How Trade Helps the Poverty in China

Trade and Poverty in China

China has become one of the fastest growing economies of the world (Adornino Wilcox 96 ) through the implemention of economic reforms and an Open Door policy that have liberalized trade and investment activities in the country . As a result of efforts to significantly reduce trade barriers and to provide a conducive environment for business activities , China 's economy has been integrated into the global economy , which enables it to take advantage of foreign markets for its exports while at the same time enjoying significant inflows of foreign

direct investment (Fujita Hu 3 , 31 Liang 239 Guan 119 ) There is no doubt that China 's economic growth is largely due to an increase in its trading activities with other countries that is facilitated by its integration with the global economy . However , alongside China 's rapidly growing economy is the disturbing issue of growing social inequality and poverty , which raises the question of whether increased trade really helps the poor or contributes to their further impoverishment

Unfortunately , the same policies and reforms driving China 's economy to levels of remarkable growth may be responsible for the growing social inequality among the Chinese

The findings of a study done by Fujita and Hu , for instance , reveal that regional disparity between China 's coastal and interior provinces have been increasing since 1984 due to the uneven distribution of trade activities and direct investment in favor of the latter (31 ) The increasing disparity between the coastal and interior provinces also reflects the income disparity between the rich and the poor provinces characterized by high poverty incidence in the latter . Results from a study done by Huang , et . al . echoe this contention by illustrating that China 's entry into the World Trade Organization - which signalled its complete transformation from a state-planned to a market-driven economy - benefitted rich farmers in the eastern and coastal areas more than the poorer farmers in the hinterlands (1298 ) Thus , increased trading activities have clearly been advantageous only to the rich households but have a minimal impact on poverty alleviation The increasing gap between the rich and the poor , and the increasing numbers of China 's poverty levels are seen as arising from the influence of the economic reforms on the changes in the country 's social policy Liang notes for instance , that recent implementation of radical reforms and the restructuring of state-owned enterprises (SOEs ) have led to increased unemployment of massive lay-offs (239 ) Likewise concerns involving the improvement of domestic efficiency and the demands of China 's new economic structure led to a shift in social policy wherein the state reduced its role in the provision of social welfare such as price subsidies for the poor (Guan 118-119 ) China 's reduced welfare spending for social services have therefore made its populations more vulnerable to poverty due to the absence of reliable safety nets such as social security in cases of unemployment and sickness for workers in urban areas . In the same manner , reduced social welfare...