Question

Discuss three China’s major economic advantages today and how these economic advantages pose both opportunities and threats to foreign multinationals investing in China

Answer 1

-CHINA'S ECONOMY-

1- China's Economy enjoyed 30 years of explosive growth, making it the world's largest. Its success was based on a mixed economy that incorporated limited capitalism within a command economy.

2-The Chinese government's spending has been a significant driver of its growth. China's economy is measured by its gross domestic product.

3-Three China's Economic Advantages-

1-Economic growth will decrease famine, starvation, infant mortality, and death; give us greater leisure; can enhance art ,music, and philosophy; and gives us the resources to be humanitarian.

2- Economic growth will especially benefit to societies in which political desire exceed the resources, because it may prevent what might otherwise prove to be social tension that people can't take it.

3- However, without economic growth, the desires of one group can he met when others expense on it. Lastly , economic growth can help newly independent countries in mobilizing resources to increase the power of a nation.

4-There have been many debates regarding the positive and negative effects of foreign direct investment with the host government caught in a love hate relationship.

1-Pros-

1-Improved capital flows .

2-Technology transfer .

3-Regional development .

4-Increased competition that benefits the economy .

5-Favourable balance of payments .

6-Increased employment opportunities .

5-Capital inflows that result from foreign direct investment benefit of all countries by making more resources available, but it particularly benefits those nations with limited domestic sources and restricted opportunities to raise funds in the world's capital markets.

1-Cons -

1-Low level of research and development .

2-Risk of increase capital outflows .

3-Stifling of domestic business practices .

4-Erosion of host culture .

5-Disruption of domestic business practices.

6-Risk of interference by foreign governments.

6-From an economic perspective, capital inflows resulting from foreign direct investment are often accompanied by higher, longer term outflows that do not benefit the host government.

-Example-

When multinational chains build hotels in the Caribbean, the shortage of local suppliers meant that much - needed foreign currency was spent on imported supplies. In other cases, multinationals prefer to use existing suppliers in their own countries rather than develop local supplier networks. Another frequent complaint is that investors fail to follow though on their promises.

7-Multinational companies are, by definition, change agents,. That is the products and services they generate and market bring about change in the lifestyles of consumers in the host country.  

-Example-

The introduction of fast - food restaurants to Taiwan dramatically altered eating patterns, especially of teenagers, who make these outlets extremely popular and profitable .