Australian and Chinese economies

Published: 2021-07-10 03:55:05
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The similarities and differences between the Australian and Chinese economies provide an interesting comparison of economic systems throughout the world. They both differ and coincide with each other’s economic growth, environmental sustainability and the role of each of their governments. Since the late 1970’s, china has begun to move from a closed, centrally planned system to a more market-orientated one that plays a major global role, proven by becoming the world’s largest global exporter in 2010. Australia on the other hand, also has an economy that has witnessed many high and low points over the last few decades. Australia has an incredibly prosperous mixed market economy, which defines as an economic system blending elements of market economies with elements of planned economics, free markets with state interventionism, or private enterprise with public enterprise. Its free market is among the first five developed countries of the world, with the four main components being trade, manufacturing, and services and financing. A free market defines as a system in which the prices for goods and services are determined by the open market and by consumers. China on the other hand is governed or ruled by a socialist market economy where the government allows limited free enterprise while still continuing to maintain full control over its resources. Although China is ruled by this system, it has become incredibly successful for trade to and from china. Therefore overall, Australia and China’s differing market systems do and will result in both successful and varying levels of growth and use of resources, the role of government in health-care and education.China’s mainly socialist market economy has sustained an incredibly high rate of average annual growth in real GDP of 10.1% between 1998 and 2008 and peaked at 14.2% in 2007, however slowed to 9.2% in 2009, due to the impact of the Global Financial Crisis. The Chinese government responded to the GFC by implementing a US$586 billion fiscal stimulus package in November 2008 to maintain a growth target of 8% in 2009-10. The economy therefore recovered in 2010, and growing by 10.4% in 2017, China’s growth was at $23.12 Trillion, the largest in the world, 6.8% greater than in 2016. China’s GDP grew at 6.5% year-over-year in the third quarter of 2018. China’s industrialization and modernisation has been based on ‘driving growth’ through foreign investment and international trade. After the USA, China is the second largest economy in the world measured by the nominal value of its GDP in US dollars and at market exchange rates. In 2016, China’s share of global GDP was 17.8%, share of world population was 19% and share of world exports of goods and services was 10.7%. Furthermore, with rapid economic growth throughout China over the past few decades, there has been an ample decrease in poverty. The World Bank estimates that over the last 25 years, China’s poverty has reduced by 400 million people living off $1 US per day. Moreover, one of the largest impacts on China has been globalisation as economic growth was sustained at between 7% and 10% in the 1990’s and 2000’s, with business investment and net exports being the main ‘drivers of growth’. However, between 2011 and 2015, this growth rate began to fall (9.5% and 6.7%, respectively), as growth globally began to stall and China began to transition to domestic sources for growth, with a growing middle class society having a higher demand for more goods and services to consume domestically.Contrastingly, Australia’s mixed market economy grew just 0.3% in the September quarter of 2018, slowing distinctly from 0.9% expansion in the previous period and missing market consensus of a 0.6% advance, being the weakest rate of expansion seen since the third quarter of 2016, due mainly to a piercing slowdown in private consumption and a pull-back in non-residential construction. However, like China’s economy, government spending went up 0.5% and consumer spending by 0.3% in the third quarter of 2018, supported by national government spending (1.9%) while local government and state government consumption dropped (-0.5%). The slight increase was driven by increases in insurance and other financial services (1.6%), transport services (1.8%) and food (0.8%), while there were falls in consumption of operation of vehicles (-1%), other goods and services (-0.7%) and the purchase of vehicles (-1.3%). Furthermore, total inventories have increased AUD$47 million in the third quarter of 2018. To conclude, Australia’s economy, as seen in the stimulus, has also consistently experienced a rate of GDP growth that is steady with the average growth rate slightly decreasing over the past 5 years.China’s rapid rate of economic growth has led to a high level of resource use and environmental degradation, therefore experiencing severe environmental problems. The Chinese government has therefore commissioned the OECD to conduct a study of the environment in 2007. The Organisation for Economic Co-operation and Development (OECD) is an intergovernmental economic organisation with 36 member countries, founded in 1961 to stimulate economic progress and world trade. This report discovered that by 2020, uncontrolled pollution would cause an approximate 600,000 premature deaths in urban areas, 20 million cases of respiratory illness per year and up to 7% of China’s annual GDP being lost due to pollution. If stronger environmental laws are not implemented, there is also a possibility for this number to rise to 13%. Furthermore, although the high-income OECD countries account for 40% of global carbon dioxide emissions in 2006, China and other developing countries are responsible for an increasing share of the world’s total emissions. Also, China has an ever-rising per capita CO2 emission. This per capital carbon dioxide emission was 3.2 metric tonnes in 2003, compared to 19.9 metric tonnes in the USA, 10.3 metric tonnes in the Russian Federation and 1.2 metric tonnes in India. The World Bank estimated that China’s per capita emissions grew by 6.5% annually between 1970 and 2011 to 6.7 metric tonnes per capita. Moreover, as of 2013, China’s total CO2 emissions were estimated at 10,249.5 million metric tonnes (The World Bank), making it the largest polluting country in the world. However, in China there are also many other environmental problems aside from carbon emissions that are significant. For example, the OECD estimates that up to 300m people are drinking contaminated water on a daily basis, also, there have been a loss of natural grasslands and forests due to the expansion of industry and agriculture, a loss of topsoil, vegetation, lakes (15% since the 1950’s) and wetlands (26% since the 1950’s), shortages of water due to drought and insufficient irrigation systems and inadequate disposal of household and industrial waste (20% of solid waste/year is being properly disposed of). In order to battle these environmental problems, the Chinese government has set targets for reducing pollution levels by committing US$6.6b in 2015 in new spending, including the complete shutdown of coal fired power stations. China also signed the UNFCCC’s Paris Agreement in 2015 and agreed to peak its CO2 emissions in 2030 and launch a national cap and trade emissions programme in 2017.The Australian government on the other hand, has a range of environmental policies to minimise the impact of government operations on the environment. There are also agency measures and targets for carbon emissions, energy, waste and resource use, as well as set mandatory environmental standards for incorporating sustainability into government procurements. However, like China, they seem to be needing some rethinking or modification. Australia’s emissions from fossil fuels and industry continue to rise, and based on the most recent quarterly inventory, are now 6% above 2005 levels and increasing at around 1% since 2014. Under current policies and taking into account the previous increase in levels of carbon emissions, Australia is headed for an increase of 9% above 2005 levels by 2030, rather than the 15-17% decrease required to meet the Paris Agreement target. Furthermore, as seen in the stimulus, the Australian Government has set a target to ‘reduce emissions by 26-28% below its 2005 levels by 2030 through a credible policy suite that is already reducing emissions, encouraging technological innovation and expanding our clean energy sector.’ Thus, to conclude, Australia ratified the Paris Agreement on 6 November 2016. Its Nationally Determined Contribution (NDC), includes a target of reducing GHG emissions, including land use, land use change and forestry (LULUCF), by 26–28% below 2005 levels by 2030. However, current policies are projected to increase GHG emissions excluding LULUCF by about 9% above 2005 levels by 2030, relating highly to China’s extreme levels of CO2 emissions.The Human Development Index (HDI) is a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living. China’s HDI value is 0.752 (2017), which puts the country in the high human development category at 86 out of 189 countries and territories, shared with Ecuador. Between 1990 and 2017, China’s HDI value increased from 0.502 to 0.752, an increase of 49.7%. Between 1990 and 2017, China’s life expectancy at birth increased by 7.1 years, mean years of schooling increased by 3.0 years and expected years of schooling increased by 5.0 years. China’s Gross National Income (GNI) per capita increased by about 898.7% between 1990 and 2017. In China, the central government has overall responsibility for national health legislation, policy, and administration. It is guided by the principle that every citizen is entitled to receive basic health-care services, with local governments (provinces, prefectures, cities, counties, and towns) responsible for providing them. Health insurance is also publicly provided and financed by local governments, therefore local governments play a major role in keeping the HDI value of China high by keeping facilities available to members of the local communities and their families. In addition, the Chinese deputy director general of basic education, Wang Dinghua stated: “We need to shift from a nation with large human resources to a nation with strong human resources.” To achieve that, China is doing more than just talking. It is working to implement a plan that it hopes will significantly improve its education. At the moment, China has an incredibly high internal immigration rate. It is seeing a mass migration of more than 300 million people leaving their homes in rural China to go to the country’s cities. Consequently, a large amount of government money goes to expanding urban centres and updating infrastructure to accommodate the booming population, therefore however, causing worry that there will be little to no space left for incoming students throughout china. Nonetheless, China still has an adult (15+) literacy rate of 96.4%, proving its education services well.Australia’s HDI value for 2017 is 0.939, which, similar to China, put the country in the very high human development category, positioning it at 3 out of 189 countries and territories. Between 1990 and 2017, Australia’s HDI value increased from 0.866 to 0.939, an increase of 8.4%. Between 1990 and 2017, Australia’s life expectancy at birth increased by 6.2 years, mean years of schooling increased by 1.2 years and expected years of schooling increased by 5.5 years. Australia’s GNI per capita increased by about 56.7% between 1990 and 2017. Australia’s three levels of government are collectively responsible for providing universal health care: federal; state and territory; and local. The federal government mainly provides funding and indirect support to the states and health professions, subsidizing primary care providers through the Medicare Benefits Scheme (MBS) and the Pharmaceutical Benefits Scheme (PBS) and providing funds for state services. It has only a limited role in direct service delivery, as proven in the stimulus, Australia keeps a steady increase in funds towards national health-care provided by the federal government. State Governments have the majority of responsibility for public hospitals, ambulance services, public dental care, community health services, and mental health care. They contribute their own funding in addition to that provided by federal government. Finally, Local governments play a role in the delivery of community health and preventive health programs, such as immunization and the regulation of food standards. Furthermore, while states and territories are responsible under the Australian Constitution for school education, the Australian Government plays an important role in providing national leadership across important policy areas, including quality teaching, boosting literacy and numeracy outcomes, and parental engagement. This is proven by Australia’s literacy rate (adult 15+) remaining stable at 99%, which contrasts only slightly to China’s adult literacy rate.Thus, both China and Australia have incredibly prosperous economies however; can improve on some aspects of them for example, their carbon emissions. They are also very similar when it comes to increasing the levels of income and GDP of both countries. They are however different when it comes to levels of poverty and other HDI values (China’s HDI places them 86th and Australia’s places them at 3rd). Nevertheless, both countries are extremely fortunate and successful and have sustained a steady increase in gross domestic product throughout the past few decades.

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