for other economies around the world to grow faster. And this led the way for the Beijing consensus which made the so truly Washington consensus to fall apart from the path of growth in the world. The Washington consensus was discovered in 1989 and it took the importance in the world economic market in 1990 and was coined by John Williamson. The Washington consensus was the single centre of gravity till few years after its discovery and it took the centre stage for the world‘s various economies because of its various theories of development and growth. It followed the prescriptive approach and it eventually left most economies with massive destructed and abandoned ones after various long history of its application. It left a trail of destroyed economies since Washington knows best about suggesting other nations to run themselves better and how to position themselves in the world market. This was the approach followed till few years back when the Beijing consensus came into existence and this approach was soon nullified and obsolete. The Beijing consensus paved the path for growth with free trade policy and peaceful application of various economic factors and tools around the globe for its various approaches around the world. This economy was the one the world was waiting for its growth and the same was made possible because of better economic and political support from the Chinese government to the policies of world growth (Zhang, 2010).

This theory is the one who believes in fast growth by the application of ruthless and new ideas to maintain and discover new theories of life. The Chinese economy is still ruled by the thoughts that the best approach to cross a river is by gathering few stones to do so and not by building a huge bridge to overcome. Thus the theory is underlying the path that a better approach which is economical and best suitable to a situation is the one which should be followed while designing a policy and publishing it over the world and thus guiding the other economies around the world. The theory is feasible enough to incorporate new theories an ideas from around the world to incorporate into it and thus making the best suitable of the present theories.

The Beijing consensus by passes the Washington Consensus on the feature that it applies best know knowledge and facts in a ruthlessly feasible ways of doing things right and thus making it feasible for the countries to adopt it more likely. The Chinese theory is not ruled by the borders and governments and it can be changed and adopted at the same time to the best feasible way of life. The country has the ancient thought process and at the same time the modernized approach to solve situations and achieve things more effectively, as it had the people from the ancient world and the modern think tanks which make the country the one which can approach and grow toward the most powerful economy of the world. The theory of the Chinese economy hardly makes a difference between the theory and practice that is it take the practical application of a problem and solution at the same pace at which the theoretical approach to the problem could have been done. Thus the economy believes in feasible solutions to the problems at a better pace then those applied at world over (Bates, 2006).

Another important aspect of the Chinese economy is that it is governed by a society which is changing so fast that it is governed by the people who believe in the ancient approach and thoughts and at the same time the people who carry the modern thinking and approach are also considered. The society takes innovation as the centre of the economy and it rules the growth and discovery of furthest more products and services to serve the nation and this approach has been applied in the Beijing consensus which makes it feasible for the country to overdo with its approach of growth  (Yiping, 2010).

Beijing consensus is more to deal with the social change rather than the economic change and it has begun the change in the country with changing the thought process of the citizens about growth and innovation. The Washington consensus lacked the importance of society in the growth and the economics and governance. The Beijing consensus has taken enough care to include the social importance of the economic growth and thus took it from the people to grow along with the economy and this has led to the change in the growing economies of the world over who are developing and striving for the success and thus the Beijing consensus has been an ideal for them to guide through the oath of success (Williamson, 1989). This is possible because the political social approach of economic growth according to the Beijing consensus is more important and thus the approach took the people of the society along with them to grow and thus the society grows. This approach was widely used and utilizable in the economies around the world that have the majority of the society in the middle class or the lower class and thus helped them to grow with the contribution of people. Beijing consensus unlike the Washington consensus contains the ideas of economics which are more about politics, quality of life, and balance of power in the society. This has led the curiosity of the world to the Chinese economy and the country has learned from its mistakes of globalization in the past and is keen to grow on the lines of correcting and not repeating the mistakes and hence taking the points into consideration of the involvement of the society in the economic growth (Daron, 2008).

Conclusion

The Beijing consensus is gaining the importance in the world and is over coming as an alternative to the well known Washington consensus and thus has been made feasible due to the political and economical support to the phenomenon. Also the theory undertakes the task of highlighting the social change rather than the economic change for the improved and better growth for the society and country.

References

1. Zhang L. The Rise of China: media perception and implications for international politics. Journal of Contemporary China, Volume 19, Issue 64 March 2010, pages 233 – 254
2. Williamson John: What Washington Means by Policy Reform, in: Williamson, John (ed.): Latin American Readjustment: How Much has Happened, Washington: Institute for International Economics 1989.
3. Bates Gill, Yanzhong Huang. Sources and limits of Chinese ‘soft power’. Survival, Volume 48, Issue 2 June 2006 ,
4. Daron Acemoglu, Simon Johnson, James A. Robinson, and Pierre Yared, “Income and Democracy,” American Economic Review 98, no. 3 (2008): 808–42.
5. John F. Helliwell and Haifang Huang, “How’s Your Government? International Evidence Linking Good Government and Well-Being,” British Journal of Political Science 38, no. 4 (2008): 595–619.
6. Dani Rodrik, “The Real Exchange Rate and Economic Growth,” Brookings Papers on Economic Activity (Fall 2008): 365–412.
7. Joshua Cooper Ramo, the Beijing Consensus (London: Foreign Policy Centre, 2004), 22.
8. Yiping Huang and Kunyu Tao, “Causes and Remedies of China’s External Imbalances,” China Center for Economic Research, Working Paper, 2010.

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