Canada versus China Economic Systems

Canada Economic System

Canada has one of the most developed economic systems in the world. It is a rich country which is the member of the Organization of the Economic Cooperation and Development. Canada can be found among “the top trading nations in the world”. (Economy Watch)

Canada Economic Structure. It is known that the service sector on Canada gives about 70% of GDP. It means that about 75% of the population in Canada work in the service sector and only 2% of GDP is contributed by the agriculture sector which has practically the same number of employees. (Economy Watch)

The country’s service sector includes financial services, education, communication, tourism, health care, retail and technology services.

As the country has a great deal of natural resources, such as oil, nickel, gold, forest, agricultural products and others, a large portion of them is exported to other countries of the world. (Pomfret 21)

Canada economic system is a market-oriented system. Since World War II it was noticed a fast growth of manufacturing, service sector and mining industry. The agrarian economic structure of Canada was transformed to the urban economy. Canada offered low labor costs and other benefits to the automobile partners from the USA and Japan that decided to place their manufacturing facilities in Canada. Canada has close relations with the United States, its largest business partner and investor that has investments not only in mining and petroleum and chemical industry but also in machinery sector. (Economy Watch)

Distinguishing features of the economic system of Canada.

Canada economic system is a mixed economic system which has the following distinguishing features:

  • The natural resources are controlled by both the government (one part) and the private sector (another part).
  • The government of Canada play an important role in determining what goods should be produced.
  • The following services as education, health care, military defense of the country, jurisdiction are provided by the government.
  • Private ownership together with the government resolve the major economic problems of the country.(Pomfret 23)

China Economic System

China’s economy is known as a fast developing economy. According to the statistical data, it has grown 10% each year for the last 30 years. The result of such an intensive economic growth lies in the reforms which were set by the government of China in 1970s. (Ninomiya)

It is known that GDP was growing an average 9,5% per each year since the implementation of new reforms. Nowadays, it is the third largest GDP in the world.

So, China’s economy was controlled by the government but now it has transformed to a market economy because there was privatization of a number of enterprises. It was allowed to peasants to have their own farms, a great deal of foreign partners were allowed to set up their business in China.

Although there are great changes in the economic system of China, there is a huge gap between town and country in China. These inequalities are concluded in the income of the Chinese people. Those people who live in the cities can earn more than those who live in the rural areas.

Major Reforms in China. The major reforms were put into operation in 1970-1980. They had the main goal to collectivize agricultural sector of China. These reforms also focused on liberalization of the prices in the country and financial decentralization.

As a result of numerous changes in the economic system, a lot of business enterprises of the private sector were created in China. They were engaged in services and manufacturing. There were also great changes in the banking system. The growth of Chinese stock markets was noticed and China’s economy became open to the world trade market and numerous foreign investments. (Guo 71)

The following factors influenced the fast growth of economy in China:

  • The implementation of new technologies and new equipment;
  • the obvious reduction of unemployment;
  • finding new ways of conducting business;
  • the discovery of new deposits of natural resources such as gas and oil which made it possible to develop manufacturing.

China’s manufacturing is called “the manufacturing hub of the globe”. China produces a great variety of goods and has a lot of business partners from all over the world. (Guo 81)

Major industries in China

The following industries are highly developed in China:

  • machine building;
  • textiles;
  • electronics;
  • transportation equipment;
  • telecommunications equipment.

According to the statistical data, labor force by occupation is divided between agriculture which takes about 40%, industry – about 28%, and services – about 32%. (Ninomiya)

Comparison of Canada and China Economic Systems

Canada and China have absolutely different economic systems although both of them are market oriented.

The difference is concluded in the following facts:

  • Canada is a country which has high living standards while China is known as a country which has a rather large gap between rural and urban population.
  • Canada has vast deposits of wood that is why woodworking industry is a well developed while China has to buy wood for manufacturing. (Guo 41)
  • As there are many rivers on the territory of Canada, the country has an opportunity to use electric power by means of hydro-electric power stations. China also uses electric power a lot as there are also several large hydro-electric power stations in the country.
  • There are vast deposits of coal in the north of China that is why mining is one of the most developed industries in the country. In Canada, there are great deposits of nickel, ore, copper, gold, sulfur, oil, gas, aluminum but there is a reduction in export of these natural raw materials.
  • The USA is the major business partner for both Canada and China.
  • The main peculiarity of Canada economic system is that it has a great amount of foreign capital as well as China.

According to the statistical data, about 40% of manufacturing enterprises belong to the foreign investors about 70% of which are the US corporations. The largest portion of foreign capital refers to automobile industry (about 92%), chemical industry (about 68%) and electric power industry (about 63%). (Pomfret 49)

  • The level of unemployment is rather low both in China and in Canada. (Economy Watch)
  • The goods imported from China are cheaper than the goods imported from Canada. The main reason in concluded in using up to date technologies and low cost labor in China. Of course, the quality of goods in different but it is noticed that the goods made in China are in demand not only in the United States but also in other countries of the world. (Guo 56)

Conclusion

In conclusion, it is necessary to say that Canada and China are among the leading countries in the world market although these countries have different economic systems. Canada is more developed than China, but today there are great changes in the economy of China which can lead to the first position in the list of the countries with the most developed economic systems in the nearest future.

 

Works Cited

Economy Watch. Canada Economic Structure. October, 2010. Available from:

Guo, R. How the Chinese Economy Works. New York: St.Martin’s Press. 2006. Print.

Ninomiya, K. About China’s Economic System. Ehow. Available from:

Pomfret, R. The Economic Development of Canada. Routledge. 2002. Print.