Economic data, especially of macroeconomic scale, is necessary for any nation when it comes to making investment decisions. Increased investments in a nation have the impact of escalating economic growth due to the amplified inflow of foreign currency and job creation rates. Thus, it is important to measure the health of an economy using global economic indicators such as the Consumer Price Index (CPI), unemployment levels, and even the Gross Domestic Product (GDP) among others. China’s economy experienced a burst by growing at a very high rate to the extent of threatening to overtake the economy of the United States of America over the last decade. In 2013, China had a GDP of 9,579 billion USD and 10,360 billion USD. Its GDP Per Capita over the two years was 7,040 and 7, 574 respectively.
The variation in CPI was 2.5 and 1.5 (The UN Data China par.4). Over the two years, the unemployment rate remained constant at 4.1%. Comparably, the UAE had GDP Per Capita of 44, 044 USD in 2013. Its total GDP in 2013 was 398 billion USD while the unemployment rate was 3.8% with the CPI annual variation of 1.1% in 2013, which increased to 2.3% in 2014 (The UN Data The United Arab Emirates par.3). In 2015, a slight increment and decrement in CPI was recorded. Therefore, economies of China and the UAE have variations in terms of their global economic indicators. Thus, no economy can be considered to have a stable trend in the variation of major economic indicators. CPI, GDP, and unemployment levels vary continuously.
Ethical Indicators for the Chinese and the UAE Economy
The rapid growth of the Chinese economy implies resulting in a global feel of trade relations and agreements made with China by different nations and/or regional areas of world trade such as the European Union (EU). China is undergoing immense changes, including social, economic, and political transformations that are deemed pivotal in enhancing the integration of China into global trade. However, it faces several accusations for engaging in unethical practices in its business dealings.
For example, many nations now take caution over counterfeit products manufactured in China (Coase and Wang 97). There are also accusations of engaging in unethical practices such as child labor and exploitation of employees to meet high labor demands (Coase and Wang 113). Comparably, the UAE does not experience such challenges. Indeed, the UAE Interact states that the UAE scored high on the list of most ethical nations in its overseas investment approaches (par.2). According to Transparency International, the UAE was far ahead of China, Hong Kong, and even France in its overseas investment practices (The UAE Interact par.2).
Guanxi comprises one of the most important cultural business norms that are central to the Chinese society. However, there are other ethical indicators for the Chinese people in any business relationship. They include renting, Xinyong, and Miazi. These terms mean reciprocity, confidence, and expression respectively (Wilson and Brennan 653). Guanxi means custom-made links. Among the four concepts, Guanxi encompasses the most researched cultural norm for doing business with the Chinese people among the western-based companies that seek to yield success in the Chinese business market environment.
Guanxi refers to tailored associations or relationships in which an individual can prevail upon another in search of favor or when another person seeks favor and/or service (Rivers 478). The UAE ethical business practices are based on the concepts of Islamic business systems that are guided by moral practices prescribed in the Holy Quran. In the UAE, business activities and conducts of parties in businesses are legitimate only within the confines of the teachings of the Holy Quran as the basis of the Sharia law (El-Galfy and Khiyar 949). In contrast with the conventional systems, Sharia takes control of any business undertakings conducted by Muslims to ensure a free and fair market.
For instance, Islamic financial systems are guided by various rules that are derived from the Sharia law such as avoidance of riba and Qard (El-Galfy and Khiyar 949). In the conduct of the permissible types of sale, the parties involved cooperate to avoid unacceptable practices such as riba and gharar (El-Galfy and Khiyar 949). Unlike in China, in the UAE, a few ethical checks are important to ensure the positive reception of an organization that seeks to invest in the UAE markets. One of the issues is the corporate culture. The teachings of the sharia law guide trade and business relationships. Organizations must then alter their business culture such as charging interests (riba) just like in the case of conventional financial systems that are acceptable in China while operating in the UAE market.
Political Indicators for Chinese and the UAE Economy
The political business environment is critical to ensuring successful business performance within a given nation. An important indicator of the political environment entails political stability within a given nation. The UAE is located in the Middle East region. Therefore, political instabilities within the regions influence business operations in the nation, especially decisions for new investments in the country by foreign firms.
People can decide to invest in China or the UAE depending on the nation’s political instability risks. These decisions require the availability of frameworks, information, and insights that are critical in developing an effective entry coupled with growth strategies. This strategy is particularly important for markets that are characterized by political turbulence and the changing social developments.
Although nations that neighbor the UAE have experienced cases of political instabilities, they only suffer from instabilities due to the fear of spillover effects. Such fears are not prevalent in China. This situation perhaps explains why China has become a major manufacturing outsourcing center for many developed nations. The UAE is experiencing an improvement in business regulations, which is a major political indicator of economic success. Similarly, China has similar regulations, which help in securing the nation’s production capacity and retention of intellectual property.
Physical Indicators for the Chinese and the UAE economy
The UAE has a large wealth of energy resources to augment production. On the contrary, China relies on the net importation of oil from Gulf nations to drive its production process. The physical location of the UAE is also critical to ensuring accessibility to its fuel markets. Other physical indicators for both the UAE and China economy include accessibility to clean water, good sanitation, and energy supply.
By 2012, 92.0% of the Chinese population had access to improved sources of drinking water while 65% accessed improved sanitation (par.4). In the same year, the nation had energy per capital supply of 79.0 Gigajoules (The UN Data China par.4). Comparably, in the same year, the UAE had its 100% population having access to improved drinking water sources while 98.0% could access improved sanitation. In the same year, the UAE had energy supply per capita amounting to 311.0 Gigajoules. Therefore, in terms of physical indicators, the UAE economy is well-positioned compared to the Chinese economy.
Societal Indicators for the Chinese and the UAE Economies
Both the UAE and China have attractive factors such as the availability of cheap youthful labor. The availability of youthful labor is critical in ensuring a long-term supply of labor. For example, in 2014, the UAE had its population comprising 15.7% of people between 0 to 14 years were 1% for both males and females were over 60 years. Hence, over 80% of its population falls within the 15-59 years gap.
Similarly, by 2014, China had its population comprising 18.1% of people between 0 to 14 years while those over 60 years were 15.2% males and 13.8% females (The UN Data China par.4). Therefore, over 60% of its population can engage in paid labor. However, in terms of social indicators, the UAE has a high proportion of youthful people who can engage in paid labor compared to China.
The UAE is experiencing regional integration and an emerging influx of participation of women in the development and maturation of the labor force (Rogman par.4-7). However, when compared to China, the UAE may continue to have a lower engagement of women in the labor force due to its high sex ratio (males: females). The UAE had a sex ratio of 230.9 while China had a sex ratio of 107.6 by 2014. The demographic characteristics of the UAE, the shift towards value consumption, turning towards the east, and the emerging multinationals in the UAE also constitute important social indicators for the UAE’s economic growth.
The Size and Growth of the UAE and the Chinese Economies in relation to Capitalism and Democracy
Capitalism and democracy play pivotal roles in shaping economic development in different nations. McNally notes that the Chinese political economy embraces global capitalism (116). The fall of communism and the creation of good international politics have forced China to establish a central position in the global economic debate. These interactions gave rise to its direct linkages with developed economies that were already pursuing capitalistic policies to drive their growth. This situation led to the adoption of a capitalistic mindset in China, which has supported the rapid economic growth of the nation. In this sense, the size and growth of the Chinese economy relate to capitalism.
Although capitalism can be attributed to the current size and growth of the Chinese economy, the case is different from that of the UAE. Yassin investigates Islamic economic systems (2). He deploys a secondary qualitative data from the literature on Islamic economic systems, capitalism, and neoliberalism economic systems. A capitalist economic system operates under the forces of demand and supply with its players mainly concerned about profit maximization (Yassin 2). Hence, the players engage in business in a manner they deem fit for them without considering the implications of the business operations to the external actors or stakeholders.
Yassin asserts that Islamic business ethical practices only support those practices whose sources can be traced from Allah (God) through His revelations to his chosen messengers and the teachings of the Quran (2). In this sense, practices such as capitalism and neoliberalism, which were developed to resolve many of the challenges, are unethical since they do not explain the size and growth of the UAE economy. Major aspects of the UAE Islamic economic growth strategies involve taking responsibility for individual actions, trust, security of people’s property, and enhancing self-discipline and natural justice (Yassin 5). Indeed, these elements are the basic tenets of any democratic system in which such freedom is limited to the extent that it does not negatively influence other people, even though people have freedom for their rights.
China’s embracement of capitalism and the free market spirit has been instrumental in its economic growth. If the nation wanted to attain its current economic power, then it had to reconsider developing policies based on capitalism as opposed to socialism and communism. Indeed, Coase and Wang assert that if the nation decided to disregard capitalism, then its current growth of the economy would have failed to occur at the infancy stage (67). Hence, the only option was to adapt to capitalism while ensuring the retention of its historical conditions and policies.
In the UAE, capitalism does not function as a structure that stands on its own. Katzman terms this case as sheik-capitalism (43). Although the UAE economy permits the freedom of capital, there exists a distinct form of control. In the national agenda, all public policies do not necessarily define the UAE as a nation. Rather, policies dictate the direction taken by industries operating in the nation. Hence, the ease of resources movement is a function of the directions of leaders. Such leaders can overturn the path taken by any given business through new strategies.
The Impact of the Internet on China and the UAE Economies
The internet comprises an important technological advancement, which has increased the global reach of products and services produced within any nation. In fact, the internet improves the communication process of a nation’s capabilities, its strengths, and resources it can offer to the global free-market economy. In return, it improves a nation’s image before the international foreign investors. Consequently, the internet has the effect of increasing foreign direct investments within a nation. Failure to embrace internet advancements implies isolating and depriving a nation’s population of the merits that accompany the internet technology. Even though China acknowledges the merits of the internet technology in terms of its contribution to economic growth, the nation has held a position that does not favor a full development of the technology.
In China, the state determines the role that the internet should serve. Sun supports this assertion by noting that in China, “right now, the IT industry becomes a milking cow for the party-state to earn and become a property-rich owner” (117). The government has total control of the media. This way, it hinders the internet from playing its role in social and economic development by controlling vertical markets. These constraints have the effect of creating uncertainties of the internet technology and its contribution to economic growth. Nevertheless, organizations in the global economy are venturing into the Chinese internet market in partnership with local organizations. However, they must operate within the rules and regulations of the government. For example, Google China is attempting to gain the Chinese internet market share.
In the UAE, the internet technology has undergone massive growth. Indeed, the UAE internet penetration exceeds that of other Arab nations by more than 15 times (Europa Publications Limited 23). This gap may be explained by the relaxed regulations on internet technology in the UAE unlike in China. In both China and the UAE, the internet has different roles in terms of influencing political values. However, following high changes in the global economy, financial value, and the national strength, the two nations and the rest of the world depend on the deployment of the internet technology as one the most preferred media to drive economic growth.
How China and the UAE define Capitalism in the Context of National Policies
Capitalism implies social systems that uphold private ownership of factors of production. It also entails the production of service and goods with the primary objective of making profits by selling them in free markets that are controlled by the forces of demand and supply. However, the Chinese understanding of capitalism is based on opportunistic views (McNally 38).
Through the views, China exited successfully from an economy based on agriculture to industrial investments. This move was accomplished by taking opportunistic steps in the global capitalist system. However, this situation never led to the privatization of industries in China, as it is witnessed in nations that explore capitalistic social systems. The industries are owned by the state, with the government having major stakes in them (McNally 71). The UAE holds a similar understanding of capitalism since the government owns many of its industries, including oil, finance, and banking. Policy direction in these industries is also determined by the government.
Conclusion: The Relationship between Economic Growth and Personal Freedom in the UAE and China
Personal and business freedom has a direct relationship with a nation’s rate of economic growth if people can earn higher incomes from higher economic growth. Indeed, Stretton supports this direct relationship by claiming that business and individual freedoms act as incentives for economic productivity (762). In any economy, personal freedoms permit free interaction with markets and their dynamics to help in making individual choices and controls.
For instance, high economic growth has the impact of increasing people’s ability to purchase more goods and services due to the increased financial freedom. Nevertheless, failure to ensure political freedom influences personal freedoms. Amid the difficulties and challenges encountered by different nations, including China and the UAE, in creating scenarios that foster political freedom, updating policies and the formulation of new ones may ensure continued enjoyment of personal freedoms.
Akin to the various policy issues, personal freedoms in China are not accompanied by high economic growth, which leads to high income. Although the Chinese economy now approaches that of the US, which is the global economic giant, data from the United Nations Development Program indicates that Chinese people only earn $7,945 per year while the yearly income of the US workers is $43,480 (19).
Comparably, the organization notes that the UAE workers earn $42,716 annually. This finding suggests that the Chinese people have much lower personal freedoms compared to the UAE citizens. Personal freedom means the possession of the ability to make choices relating to educational attainment and health. Nonetheless, this situation is not the case in China. However, in the UAE, people have higher disposable incomes for investing in educational and accessing quality healthcare services, which form an important aspect of personal freedoms.
Works Cited
Coase, Ronald, and Ning Wang. How China Became Capitalist, New Jersey, NJ: Palgrave, Macmillan, 2012. Print.
El-Galfy, Ahmed, and Abdalla Khiyar. “Islamic banking and economic growth: A review.” The Journal of Applied Business Research 28.5(2012): 943-956. Print.
Europa Publications Limited. The Middle East and North Africa: 2004, London: Routledge, 2004. Print.
Katzman, Kenneth. United Arab Emirates (UAE): Issues for U. S. Policy, Collingdale, PA: DIANE Publishing, 2010. Print.
McNally, Christopher. China’s emergent political economy: capitalism in the dragon’s lair, London: Routledge, 2008. Print.
Rivers, Charles. “Negotiating with the Chinese: EANTs and All.” Thunderbird International Businesses Review 51.5(2009): 473-489. Print.
Rogman, Tim. “Entry Strategies for Middle Eastern Markets.” The World Financial Review, 2014. Web.
Stretton, Hugh. Economics: A New Introduction, London: Pluto Press, 1999. Print
Sun, Helen. Internet Policy in China: A Field Study of Internet Cafés, New York, NY: Lexington Books, 2012. Print.
The UAE Interact. UAE High on Ethics List, 2006. Web.
The UN Data. China, 2015. Web.
The UN Data. The United Arabs Emirates, 2015. Web.
The United Nations Development Program. Human Development Report 2013, New York, NY: The United Nations, 2014. Print.
Wilson, Jonathan, and Ross Brennan. “Doing Business in China: Is The Importance of Guanxi Diminishing?” European Business Review 22.6 (2010): 652-665. Print.
Yassin, Amandu. “Do Ethics Matter in Corporate Business Management From View Point of Islam?” Kuwait Chapter of Arabian Journal of Business and Management Review 2.2(2012): 1-9. Print.