Updated: 2006-10-19 09:51

Globalization refers to the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby increasing the interconnectedness of different markets. Globalization has had the effect of markedly increasing not only international trade, but also cultural exchange.

The advantages and disadvantages of globalization have been heavily scrutinized and debated in recent years. Proponents of globalization say that it helps developing nations "catch up" to industrialized nations much faster through increased employment and technological advances. Critics of globalization say that it weakens national sovereignty and allows rich nations to ship domestic jobs overseas where labor is much cheaper.

Economic globalization and China

Economic globalization can be compared to a two-blade sword or a coin with two sides. Advantages and disadvantages exist side by side. It can also be likened to swimming in the sea in summer. One can enjoy the cooling feel of the water and swimming can improve the physique; but one also runs the risk of catching cold or even drowning.
The developed countries are good swimmers, while the developing countries are less strong in physical strength and poorer in swimming technique of swimming, or even just beginners. It is only natural that they feel very differently about swimming in the sea.

Globalization offers China opportunities as well as challenges. How should it strive to profit from the advantages and avoid the harm brought about by the disadvantages? Attention is demanded to the following aspects.

First, making better use of foreign investment to promote the industrial uplifting. China welcomes medium and small overseas entrepreneurs to invest and also sets great store by investment from foreign transnational corporations and big foreign enterprises. Capital is encouraged to exploit underdeveloped regions in western China, and further develop labor-intensive industries using China's rich resource of relatively cheap labor.

An even greater amount should be used to speed up the development of high and new technological industries, so that China's industrial standing can be raised and its international competitiveness strengthened.

Second, speeding up the reform of the financial system and improving the risk-prevention system. The setting up and improvement of the central bank, organized to carry out specific polices, the commercial banks and non-banking financial institutions, should be continued. The state-owned banks should be commercialized and genuinely run in accordance with the demands of a market economy.

In financial macro-control, the principle of sectoral operation and management should be implemented, a centralized and unified supervision system promoted, and the mechanism of supervision over foreign banks in China should be worked out and improved as soon as possible, so that an effective financial safeguard and security mechanism can genuinely function.

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