Pestal in China

PESTEL analysis for China1)

Political Factorsi.Constitutional SystemChina or People¶s Republic of China adopts socialist system or communism in their political system in their decision-making processes in governing the country.The country¶s sole political party in power is known as the Communist Party of China.The government have the sole power to control all activities done by their citizen as whathave been describe in how communism system worked in governing a country. Inother words, the purposes of working in China are to contribute to the nation and alsoto the government as the government control on all activities in the country.

ii.Stability of Government.

The stability of the China government is quite moderate and stable because theadministration of the government are not publicize to the public either through thepress or on the internet. So, the degree of the citizen involvement in the politics is lowbecause of the heavy restrictions impose by the government. However, the policiesimpose and the law regulations are quite effective in terms of economy where China isone of the leading countries in the world. In the recent years (2001), China has joinedthe World Trade Organization and results rapid growth in industrial and manufacturingsectors because of the cheap labor in China. But still problems such as managingenvironmental degradation, demographic pressure and the extreme immigration fromrural to urban area must be faced by the government.

iii.Business FreedomThe business freedom in China is quite tight because of the regulation impose by thegovernment where they restrict businesses from other countries coming in. But recently,China government open their gate to the outside world to set up business in their country.It takes 37 days to start anew business in China compared to the worldaverage 38 days. While it takes 1.7 years from the filling for insolvency in court untilthe resolution of distressed assets. Examples of business freedom in China aresupermarketization and opening market to foreign multinationals company because of the entry of China into WTO. Supermarketization is where the government shuts downthe traditional ³wet market´ and transform them into supermarket.

iv.Trade FreedomIn the past few decades, China loosen their trade policy to the outside world in their trading, export and import industry.China¶s weighted average tariff rate was 3.9percent in 2008 based from the web (heritage.org). Factors that affect the cost of tradefreedoms areimport and export bans and restrictions, import and export licensing, non-transparent tariff classifications, complex regulations and standards, subsidies,state trading in certain goods, services market restrictions, issues involving theprotection of intellectual property rights, and inconsistent and corruption-pronecustoms administration add to the cost of trade. So, China¶s trade freedom score