PESTEL analysis for China

1) Political Factors

i.Constitutional System

China or People’s Republic of China adopts socialist system or communism in their

political system in their decision-making processes in governing the country.
The country’s sole political party in power is known as the Communist Party of China.
The government have the sole power to control all activities done by their citizen as what
have been describe in how communism system worked in governing a country. In
other words, the purposes of working in China are to contribute to the nation and also
to the government as the government control on all activities in the country.

ii.Stability of Government

The stability of the China government is quite moderate and stable because the
administration of the government are not publicize to the public either through the
press or on the internet. So, the degree of the citizen involvement in the politics is low
because of the heavy restrictions impose by the government. However, the policies
impose and the law regulations are quite effective in terms of economy where China is
one of the leading countries in the world. In the recent years (2001), China has joined
the World Trade Organization and results rapid growth in industrial and manufacturing
sectors because of the cheap labor in China. But still problems such as managing
environmental degradation, demographic pressure and the extreme immigration from
rural to urban area must be faced by the government.

iii.Business Freedom

The business freedom in China is quite tight because of the regulation impose by the
government where they restrict businesses from other countries coming in. But recently,
China government open their gate to the outside world to set up business in their country.
It takes 37 days to start anew business in China compared to the world
average 38 days. While it takes 1.7 years from the filling for insolvency in court until
the resolution of distressed assets. Examples of business freedom in China are
supermarketization and opening market to foreign multinationals company because of
the entry of China into WTO. Supermarketization is where the government shuts down
the traditional ³wet market´ and transform them into supermarket.

iv.Trade Freedom

In the past few decades, China loosen their trade policy to the outside world in their
trading, export and import industry.China¶s weighted average tariff rate was 3.9
percent in 2008 based from the web (heritage.org). Factors that affect the cost of trade
freedoms are import and export bans and restrictions, import and export licensing,
non-transparent tariff classifications, complex regulations and standards, subsidies,
state trading in certain goods, services market restrictions, issues involving the
protection of intellectual property rights, and inconsistent and corruption-prone
customs administration add to the cost of trade. So, China¶s trade freedom score to
account for non-tariff barriers deducted about twenty points.
2) 
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