Chinese and UAE Economic Growth and Policies


The emergence of the United Arab Emirates (UAE) and China as key players in the world economy is a huge economic advancement experienced within the last four decades. It is fundamental for these two economies to mix with global economies and adapt global changes related to the open market. Currently, only a small percentage of the global population has enjoyed the outcomes of economic advancement. Nevertheless, since early the 1980s, the UAE and China have reached remarkable heights concerning economic development and poverty reduction.

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Even though China has emerged as a great force in the global economy, the UAE continues to boast a substantial economy in the world accounting for a significant share of the global GDP. Nonetheless, China has surpassed the UAE in at least a few measures regarding economic strength on specific realms that include GDP concerning purchasing power parity. However, the economies are currently the strongest globally after the United States in various perspectives. While both exhibit similarities in scope and size, the constituents of each economy vary.

The global, ethical, political, physical, and social (GEPPS) indicators are very different. For instance, the UAE has a very sophisticated and highly myriad economy that is oriented on finance, service delivery, and reliance on the middle class for consumption. On the other hand, China can be said to possess common aspirations, but currently, it is propelling its growth engine based on available resources in a bid to move from a manufacturing center to a consumer-oriented economy.

In this light, this report will compare and contrast the two economies regarding GEPPS indicators, show the relationship between the size and growth of the two economies to capitalism and democracy and show the impact of political policies on the two economies among other factors. In a bid to compare and contrast the experiences of the two economies over the past quarter-century, one has to acknowledge that the UAE and China share a lot than they differ. Geographically, both cover large tracks of land with high populations that are relatively poor.

In the early 1980s, roughly the background of this report, the two economies experienced low per capita incomes. Since then, each economy has expanded but at varying rates. While both were self-sufficient countries and sidelined from the world economy, China reacted more swiftly and decisively to lower trade constraints and encourage foreign direct investment. Besides, as discussed deeply in later sections, China has gone through massive growth in its industrial hub. On the other hand, the UAE has embraced diversification to ease reliance on oil and focus on other sectors such as tourism and transportation. The patterns of economic growth for both economies are reliant on GEPPS indicators that will be analyzed in this paper.

Background information

Following a series of reforms and opening to the global markets, by 2006, China’s economy moved to the second largest after the United States regarding purchasing power parity measures (Bergsten 44). Since the reduction of the government role in business activities, China continues to experience a dual economic structure that has advanced from a socialist, centrally based economy to a market economy bearing socialists traits.

The ancient systems of people’s communes were replaced by the system of township-collective production. Similar to the UAE, private ownership of production is legal, even though some aspects and facilities are still controlled centrally. Due to world multi-polarization and social integration, China’s market perspective has highly transformed. Concerning GEPPS indicators, China and the UAE’s policymakers view the countries’ role in the global economy as hugely related to each other.

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On the other hand, the UAE boasts a large and sophisticated economy even though behind that of China. The UAE runs one of the most open economies across the globe whereby private individuals and organizations are free to come up with most of the business decisions. Unlike in the Chinese markets, the UAE business organizations experience huge flexibility in decisions affecting economic progress such as developing new products or increasing capital flow. The tradition of encouraging trade traces its roots to the ancient Gulf history when trade ships sailed to the coast of East Africa and other parts of the world.

However, the application of the GEPPS indicators to the UAE economy can be assessed from two dimensions, first as having contributed to the rapid growth of the economy and its influence on the international markets. Second, the application of the GEPPS indicators is partially attributable to the economic barriers the UAE is facing particularly when entering their rival’s home markets. The social and political decisions involving the onrush of technology contributed to the rise of a two-class of labor market with those at the top boasting of technical skills and better pay compared to the bottom tier.

Global factors

In the wake of the 1980s, China experienced a transition in its economic standing from a communist perspective into the Western-based economy. Later in 2001, China became a member of the World Trade Organization (WTO) (Bao, Lin, and Zhao 32). This move resulted in a vast increase in imports, exports, and foreign direct investment inflows. By October 2006, the Chinese foreign exchange reserves grew above $ 1 trillion. This growth continued up until the end of 2008 when global growth trade declined, and foreign direct investment inflows decrease (Cai 44).

China’s opening to the global market helped its economy grow faster due to the inflow of high technology and skilled labor, especially from the Western countries. Similarly, the UAE continues to be a business hub, with integrative business systems and free trade zones enabling quick growth of the economy. Just like China, the UAE has established crucial trade ties with trade partners such as the United States in a bid to maintain a steady supply of industrial technology as well as ready markets for its products. Through tourism and trade, the UAE has created a smooth global environment thus ensuring the expansion of the domestic economy.

Ethical indicators

The UAE and China had relatively similar approaches before joining the global economy and adopting a decentralized economic system. China began to consider ethical issues following economic reforms and liberation that took place in the 1980s (Hsueh 91). Consequently, considering ethical factors such as misappropriation of funds and respect to trade rules has helped China attract more foreign investors and trade partners in the recent past. For instance, over the last decade, living standards in China have fallen behind those in the UAE. China has a vast potential, industrious, and creative workforce and plenty of natural resources.

This perspective translates that the gap can be closed if ethical issues are prioritized. The UAE had a huge private sector that was subjected to non-liberalized state controls until the reforms of the 1990s (Hsueh 99). For a continuous development and long-run sustainability of the economy, the UAE has continued to observe good business ethics. The UAE has developed policies that encourage market participants to act in a trustworthy manner. When the ethical behavior is appropriate, the economic performance of a country improves. Where markets are described by uncertainty, and it is difficult to detect unscrupulous behavior, then unethical conduct might prevail.

Political indicators

China’s main problem is to balance its increasingly centralized political structure with the rapidly decentralizing economic structure. Beginning in the 1980s, China adopted democratic economic policies that strengthened the economy. Since the Tiananmen Square massacre, the level of foreign trade reduced significantly, particularly in tourism. Besides, most firms seeking to invest in China remain reluctant and uncertain of accommodating political decisions.

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Even though the current political environment and policies in China invite foreign investment, there is still doubt that China will not drive out foreign investors shortly. Although there is no huge likelihood that foreign businesses might face expulsion under the current political system, political stability remains a key consideration for foreign investors. Similarly, although the UAE is seen as one of the Arab’s least corrupt countries, the ruling families of the seven emirates pass critical decisions. Most of the land is government-owned.

Nonetheless, China’s economic expansion and reform since the 1980s have advanced the livelihood of the Chinese population, improved social mobility, and widened the scope of democracy (Panayotakis 17). This advancement can be attributed to the friendly political environment and the stability of the current regime. On the other hand, the UAE is more open regarding welcoming investors and trade partners. The competitive and open market offers a wide array of opportunities even though the state’s presence cannot be overlooked. In a bid to sustain the flamboyant tourism sector, the UAE government encourages the inflow of skilled labor to improve integration and service delivery for its diverse population of visitors. China’s capital markets are open to many foreign firms, but the investment freedom is controlled.

Physical indicators

One of the significant factors in economic growth is geography, where they are located in the globe, and climate (Panayotakis 16). Concerning climate, China and the UAE is equally disadvantaged since it is hot and farming depends highly on irrigation. Secondly, both the UAE and China are geographically placed in regions that increase accessibility to markets. China has some of the world’s busiest ports and so does the UAE. Ports have helped both countries raise money through shipping services. Thirdly, the UAE enjoys plenty of natural resources such as oil, the wind, tide, and solar resources. In contrast, the UAE is more centrally placed on the world map with a fast accessibility to the rest of the world as compared to China.

Social indicators

Social factors include customs, traditions, values, and beliefs that add to the development of the economy. These indicators contribute to personal freedom that is directly related to economic growth. The government has to update policies that advance personal freedom by ensuring people can purchase or get the products they need. In this perspective, the Chinese lack absolute personal freedom due to poor income. Even though China enjoys a massive economy, the annual income for workers still lags behind that of the UAE.

The low-income growth characterizes the situation of education and health in China. Due to the high levels of integration resulting from the tourism and entertainment sector in the UAE, the situation is much flexible and achieving is simple. The perceived level of social integration in the UAE has improved, but just like in China, the relatively inefficient social structures remain susceptible to political influence.

The impact of capitalism and democracy to the economies of China and the UAE

Although the Chinese government was initially determined to hold on economic socialism and political communism, the Chinese government was compelled to reconsider the international effect of capitalism. Under the pressure to ease poverty, the government had to design means that would encourage private businesses in the Chinese markets. This reform was not reached out of choice but the need to engage with the world’s capitalist market for more opportunities. Since China sought to attain economic power and status, it had to introduce a free market but retain particular traits of its previous policies (Bergsten 22).

On the other hand, the UAE economy has highly benefited from capitalism. Just like in China, the UAE allows a free-market economy, but there is still controlled by the rulers. Following the collapse of communism and the introduction of better political and economic ideologies, China changed its socio-political formation from dictatorship to a partially democratic system. This move saved China from anarchy resulting from revolutions. The experience of democracy has led to economic prosperity. The UAE holds the Islamic value of democracy and is not fully related to global integration. Following the opening of the Chinese and the UAE to the global markets, both countries were able to bring capitalism into their domestic markets. This formed the beginning of the phase that changed China and the UAE into global capitalists.

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The impact of the national political policies

Global integration is a phenomenon that has shaped the face of the international economy and decision-making. For the UAE and China, it is necessary to formulate policies that favor the global economy since it is impossible to reduce the economy to their own selectively. Political policies play a critical role in the country’s economy. For instance, the decision by the Chinese government to join the WTO in 2001 had various implications that have contributed to the growth of the economy (Bergsten 33).

One of the conditions China faced to join WTO was to lower tariffs on the imports of industrial and farm goods. This move increased competition from the foreign goods thus compelling Chinese producers to reduce their prices as well as raise the quality. Such competition would favor the Chinese consumers. Besides, the efficiency in Chinese industries will improve with increased competition when tariffs are reduced. Contrary, poor political decisions can be detrimental to the country’s economy.

For instance, although China reckons the value of internet technology to the growth of the economy, China has remained adamant to let the internet play its role in growth and innovation. The government has restricted the internet infrastructure to work in its favor. China uses the Internet to control and analyze deeds of public and private businesses. The UAE policies on the production of renewable energy and clean energy are a positive step towards curbing global warming. (Serbia, Shahbaz, and Hamdi 194) These policies will improve economic growth not only on a local scale but also globally.

Relationship between economic growth and personal freedom

Personal freedom is highly related to the economic progress of the UAE and China. The freedom of the individual is determined by his/her power to interact with the market by making selections. For example, through economic progress, an individual attains financial power and can purchase commodities of choice. However, to realize personal freedom, political freedom must be guaranteed (Panayotakis 23). This move can be achieved if the government is determined to formulate relevant policies.

Based on this information and regarding the low-income growth in China, Chinese society lacks sufficient personal freedom. On the other hand, the UAE is experiencing a lighter situation since the income growth rate is relatively high. When comparing the two economies with that of the United States, it can be generalized that the higher economic growth in the U.S economy has led to a high level of personal freedom since the workers have a higher income. Since the Chinese and the UAE populations have constrained financial freedom, they cannot access quality services.


Both the UAE and China have a widening market defined by swift industrial advancement. Being among the world’s largest economies, China and the UAE will continue to be huge forces in the global markets despite the variations in GEPPS indicators. China and the UAE business individuals and firms must acknowledge the variations in global, ethical, political, physical, and social factors of each country as these can be hard to handle and might as well prevent economic growth. For the UAE and China, the future direction of economic growth depends on how the state understands and applies GEPPS indicators. Therefore, understanding these economies assists in determining the flow that these states are assuming while emphasizing the significance of humanity.

Works Cited

Bao, Shuming, Shuanglin Lin, and Changwen Zhao. The Chinese Economy after WTO Accession, Aldershot: Ashgate, 2006. Print.

Bergsten, Fred. China’s Rise, Washington, DC: Peterson Institute for International Economics, 2008. Print.

Cai, Fang. Transforming the Chinese Economy, Leiden: Brill, 2010. Print.

Hsueh, Roselyn. “State Capitalism, Chinese-Style: Strategic Value of Sectors, Sectoral Characteristics, and Globalization”. Governance 29.1 (2015): 85-102. Print.

Panayotakis, Costas. “Capitalism, Socialism, and Economic Democracy: Reflections on Today’s Crisis and Tomorrow’s Possibilities.” Capitalism Nature Socialism 21.4 (2010): 7-33. Print.

Sbia, Rashid, Muhammad Shahbaz, and Helmi Hamdi. “A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon emissions and Economic Growth to Energy Demand in UAE.” Economic Modeling 36 (2014): 191-97. Print.

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