Introduction
China is the second largest economy in the world after the United States of America. Having the world largest population, China is a target market for major exporters of the world. However, trade barriers have always hindered the entry of exports into its market.
One of such barriers is the country’s socio-cultural environment. The paper compares the socio-cultural setting of China and Haiti in an effort to show how it influences the countries’ progress.
Socio-cultural environment of China and Haiti
The socio-cultural environments of China and Haiti have similarities and differences. To begin with, the ethnic composition of the two countries is different. For example, Haiti is a highly multi-ethnic nation that has a composition of Blacks, Poles, Mulattoes, Jews, Chinese, Arabs, Germans, French, and Indians among others.
According to Crosta (2002), the Blacks form the major ethnic group in Haiti comprising of about 93% of the total population. On the other hand, China is lowly multi-ethnic. Its population comprises 91.51% Han Chinese. The Hans are the largest single ethnic group in the world.
The total population of China in 2013 was at 1,357,380,000, which is the world’s largest population figure while Haiti is a small nation that has a relatively small population. Crosta (2002) confirms that the culture of Haiti is deeply rooted in African and French traditions.
On the other hand, China had a cultural revolution in the 1960s that did away with the country’s traditional culture to incorporate the needs of the ruling government. The official language in China is Mandarin, which is an ethnic language that is spoken by most of the citizens. In Haiti, the major official language is French, which is borrowed from French colonial masters. There are also differences between religion in China and Haiti.
In China, the major religion is Buddhism, which makes 11-16%. In China, Christians only make 3-% while Muslims make only 1%. The rest of the population adheres to traditional religions such as Dongbaism, Moism, and Ruism. On the other hand, Christianity in Haiti is the major religion that comprises 80-85%.
The socio-cultural environment of China and Haiti affects the countries’ development. Factors such as language are important in the development of a country. Uniting the people of China using the mandarin and/or French in Haiti ensures ease of communication in business and official matters.
Variation in religion in China is important in the development since it indicates tolerance to freedom of worship, which can easily draw on the international markets. The presence of a higher Christian population in Haiti may impede development since investors from minority religions such as Muslims and Hindu may not feel incorporated.
The use of arts and dance in both Haiti and China also hastens development since art and dance are a major source of tourist attraction. Sporting activities enhance the health of the population. Besides, they work as a major source of income for the country.
Crosta (2002) affirms that emphasis on football by Haiti has been a source of domestic and foreign income since some players are popular in international clubs in the world. Martial art activities in China have become synonymous with China. They are a selling point for the brand China.
The effect of trade barriers in China
China uses various trade barriers to protect its internal markets. However, these trade barriers have resulted in complaints in from the international community, including the European Union and the United States. China has been a member of the World Trade Organization (WTO) for the last five years.
It has faced court battles concerning its trade tariffs (Chen, 2014). Some of the tariffs that China has put in its market are illegal while others are legal according to the WTO. However, most of the tariffs put the world market at a disadvantage in terms of competition with the enormous economy of China. These tariffs include:
Infringing intellectual property
According to Mark (2007), the international community has complained about low protection of intellectual property rights in China. The government of China is not strict on enforcement of intellectual property rights. Hence, international traders who do business with China feel threatened.
Since China has one of the largest manufacturing firms, it is easier for intellectual property rights of exporters to be violated. The international community is therefore cautious in exporting goods and services since they are likely to be duplicated and copied with the current little enforcement of intellectual property law.
The fact that the population of China is vast and that 3-4% of it is poor makes the system complex to handle. The government of China has put more emphasis on science and mathematics subjects to enhance innovation and creativity in production.
This plan makes the population focus more on the creation and development of the existing knowledge in order to produce better-placed products in the world markets. Because of the increased research and emphasis on betterment of the existing technology, the Chinese people use property and knowledge that has been developed by other people.
With little modification of the original objects or knowledge, Mark (2007) asserts that the product that was initially owned by other nations is multiplied and released to the market in volumes. Such a violation of intellectual property has occurred in the electronic business between China and other nations.
For example, mobile phone technology from Japan and other parts of the world was copied. It made a booming business for China. In the same way, the Chinese industries have copied and produced Japan cars and radios in volumes.
Owing to China’s ability to protect its internal market and its many manufacturing industries that are subsidized by the government, China’s products are able to dominate the international trade market. When the Chinese industries copy new technology and art of manufacturing from imported products, they are able to modify the product and make a lot of money from it.
For example, China modified the Japanese motorcycles together with their names only to sell products that were almost similar to those of Japan at a lower price. This situation made the products from other countries less demanded in the market due to price variations.
Extensive subsidies system
Chen (2014) observes that although China is a member of the WTO, which is against government subsidies on export products and services, it has been subsidizing its industries indirectly. The WTO prohibits monetary subsidies for all export produce to regulate competition in the world market.
However, even before China joined the WTO some years ago, it has always subsidized her industries. The government of China has ensured that it owns and controls major industries that are responsible for exports. The government of China has also used policies to ensure that government-owned installations dominate trade both internally and externally.
China has one of the highest numbers of government-owned industries in the world. Indirect subsidization of these industries by the government, which owns them, protects them from sinking even when they are infeasible. Mark (2007) observes that government industries that seem to go down are merged with others that are doing well in an effort to protect them from downsizing.
In some instances, the government forces some privately owned industries to be closed to protect it from unnecessary competition. Government’s financial assistance of manufacturing industries makes other countries that export their products to China have difficulties in accessing the market. Subsidization of manufactured goods makes them have an upper hand in the market.
Industrial policies in China
Kim, Lee, Kwak, and Seo (2014) observe that the government of China has also enacted trade policies that are harsh to the international trade. For example, China has restrictions to exports of raw materials. Such materials include the rare earth, which has barred many foreign industries from conducting business with China.
China has also restricted the location of its industries in foreign lands. It has encouraged direct internal development of industries. Kim et al. (2014) assert that other policies that have been restrictive on China include those that hamper export quotas and/or impose duties on exports.
This move discourages small exports in an effort to protect the vast Chinese population. Export duties and customs in China serve to better its industries whilst limiting the access of the market by foreign trade.
The direction of the trade in China
China’s trade has significantly changed its economy. Today, China is ranked the second largest economy after the United States. According to Kim et al. (2014), the major industries that have been pivotal in the development of business since the inception of the Peoples Republic of China include the manufacturing, construction, mining, and power industries.
These industries account for about 72.8 of the country’s GDP. Chen (2014) asserts that trade in and from China has been dominated by government subsidized or owned industries. Industries that have played a central role are those that undertake the mining and processing activities, for example, iron, steel, coal, and aluminum; those that manufacture machines, automobiles, electronics, and arms; those that manufacture clothing and textile; cement and chemicals; and food processing.
Industries that are owned by the state account for 40% of the national GDP. This figure is likely to predict the direction of trade in China. The machine manufacturing industry has been one of the leaders in economic development in China.
This industry is responsible for the production of nuclear power sets, paper making machinery, pumps, transformers fertilizers, rail, and other necessities for industrialization. The industry majors in the production of transport and machinery products that are exported to foreign markets.
For example, equipment that was sold abroad in 2006 from this country was close to USD430billion. Export is one of the areas that will lead the Chinese economy to the future. Chen (2014) further affirms that hundreds of countries in Africa, the EU, and Asia are contracting China for machinery supply and construction of roads and communication infrastructure.
The energy industry has also been significant in the development of trade in China. The industry that produces hydropower, nuclear, and thermal power is growing speedily. The industry produces the second highest voltage in the world at 3.2 trillion kilowatts. The business is responsible for power supply in all towns and rural areas of China. The industry is currently fully automated.
China is also mining crude oil at a rate of 160 million tons for supply to the local economy. Since the economy is so large, China is the largest importer of oil from other countries. The country is already generating nuclear power. It is targeting the largest nuclear power production of 36 million kilowatts by 2020. The energy manufacturing and processing industry has also produced solar panels for export.
Such solar panels have dominated the international market. They define the direction in which trade in China will follow. According to Bao (2014), high production of energy by this industry will result in high subsidization of power lowering the production cost, hence making its manufactured products more competitive in the international market.
The automobile industry has also been the force behind trade in China. In 2010, China sold 13 million automobiles. The Honda factory in China manufactures automobiles for export. This industry has been a pivot to the economy. It exports cars, lorries, and busses. Today, China is one of the key automobile producers in the globe.
Major trading partners of China and the trade barriers that they face
According to Zhao, Liu, Pu, and Yang (2013), major trading partners of China include the United States, Hong Kong, Japan, South Korea, Taiwan, Germany, Australia, Malaysia, Brazil, Russia, India, and Malaysia in order of merit. The European Union is the current largest trading partner block with China, accounting for more than 365 billion dollars in exports and 211.2 billion dollar in import.
China is a major exporter of goods and services to many countries across the world. However, Bao (2014) observes that as countries trade with China, they face various obstructions that bar them from venturing into the large market in China.
Some of these barriers include high subsidization of industries by the government of China, low enforcement of intellectual property rights by the government of China, prohibitive policies of export of some raw materials from China, government ownership of major industries and businesses, and poor transparency of business environment in China. All these factors bar free export and import trade from China.
Heavy subsidization of industries results in unleveled competition ground between China and the international market. Domination of industry ownership by the government put private business at a disadvantage. Control of raw materials export ensures that local industries buy cheap raw materials and produce goods that are relatively cheap for the local market, hence barring imports.
Impact of the trade barriers in China
Trade barriers in China have various impacts. The use of trade barriers works both positively and negatively for the Chinese economy. Subsidization of local industries by the government ensures that the industries can produce enough goods and services for the local world’s largest population.
Having a very high population is both a positive and negative factor for development in China. The large population provides a huge market for its manufactured goods, yet the government is responsible for the provision of employment and social health of the people.
The government has therefore subsidized the industries to ensure that they survive, provide employment, and produce competitive products for export. Bao (2014) observes that ownership of most of the manufacturing industries by the government ensures that the government controls and dominates the prices of manufactured products.
Although this strategy gone against the international market, it has been effective for the government. The government is able to subsidize its industries in an indirect way. Subsidization of manufacturing process ensures that products are competitive in the international and local market, thus earning the government a high income.
Ownership of industries by the government also ensures survival of vital industries such as energy, machinery, and transport sectors that are at the heart of its economy. The government saves companies that are downsizing by merging them with others to ensure survival.
Policies that bar exportation of some raw materials such as the raw earth ensure that local industries have access to raw materials for manufacturing. This plan safeguards local industries against external rivalry.
On the other hand, international businesses have complained about the dumping of subsidized products from China in their countries. A good example is the US. Subsidization also bars exporters to China from accessing the market. Industries produce cheap products that hinder foreign markets from penetrating.
Ownership of manufacturing industries by the government also bars international investors from excelling in China. For example, the government will subsidize its industries and produce products that are cheap and competitive, thus making all investors lack markets.
Analysis of the importance of trade barriers in China
Trade barriers in China have been enforced since the inception of the Peoples Republic of China. Trade barriers have enabled China to protect its internal market from the huge economies of the world such as the EU and the US. Kim et al. (2014) affirm that trade barriers such as the use of heavy subsidies on local manufacturing industries ensure that China is able to compete favorably at the international arena.
Products from the Chinese industries, for example automobiles, are able to fetch market in foreign markets due to their competitive prices. According to Yong-Liang et al. (2013), trade barriers in China also ensure protection of the local market from exploitation by foreigners.
Production of cheap manufactured products within China ensures that the populations have access to cheap products. Investors and exporters to China are thereof forced to comply with the market prices that have been already set by local industries. This plan protects them from exploitation. Subsidized local industries together with those that are privately owned are also protected from unnecessary competition through trade barriers.
By the virtue of owning most of the vital industries, the government of China ensures control of market prices and stability of the economy. The government ensures indirect subsidies to its industries, thereby ensuring market control.
Yong-Liang et al. (2013) assert that China has been able to pose stiff competition in the world market by producing large volumes of products that meet international standards and prices. Low protection of intellectual property rights has also ensured that China can learn from technology that is applied by other nations.
Innovation in the manufacturing industries has resulted in the modification and value addition of previously existing products that are then supplied in large volumes to the world market at lower prices. This move makes China fetch better prices in the market.
Conclusion
In conclusion, trade barriers in China have worked in both positive and negative ways. The government of China has therefore continued to subsidize its industries. It has also owned most of them. However, as discussed above, since China is a member of the WTO, there is a continued suit against it by the international community.
Reference List
Bao, X. (2014). How Do Technical Barriers to Trade Affect China’s Imports? Review of Development Economics, 18(2), 286-299.
Chen, E. (2014). U.S.-China Trade Relations and Economic Distrust. Chinese Economy, 47(3), 57-69.
Crosta, S. (2002). History and cultural identity in Haitian literature. International Journal of Francophone Studies, 5(1), 22.
Kim, D., Lee, H., Kwak, J., & Seo, D. (2014). China’s information security standardization: Analysis from the perspective of technical barriers to trade principles. Telecommunications Policy, 38(7), 592-600.
Mark, R. (2007). IPR protections remain key trade barrier with China. eWeek, 24(31), G5.
Zhao, Y., Liu, D., Pu, H., & Yang, Z. (2013). China’s Export Margins And Their Growth Sources: An Analysis Of Extensive Margin And Intensive Margin. Singapore Economic Review, 58(4), 1350029-1-1350029-29.