Blog4: What is the relation between economy and globalization? LIU ZIFU

 What is the relation between economy and globalization? 

                                                                                  LIU ZIFU


 I think there is a mutual relationship between the economy and globalization. And there are benefits and disadvantages. In the following, I will analyze the interaction between economy and globalization from two aspects, and at the same time, I will take China's case into account to argue my point.

Globalization drives the economy, and the economy drives globalization.

Globalization promotes economic growth through trade, investment and technology flows. For example, since China's accession to the World Trade Organization (WTO), it has rapidly become the "world's factory" by virtue of its low labor costs and manufacturing advantages. Globalization has brought large amounts of foreign investment and technology to China, enabling its manufacturing sector to flourish. For example, multinational corporations such as Apple have located their production lines in China, which has directly led to local employment and technological upgrading. And the Tesla Superfactory in Shanghai, which I mentioned in my extrablog. In addition, the rapid growth of export trade has greatly boosted China's economic development. China's exports grew from 2.6 trillion yuan in 2001 to 42.7 trillion yuan in 2022. This proves that globalization can boost economic development.

Secondly sustained economic growth can be an important driver of globalization. For example, after China's reform and opening up in 1978, China has taken the initiative to integrate into the global market by setting up special economic zones and attracting foreign investment. In recent years, China's "Belt and Road" initiative has not only strengthened the global trade network, but also provided new opportunities for the economic development of other countries. This shows that economic development has transformed China from a passive participant in globalization to a key force in actively shaping the pattern of globalization. So it can also be argued that my point that the economy drives globalization.

Globalization may lead to economic imbalances between regions

 Although globalization has driven economic growth, I also believe that it has led to widening income disparities between regions and groups. In China, for example, this phenomenon is more pronounced. The eastern coastal regions have risen rapidly due to the concentration of foreign investment and trade, while the inland regions have lagged behind. For example, Shanghai and Shenzhen have much higher GDP per capita than the central and western provinces, reflecting the fact that globalization can lead to uneven distribution of assets in some regions. This may also lead to an excessive gap between the rich and the poor in the regional population, which may cause some social problems.

To sum up, the relationship between economy and globalization is mutual. And there are benefits and disadvantages. As I mentioned in the main text, in the case of China, for example, globalization has significantly boosted economic development, and the rise of China's economy is shaping the new globalization. However, the economic imbalances brought about by globalization are also significant. It may be that only if either government or capital realizes both balanced development in order for globalization to continue to serve economic prosperity.

Extra: (China has been dealing with this issue in a good way lately, as the government has announced a plan for the development of the western region, which reveals the future inlandization of industries in the coastal areas and the gradual bringing of capital into the inland market. Chengdu and Chongqing are proposed to be the center of the western region, radiating the entire southwest and northwest of China. Boosting economic benefits for the region. (Currently big global players such as Jitterbug have moved into Chengdu, which could be a solution to the aforementioned economic imbalance).

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