Political

China has been a Communist country for more than 60 years and the government has been to
implement its policies without any major negotiations. With its increasing economic
situation, China has been able to forge ties with most of the countries and its influence is
clearly evident in Africa. However, Chinas relationship with its neighbours like Vietnam,
Philippines remains a matter of concern owing to tensions in East China Sea and South China
Sea. On the similar lines, the situation in province of Xinjiang, home of then Turkic- speaking
Muslim Uighur group remains very vulnerable. There is always a possibility of outbreak of
cultural aggression due to the Islamic separatist movement. The other areas of concern
include the Media censorship and the intolerance of the government against criticism. The
government is forming efforts to reinforce the rule of the law in the country through Judicial
reforms (MarketLine, 2014)
Economic
The backbone of the Chinese economy is divided into three parts Primary, Secondary and
Tertiary. The primary which includes Farming, Forestry, Animal Husbandry and Fishery
accounts for about 9% of its GDP. The secondary which consists of Industry and
Construction accounts about 40 %, contributes about 9% of its GDP. The tertiary which plays
the major part in the economy includes the Wholesale and Retail Trades, Transport, Storage
and Post: Financial Intermediation, Real Estate, Hotel and Catering Services etc, accounts
about 44 % of its GDP. The Chinese government is targeting to increase its economy up to 7
% in the year 2016. In 2015, the economy expanded by 6.9 %, the weakest since 1990. On
the quarterly basic, the GDP expanded by 1.8 percent, which has resulted in the growth of 1.2
% in the first quarter. (World Bank, 2015)
However looking at the Chinas Gross External Debt data, there has been a steady increase in
the debt accumulated globally since 2006. External debt is the countrys debt that was
borrowed from foreign lenders which includes Commercial banks, financial institution etc.
These loans including the interests must be usually paid back in the same format ie, the
currency has to be the same in which the loan was made. This has been reported by the State
Administration Exchange.

GDP
12

10.87

10
8

Trillion

6
4
2
0

Population
Chinas one-child policy has been universally acknowledged as having effectively
kept the population in control. As a result the fertility ratio has become in the range of
1.2-1.6 (Trends Magazine, 2015, p.11) . However China is the home to 1.37 billion
people which is over 1/7th of the planets living population. Working population rose
to 37 % from the past years and population of the age group betwee 15-64 fell to 73%
from the past years and 10 % of the total population fall under the category of above
65 age group. (World bank, 2015)

Demographics.
According to the World Bank (2015), the percentage of population in China with the
age group of 0-14 has reduced tremendously from 25 % in 2000 to 17 % in 2015. This
is due the universally acknowledged One-Child policy. However china continues to

have a population explosion of old people. The percentage has increased from 8% in
2000 to 10 % in 2015.

80
70
60
50
40
%

30

0-14

15-64

65 and Above

20
10
0

Social
The socialist market is the model employed by the People's Republic of China. It is
based on the supremacy of the public sector and an open-market economy, and has its origins
in the Chinese economic reforms introduced under Deng Xiaoping. (Tisdell, 2009)
The tastes and fashions are a great example of this change. One of the most important
differences is the growing popularity of social media. Social networking sites like Facebook
have become very well-liked among the younger people. The young consumers have grown
used to mobile phones and computers. The younger generation favours to use digital
technology to shop online. Older people will perhaps stick to their traditional methods. The
effect of changing society is an often discussed. You must also understand that these changing
factors have a toll on businesses too. Changes in the social factors can influence a firm in
many dissimilar ways. (PricewaterhouseCoopers, 2015)

 Legal
National legal systems in China are very diverse because of various
reasons like historical, cultural, political and religious reasons. The
legal terms and functionalities like rule of law, role of lawyers, the
burden of evidences, the right to judicial review etc differ from
country to country
Chinese bureaucracies have sometimes been accused of selectively applying
regulations. China has many strict rules that are usually ignored in practice until a person or
entity falls out of official favour. Governmental authorities can wield their discretionary
power to crack down on foreign or disfavoured investors or make special demands on such
investors simply by threatening to wield such power. (United States. Congress. House.
Committee on Financial Services. Subcommittee on Oversight and Investigations, 2006,
p.151)
Environmental
Chinas environmental crisis seems to rise dramatically like the vast nation itself. The
Shanghai River which supplies drinking water to the entire China has been deeply polluted
with bloated dead pigs floating in the river. (Wang, 2014)
China has a vast history of intensive agriculture dating back to centuries; it is not
surprising to see the nations 3.7 million square-mile (9.6 million square kilometres) forests
subjected to deforestation. Population pressure, the conversion of forests to farmland,
hydroelectric and other infrastructure projects have placed Chinas remaining forests under
risk. This is the reason why United Nations Environment programme has listed the countrys
forests as threatened and in need of protection (Otsubo, 2008)

Technological Factors
With the declared goal to become a global frontrunner in science and technology,
China introduced a landmark programme in 2015 for mass Entrepreneurship and

Innovation, to nurture grassroots Entrepreneurship throughout the country. This vision is

aligned with the countrys economic goal to shift from labour-intensive manufacturing to
innovation-driven growth. China is investing resources and implementing various policy to
promote

value

chains,

technological

advancement

and

encourage

innovation

in

manufacturing and service industries. (The People's Republic Of China, 2016)

However, limiting factors include weak intellectual property rights enforcement, a
route learning-based education system, internet censorship, forced technology transfer
policies and a top-down innovation model may hamper Chinas dream to become a global
frontrunner in Science and Technology. China also needs to overcome their perception issue
about the quality and reliability of its products. The Chinese firms also receive an unfair
advantage in the global marketplace through subsidized government financing and other
policy tools.