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World Trading

Essay by   •  December 5, 2011  •  Essay  •  518 Words (3 Pages)  •  3,389 Views

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If current trends continue, China may be the world's largest economy by 2020. Discuss the possible implications of such a development for (a) the world trading system, (b) the world monetary system, (c) the business strategy of today's European and U.S. based global corporations, and (d) global commodity

If this takes place to the economy of the world, indeed things will change. The World Bank data on China shows that the GDP has grown by almost 5 trillion. When dealing with the world's trading system, there would be a huge increase in exporting goods, importing goods, and direct investment, both internal and external to the border. These methods are the sources for their GDP increase. In order to continue this trend, China has to focus on its poverty rates. This will help increase employee wages which in turn will cause some manufacturing to be spread among other areas.

The world's monetary system may change as well. This is because instead of everyone putting their money in US Treasury bonds and wanting the US dollar as the hard currency to hold on to, instead they may want China's Yuan and its treasury bonds. Again, this may or may not happen. It depends on how the world views them and their government's stability and transparency.

The business strategies of the US and Europe will continue to change whether or not China becomes the largest economy by 2020. This is because as long as their economy keeps growing, or even if it stays at about the same level, we (the United States Europe) will continue to keep buying more from them (like clothing) and continue to try to export to them more things like smaller cars, motorcycles, computers and some computer hardware. Finer things such as American tobacco and European wines and chocolates will continue to sell more there too as their middle class and upper middle class continues to expand more. Since they are becoming more technologically advanced they will continue to open companies here, there and in Europe, buy more real estate around the globe and likely allow more American companies in for partnerships. Again, this still does depend on their government and the western world's view of it.

Lastly the use of commodities in the world will change. There will likely be a demand for more oil, natural gas, water and coal in this country. Unless more is found, because there is more competition for it, the prices could go up (this also depends on how far solar, nuclear, wind and other power sources advance in this time). Because the countries of the world (including and especially those that have been modernized more lately and are using more fuels and resources and are having more companies move in) will be trying to vie for these natural resources to help run factories, ships, trains and trucks within and outside of their countries to assist good

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