ECONOMICS

TOPIC 1:
THE GLOBAL

ECONOMY























ECONOMICS
CHAPTER 1 SUMMARY: INTRO TO THE GLOBAL ECONOMY
GROSS WORLD PRODUCT
• Gross World Product (GWP): total value of all G+S produced worldwide each year
o 10 x 1950 level à volume 50 x 1950 level
GLOBALISATION: the increased connectedness between countries and their economies through a process of integration
TRADE IN GOODS AND SERVICES:
• A measure of how G+S produced in an economy are consumed in economies around the world
o Grown rapidly: US$8.7 trillion in 1990 à US$46 trillion in 2014
• High volumes of global trade = economies don’t produce all G+S they need, or not as efficient
o Grown b/c new technology in transport + communications à reduced costs
o Also removal of barriers to trade + new trade agreements
o Richest 15% of nations had 61% of global trade, poorest 30% less than 4%
• Composition of trade: what G+S are traded
o Used to be dominated by manufactures à growth in fuels, minerals, services
• Direction of trade flows: where the G+S traded move from and to
o Changing à reflects changing importance of economic regions
o 1995-2014: North US + Western Europe à 82% to 70%
o 1995-2014: East Asia + Pacific (China, Indonesia, Vietnam) à 7% to 17%
• Terms of Trade: relative prices of exports compared to imports à favourable = $X rise faster than $M
o Export Price Index x 100
Import Price Index
FINANCIAL FLOWS:
• Foreign exchange markets (FOREX) are an important feature of international finance à networks of buyers and sellers
exchanging one currency for another
o Daily turnover reaching almost $5.5 trillion in 2014
o Only 5% of FOREX market involves payments for G+S, 95% is speculative investment
• Main benefit: enables countries to obtain funds to finance domestic investment = EG
• Negative economic impacts: speculation creates volatility à herd mentality
th
• AUD is the 5 most traded currency
INVESTMENT AND TRANSNATIONAL CORPORATIONS:
• Foreign direct investment (FDI) à movement of funds b/w economies to establish a new company or buy a substantial
proportion of shares in an existing company (10%+) à long term investment
o 2012: LICs received more FDI than HICs
o Long term: more FDI to HICs – safer à short term: more going to MICs – profits
o 68% comes from richest 20%, 1% from the poorest 20%
• Transnational corporations (TNCs): production facilities overseas à bring investment, technology, knowledge
o Governments encourage TNCs through incentives (subsidies, tax concessions)
o 82 000 TNCs with 810 000 foreign affiliates à number falling b/c mergers and takeovers = hold more power
o 1/3 of all world trade, ¼ total output
TECHNOLOGY, TRANSPORT AND COMMUNICATION:
• Technological developments facilitate integration of economies
o Cheap + reliable communications = international services à 2000-2012: internet use ­ 566%
o Finance + investment: rapid movement of money worldwide
o Phones + internet = changing structure of industries à online
o Advances in transport (aircraft, rail) allow greater labour mobility, better movement of G+S
• Firms move directly into overseas markets to sell G+S à invest in new countries \ tech drives FDI
• Benefits: stock ordered instantaneously (reduces waste), IT systems maintain inventories (reduced warehousing costs),
increased choice, lower prices (increased competition)
• Structural changes in production + distribution of G+S
INTERNATIONAL DIVISION OF LABOUR, MIGRATION:
• Labour markets far less internationalised à people do not move jobs so freely
• Outsourcing of work to countries with cheap labour is increasing e.g. manufacturing, communications
• World Bank estimates 230+ million people have moved country for work
o Highly skilled to wealthy economies - higher pay, better opportunities à Brain Drain
o Low skilled to HICS – not enough locals for some work
• Barriers to working overseas: immigration, language, culture, incompatible education + qualifications
THE INTERNATIONAL AND REGIONAL BUSINESS CYCLE:
• International business cycle: fluctuations in the level of economic activity in the global economy
• Factors that strengthen the international business cycle:
o Trade Flows: affects demand for G+S
o Investment Flows: can affect confidence, herd mentality
o TNCs: spreads international business cycle
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o Financial Flows: spreads international business cycle
o Global Interest Rates: Monetary policy influenced by interest rates abroad
o Commodity Prices: role in general level of inflation
o International Organisations: influence global economic activity
o Technology
• External Shocks:
o Real shocks à changes in world output, commodity prices, technological change = structural changes
o Financial shock à changes in financial variables à transmitted more quickly than real shocks
• Ties b/w countries enhance the effect that one country’s events/performance has on another à e.g. EU
o E.g. Synchronisation is highlighted by GFC

CHAPTER 2 SUMMARY: TRADE IN THE GLOBAL ECONOMY
THE BASIS OF FREE TRADE – ADVANTAGES + DISADVANTAGES
• Free trade: Gov’s impose no barriers to trade that restrict the free exchange of G+S between countries, with the aim of
shielding domestic producers from foreign competitors
o Advantages:
§ Access to G+S countries cannot produce
§ Specialisation in production – comparative advantage
§ Efficient allocation of resources
§ Economies of scale à specialisation = ¯ costs of production = increased efficiency
§ Encourages innovation and spread of new technology
§ Higher living standards
o Disadvantages:
§ Short term UE: domestic firms find it difficult to compete à ¯ production = UE
§ Infant industries: difficult to establish if not protected from large foreign competitors
§ Dumping of surpluses
§ Environmentally irresponsible production methods
ROLE OF INTERNATIONAL ORGANISATIONS
1. Manage instability
2. Assist countries experiencing economic crises
3. Develop global standards
4. Establish global rules on free trade
5. Resolve disputes
• World Trade Organisation (WTO): implement and advance global trade agreements and to resolve trade disputes
between economies à power to enforce agreements
o General Agreement on Tariffs + Trade (GATT): couldn’t enforce à Uruguay Round = WTO
§ Now includes services and intellectual property
o Doha Round: to free up global trade à remove agricultural protection, lowering tariffs on manufactures +
reducing restrictions on services trade
• International Monetary Fund (IMF): maintain international financial stability
o Advice + financing to members, work with developing nations to help achieve stability + reduce poverty
o Supports free trade and movement of finance + capital globally
o Structural Adjustment Policies: demand countries make changes before receiving aid à up to 125% quota
§ Helped Thailand, problems for Indonesia
o Funds paid by members (based on national income), voting power based on contributions
• World Bank: helping poorer countries with economic development, investment in infrastructure, reducing poverty
and in adjusting economies to the demands of globalisation
o Aim: reduce extreme poverty to 3% of global pop. by 2030 + raise incomes for the lowest 40% of earners
o Controlled by members à voting power based on contributions
o Millennium Development Goals (MDGs)
o Support of Heavily Indebted Poor Countries Initiative: reduce debt by 2/3 in 46 of the poorest countries
• United Nations (UN): agenda is broader than any other organisation à global economy, poverty + development,
international law, global health issues, environment, international security à internal agencies + orgs
o Maintain international peace and security
o Established 1945, 193 members
• Organisation for Economic Cooperation + Development (OECD): achieve highest sustainable EG+D, raise standard of
living
o Coordinates economic cooperation among members
• Trans-Pacific Partnership (TPP): 12 parties e.g. Aus, NZ, Canada, Japan, Singapore
o Potential to forge stronger economic links b/w economies
o Access to new markets à e.g. opportunities for Aus. goods + services

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INFLUENCE OF GOVERNMENT ECONOMIC FORUMS
• Role in coordinating policies b/w major economies, especially during times of economic/financial crisis
o Aim: enable nations to discuss global economic issues with attention to economic stability and growth
• G7: US, UK, Fra, Ger, Canada, Jap, Italy à largest industrialised nations
o Coordinate global macro policy à influence over FP + MP of largest economies
o Agenda often includes political issues + priorities e.g. climate change, global poverty, security
o Significance declining – no longer most important forces in global economy
• G20: G7 + Argentina, Australia, Brazil, India, Indonesia, China, Mexico, Russia, Saudi Arabia, Turkey à some emerging
o Leading forum for coordinating key issues relating to global economic stability (post GFC)
o 80% of GWP and 2/3 world’s population
TRADING BLOCS, MONETARY UNIONS + FREE TRADE AGREEMENTS
• Countries form agreements + trading alliances to ensure they are in best position to gain from growing trade
opportunities and to avoid being excluded from emerging trading blocs
o Global agreement: World Trade Organisation (WTO) à break down all trade restrictions
• Trading bloc: 2+ countries form a trading arrangement to the exclusion of others à EU, NAFTA
• Free trade agreement: agreements between countries to break down barriers to trade between them
o Regional + bilateral = trade blocs = hinder progress towards global free trade
o Initially convince economies to reduce protection against few economies, eventually remove fully
• European Union (EU): 37 members e.g. Austria, France, Germany, Italy, UK, Spain, Ireland etc.
o To increase trade within Europe
o Tariffs against non-members = oversupply of agricultural products à NAFTA
o Monetary union 1999 à 19 members à common currency + IR
§ Stability of Euro undermined by sovereign debt crises à loans needed to prevent collapse
• Asia-Pacific Economic Cooperation (APEC): 21 members: Aus, NZ, Canada, US, China, Russia, Singapore, Indonesia etc.
o Intended to be a FTA that supports the WTO
• North American Free Trade Agreement (NAFTA): US, Canada, Mexico
o To counter power of EU à trade tripled b/w countries
o Agricultural protection completely eliminated, other tariffs phased out over 5-15 years
o Access to US = increased exports for others, US shifted production facilities to Mexico
• Association of South East Asian Nations (ASEAN): e.g. US, China, Japan, South Korea, Indonesia, Singapore
o To enhance international competitiveness and enjoy free trade among members
o Working towards lowering tariffs to 5%
• Bilateral Agreements: 2 countries e.g. CERTA (Aus, NZ), SAFTA (Singapore, Aus), AUSFTA (Aus, US)
o Resurgence à reflects slower progress of WTO negotiations
o Gov.’s claim they will deliver large increases in trade - impact is often much smaller
• Multilateral Agreements: between 2+ countries e.g. EU, NAFTA, APEC, AFTA, ASEAN
o 27 in 1990, 406 in 2015
o Most effective way to reduce trade barriers
REASONS FOR PROTECTION
• Protection: Gov. intervention that gives domestic producers an artificial advantage over foreign competitors
TYPES OF PROTECTION:
• Infant industries: difficulties early years = establish markets, achieve economies of scale so can compete
• Protect domestic employment: demand for local product ­ = more jobs à long run: unemployment, ¯ growth
• Prevent dumping: foreign firms sell G+S overseas at unrealistically low prices to eliminate surpluses or establish
market position à may force local firms out of business
• Defence + self-sufficiency: defence force for war + self-sufficiency in food
• Protect human rights: should prohibit trade with goods produced using forced/child labour
• Environmental factors: environment may be harmed in production
METHODS OF PROTECTION:
• Quota: controls the volume of a good allowed to be imported over a period of time à guarantees domestic producers
a share of the market
o Tariff quotas: goods up to quota pay standard tariff, above pay higher
• Tariff: government imposed tax on imports à raises price of goods \ domestic product is more competitive
o Stimulates domestic production + employment b/c supply more
o Reallocation of resources to less efficient producers à to protected industry
o Consumers pay a higher price for fewer goods
o Raises government revenue (not primary objective)
o Retaliation effect
• Subsidies: financial assistance to domestic producers, reduces selling price, compete more easily with imports
o Consumers pay a lower price for more goods à indirectly pay for subsidies through taxes
o Impose direct costs on Gov. budgets à abolished quicker than tariffs

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• Voluntary export restraints: 2 countries agree to restrict exports to each other à short term
• Local content rules: a good must contain a minimum % of locally made parts à may not get tariffs
• Export incentives: domestic producers get assistance e.g. grants, loans, technical advice

CHAPTER 3 SUMMARY: GLOBALISATION + ECONOMIC DEVELOPMENT
• 2015: 836 million people in ‘extreme poverty’ (less than US$1.25 per day) à 1/2 in Sub-Saharan Africa
• Global hunger declined by 27% since 2000
• 1990-2015: people living in extreme poverty 47% to 14%
DIFFERENCES BETWEEN ECONOMIC GROWTH + ECONOMIC DEVELOPMENT
• Economic growth: increase in a country’s productive capacity over time à measured by % increase in real GDP
• Economic development: measure of welfare including indicators of health, education, living standards – e.g. HDI
• Countries may experience EG but not development and vice versa
• Global inequality: gap in living standards b/w + within countries à some believe this is narrowing
DISTRIBUTION OF INCOME AND WEALTH
• Gross National Income (GNI): total income earned by domestically owned FOP over time
• Purchasing Power Parity (PPP): exchange rates adjusted to equalise price of G+S in different nations = accuracy
• Greatest reduction in poverty in East Asia + Pacific à 400 million in China à 60.2% to 11.8% from 1990-2010
o Smallest reduction in Sub-Sahara Africa from 56.5% to 48.5% (6% drop)
INCOME AND QUALITY OF LIFE INDICATORS
• Human Development Index (HDI): measure of economic development à between 0 and 1
nd
§ 2014: Norway highest at 0.944, Australia 2 at 0.933, Niger lowest at 0.337
o Life expectancy at birth
o Levels of educational attainment
o GNI per capita
• MDGs: improve economic development in poor nations by 2015 à UN Summit 2000, 189 countries
o Focus on poverty, education, gender equality, child mortality
o Now Sustainable Development Goals – climate change, food security, infrastructure
DEVELOPING, EMERGING + ADVANCED ECONOMIES
• Advanced economies: high economic development, close economic ties with others à e.g. Aus, UK, US, NZ, Canada
o 1/6 world population, 50% world’s income (PPP)
o Slower growth in recent decades
o Large service industry
• Developing economies: low incomes, limited industrialisation à e.g. sub-Sahara Africa e.g. Chad, Congo, Mali
o Large numbers in absolute poverty
o Moderate growth rates, high population growth
o High levels of income inequality
o Very dependent on agriculture and foreign aid
o Poor levels of government à corruption
• Emerging economies: in process of industrialisation, high levels of EG à e.g. Brazil, Russia, India, China, Mexico
o Increased contribution to world output + trade
o Reduction in poverty + rise in living standards
REASONS FOR DIFFERENCES BETWEEN NATIONS
GLOBAL FACTORS:
• Global trade system:
o Wealthy countries protect agriculture à bad for developing nations (X’s mainly agriculture)
o Regional trade blocs exclude poorer nations from global markets
o WTO’s Doha Round: HICs fought against reducing protection to help LDCs
o Benefits of FTAs often non-accessible to developing nations b/c substantial cost in implementing them
• Global financial architecture:
o Long term FDI favours HICs à changing à 48 poorest LDCs got 4% FDI
o Short term FDI favours MICs à better financial returns à 2014: 54% of FDI to BRICs
o International finance tolerate loopholes à advantage for wealthy e.g. international tax havens
o Criticism over structural adjustment policies of IMF à has caused problems
o Many LDCs have massive foreign debt à Gov.’s focus on repaying debt over development
• Global aid and assistance:
o ‘Phantom aid’ à admin, consultant fees etc. à does not improve lives of the poor
o Tied aid is often not needed
• Global technology flows:
o New tech geared to needs of HICs – useless for LICs
o New tech requires increased infrastructure, education + related technologies to be absorbed quicker
o Labour saving: not suited to large labour force of LICs

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DOMESTIC FACTORS:
• Economic resources:
o Natural resources: low value added, create a narrow export base
o Labour supply + quality: LICs have poor education + low health standards à reduce quality of labour
o Capital + technology: LICs find it difficult to access capital à expensive
• Institutional factors:
o Political + economic institutions: corruption and low law enforcement discourage FDI
o Economic policies: influence an economy’s ability to take advantage of globalisation à policies related to trade
+ investment, participation in global orgs
EFFECTS OF GLOBALISATION
• International convergence of economic systems = increased risk of financial contagion
• Reinforced existing income disparities b/w HICs, MICs, LICs
• Since 1990, 20 countries have suffered a reversal in HDIs (internal + external factors e.g. corruption)
o Most severe reversals occurred in Sub-Sahara Africa and central + eastern Europe
• Trends over 20 years:
o East Asia + Pacific: 9% avg.
o Middle East: 4% avg.
o HICs: 1.9% avg.
TRADE, INVESTMENT + TRANSNATIONAL CORPORATIONS
• Trade Flows:
o World trade in G+S has grown by 8% from 2003-08
o Global Resources Boom = demand for resources and commodities
o 2009: GFC = world trade contracted by 12%
o Shift to elaborately transformed manufactured (ETMs) = high tech goods, services, intellectual property
• Financial Flows: increased reliance on FDI for investment, greater access to funds
• FDI: concentrated in established sectors
o Leads to increased economic activity
o High increases recorded for countries that relaxed barriers to FD à BRICs, Mexico à primary + services
• TNC sales:
o TNC’s and foreign affiliated accounted for 35% of GWP in 2014
o Top 100 TNCs produce 1/6 of GWP à dominate major industries
o Criticisms: merger activity continues to concentrate the number of companies
§ May lead to exploitation of workers and environmental degradation
§ Don’t operate under laws of one country so move production facilities to those with weakest laws
• Intellectual property + knowledge is being traded
ENVIRONMENTAL SUSTAINABILITY
• Globalisation can have a negative impact on the environment, yet also offers the best opportunity to protect the
environment as it forces nations to face up to their global responsibility
o LIC’s: to attract FDI they neglect the environment
o New technology: improves energy efficiency
• Reducing climate change effects coordinated by Kyoto, UN committee à strategies, goals
• Global problems:
o Pollution - manufacturing (air + water)
o CO2 emissions
o Increased methane gases (agriculture)
o Running out of non-renewable fuels à increased consumption
THE INTERNATIONAL BUSINESS CYCLE:
• Close links between economies
o Benefits: faster rates of economic growth through specialisation
o Cost: economies more exposed to spread of financial contagion e.g. GFC
• Increased need for coordination of macro policy











GRAPHS:
TARIFF:














QUOTA:














SUBSIDY:














PPF:












CHINA:
Economic Information:
- Market socialist economy with a communist government
o Moved from a planned economy to a market based economy
- Population: 1.3 billion
o Rapidly ageing
- Working age population: will fall 23% by 2050
o Has been declining since 2012
o Because of the ageing population à Gov is considering raising the retirement age
- Economic Growth:
o 2016: overtook US to become the world’s largest economy
o Fastest growing economy for past 20 years à average 10%
§ Fell during GFC + Sovereign Debt Crisis
o 2016: Forecast at 6.9%
- GDP per capita:
o 2016: US$6807
§ High levels of EG doesn’t translate to a high GDP per capita for entire population
- Unemployment: 4.1% in 2015
- Gini Coefficient: 2015 0.462 = rather unequal distribution of income
o Improved from 0.491 in 2008
o Worsened from 0.250 in 1990 = more inequality
- Real incomes: risen 8.2% between 1975 and 2010
Development Information:
- Emerging economy
th
- HDI: 2014 0.727 = 90
o 0.368 in 1980
o Life expectancy: 2014 75.8 years
§ Greatest improvements seen in very rural (west) areas
o Average years of school: 7.5 years
th
- Human Poverty Index: 29
- Percentage of pop. under poverty line: 6% in 2013 à US$1.90 per day
o 1981: 88%
o Last 25 years = 400 million lifted out of poverty
- Basic amenities:
o Water access improved 88% since 2008
o Sanitation improved by 47% since 2008
- Less than 3% of GDP is spend on health and education combined
Trade:
- Major exports: - Major imports:
o Machinery à 48% o Minerals à 26%
o Textiles à 11% o Machinery à 25%
o Metals à 8% o Transport à 8%
- Major export recipients: - Major import partners:
o US à 18% o South Korea à 9.3%
o Hong Kong à 11% o US à 8.8%
o Japan à 7% o Japan à 8.5%
- Exports have been growing at an average of 17% p.a.
- Foreign Direct Investment:
o Top recipient of FDI worldwide à 2014 $128 billion
§ Cheap labour à wages <5% of US wages
§ Surpassed USA in 2002
o Encourages inflow of FDI
o Main sources 2015: o Main invested sectors 2015:
§ Hong Kong § Manufacturing
§ Singapore § Real estate
§ Taiwan § Business services
- Global Organisations + Trade Blocs:
o WTO: joined in 2001
§ Took 14 years to comply with rules e.g. lowered tariffs on agriculture
o ASEAN: 10 members à EG, social progress, regional stability, enhance international competitiveness
o APEC: 21 members à promotes free trade among members
o G20: leading forum for coordinating key issues relating to global economic stability (post GFC)
o Trade Agreements: Pakistan, Chile, NZ, Singapore, Peru, Switzerland, Korea, Australia (CHAFTA 2015)


Strategies to Promote Economic Growth + Development:
Agricultural Reform:
- Agricultural, rural based society à industrialised, urban based economy
- Deng Xiao Peng à late 70s, early 80s
o Abandoned the agricultural commune system à Household Responsibility System
§ Farmers were allocated government owned land under long-term contracts
§ Make their own production decisions + sell surplus output once the state quota was met
• Quotas were reduced sizeably
§ Dramatic increases in food production = surplus income invested in town + village enterprises (TVEs) à
raised agricultural + industrial output
§ By 1983 it incorporated 90% of the country’s farming households
§ Growth in factories, movement of labour to urban areas
§ 1979: 18% jump in rural income
o 2016: further encouragement of urbanisation
Industrialisation:
- Agriculture à industrialised
- Based on driving growth though foreign investment and trade
o China required G+S it couldn’t produce itself = imports
o Cheap labour attracts TNCs
§ <5% of US wages
- Also export additional produce for additional income
- 1960s: 60% of population working in agriculture
o 2006: 14%
- 51% of China’s population live in urban areas
o 1979: 81% in rural areas
Open Door Policy:
- Deng Xiao Peng à 1980
- Allowed more foreign investment
- Created trade agreements
- Trade grew from 10% of GNP in 1978 à 36% by 1966
- Access to Western technology, management skills = more domestic jobs
Special Economic Zones (SEZs):
- Strategy to have TNCs invest in these easatern coastal cities à incentives
o 15% tax in SEZs rather than 33% in the rest of the country à e.g. Beijing, Shanghai
o Exempt from local taxes
o Can export goods duty free
- Where EG + development are highest, highest incomes per capita à at the expense of rural areas
- Gov is experimenting with market ideology in these areas
- TNCs contribute 80% of employment in China
- 90% of exports are produced by foreign TNCs
- 2013 investigation found that whilst they helped to increase GDP by 10%, they have no led to increased productivity
within their regions
Financial Reforms:
- Currency:
o Export success assisted by undervalued currency = competitive à fixed RMB to USD
o Criticism of unfair advantage = 2005 managed peg arrangement – based off top trading partners
§ 2016: 0.15 RMB to the USD
o Growing pressure to adopt a floating exchange rate
One Child Policy:
- A method of population control
- Because of pressure on resources, to slow rapidly growing population
- Many were exempt à only 39% of population actually had it enforced
- 2016: 2 child policy
Trade:
- 1980: ‘open door policy’ towards foreign trade and investment
o Trade in X + M grew from 10% of GNP in 1978 to 36% by 1996
o Increased access to export markets, Western technology, management skills, created jobs
- 1992: tariffs cuts à encouraged greater domestic efficiency through M competition à 32% to 15% in 2000
o Supported drive to attract FDI + open domestic market to more foreign competition
- Exports grew by 20% annually between 2005-2010
- WTO in 2001
- Imports + exports à above
- Trading partners à above
Investment: Grown 14% p.a.

State Owned Enterprises (SOEs):
- 113 large SOEs in China in 2014
o Pay 5-20% of profits as dividends
§ Will increase to 30% of earnings to be used for social security and infrastructure by 2020
- Monopolise markets e.g. telecommunications, energy, raw materials
- Invest significantly in the areas in which they operate = furthered economic development
- 1978-1992 reforms: many were privatised or merged = increased productivity + EG
o Loss of 12 million jobs = less economic development
Five Year Plans:
th
- 12 Plan 2011-15
o First inclusion of environmental objective à balance between people and nature
th
- 13 Plan 2016-20
o Infrastructure: high speed rail, highways, new airports, 60% to live in urban areas permanently
o Environment: new energy vehicles, maintain farmland, 6-10 trillion RMB invested in environmental initiatives,
improved air quality (from PM10 to PM2.5)
o Financial services: green innovation, further opening of financial markets, financial market reforms,
internationalisation of RMB
o Health: 2 child policy, more doctors (at least 2.5 for every 1000), pensions, life expectancy increase by 1 year
o Social and economic development: 50 million new urban jobs + industries, annual growth rate target of 6.6%
Environment:
- The world’s top investor in clean energy
o Policy to move from reliance on coal to renewable power
- Targets set for pollution levels
- Tradable emission permits à incentive to firms to reduce pollution by trading excess rights in a market
- 2003: Environmental Impact Assessment à applies to all new development projects
- 2008-12: Kyoto Protocol
- 2016: Ratified the Paris Agreement on Climate Change (COP21)
o Responsible for 25%+ of global emissions
o Responsible for 18% of energy consumption
o Committed to keep global temp increase below 2 degrees C

Influence of Globalisation on China:
- Increased integration into global economy
o Increase per capita incomes, improved living standards, reduction in poverty
- Economy doubled in size from the 1980s to 1990s
- Dualistic economy:
o Urban areas depend on SEZs – TNCs, FDI, technology
o Rural areas depend on agricultural production
§ Creates inequality in distribution of income and employment opportunities
- Inflationary pressures b/c high rates of growth
o 2007, 2010-11: tighter MP
- Distribution of income and wealth:
o Globalisation = rapid growth in some areas and little/none in other areas
§ Coastal areas: majority of wealth, greater employment opportunities
§ Incomes 100-250% higher in eastern provinces than western ones
o Richest 30% of population earn 87% of national income
- Environment:
o Highest level of carbon emissions worldwide
§ 2011: responsible for 27% of emissions
o Unless pollution controlled by 2020, there will be 20 million cases of respiratory illness p.a.
§ 2010: air pollution caused 1.2 million premature deaths
§ Highest rate of chronic respiratory disease
o Costs 8-10% of annual GDP à e.g. acid rain kills crops, depletion of natural resources
o 300 million people drink contaminated water every day (OECD)
o Loss of natural grasslands, topsoil, lakes, wetlands b/c agriculture + land clearing
o Inadequate disposal of waste = water pollution
o Highest rate of chronic