Class XII – New Centres of Power – PYQs

Ans. The features of EU are as follows:

(i) EU’s share of world trade is much larger than that of US allowing it to be more assertive in trade disputes with US and China.

(ii) It has evolved from economic union to political one. It has its own flag, anthem, founding date and currency.

(iii) Its economic power gives it influence over its closest neighbours and on Asia and Africa. It also functions as an important bloc in international economic organisation such as WTO.

(iv) EU has political, economic, diplomatic and military influence. GDP of EU is slightly larger than that of US.

Ans. The European Union has evolved over time from an economic union to an increasingly political one and has started to act more as a nation state. Factors that make European Union an influential are given below

(i) The EU has economic, political, diplomatic and military influence all over the world.

(ii) The EU is the world’s second biggest economy next to that of the US.

(iii) It also functions as an important bloc in international economic organisations such as the world trade organisation. Two members of the EU, Britain and France, hold permanent seats on the UN security council.

(iv) Military, the EU’s combined armed forces are the second largest in the world.

(v) In many areas, its member states have their own foreign relations and defence policies.

(vi) EU has its own flag, anthem, founding date and common currency. The EU has tried to expand areas of cooperation while acquiring new members, especially from soviet block.

Thus, the given statement that European Union is a highly influential regional organisation is correct.

Ans. China’s economic success has been linked to its rise as a great power. The major policy decisions regarding new economic policies of China were

(i) China ended its political and economic isolation with the establishments of relations with the United States in 1972.

(ii) Four modernisations (agriculture, industry, science and technology and military) were proposed by the Premier Zhou Enlai in 1973.

(iii) Den Xiaoping declared the ‘Open Door Policy’ and rapid economic reforms in China. It was meant to generate higher productivity by investments of capital and technology from other countries.

(iv) The privatisation of agriculture in 1982 was followed by the privatisation of industry in 1998.

(v) The trade barriers were eliminated only in Special Economic Zones (SEZs) where foreign investors could set up enterprises.

Ans. Even though the Chinese economy has improved dramatically, there have been negative consequences affecting the people of China. The four negative consequences or drawbacks in the changed Chinese economic system are:

(i) The benefits of the reforms have not been equally received. Approximately 100 million people are still unemployed.

(ii) Female employment and conditions of work are as bad as in Europe of the 18^th and 19^th centuries.

(iii) Corruption and environmental degradation have increased.

(iv) There has been rise in economic inequality between rural and urban residents and coastal and inland provinces.

Ans. China is viewed to dominate US by the year 2040. The basis of the projection are

• China is considered as the driver of East-Asian growth because of the economic integration into regions. China is considered to be very powerful and factors such as population, landmass, resources, regional location and political influence adds to its strength.
• China announced ‘Open Door Policy’ in 1978 which aimed at generation of high productivity by investments in capital and technology from abroad. In economic sector, various steps were taken to encourage investment by Western entrepreneurs for modernisation of industry, science and technology, agriculture and military. In 1980, China became the member of World Bank and International Monetary Fund.
• Privatisation of agriculture and industry helped in growing economy rapidly.
• Foreign trade grew with the creation of SEZs and new trading laws. This resulted in high foreign exchange reserves. In this way, china became most significant for FDI.
• The above points show China’s ability to overtake US as world’s largest economy by 2040.

Ans. The difference between the SAARC and the European Union are as follows:

Ans. China is the third major alternative centre of power. It is the fastest growing economy. China at one time was based on Soviet model and at that time, it broke all the links with capitalist world. Following are the factors responsible for the rise of Chinese economy.

Use of Soviet Model: China accepted the Soviet model and relied on its resources. China decided to substitute imports by domestic goods and create state owned heavy industries from capital produced by agriculture.

Development of Industrial Economy. China used all its resources to develop an industrial economy. All citizens were provided education and health programmes.

Relationship with USA. China established relation with USA in 1972. The integration of China’s economy and the inter-dependencies that it has created has enabled China to have considerable influence with its trade partners like USA.

Modernisation. Modernisation in field of agriculture, industry, military, science and technology were proposed. This policy helped the Chinese Economy to break stagnation.

Major Policies Announced. Open Door Policy was announced by Deng Xiaoping in 1978, which aimed at generation of high productivity by investments in capital and technology from abroad.

Era of Privatisation. Privatisation of agriculture in 1982 and privatisation of industry in 1998 was done. Privatisation led to remarkable rise in agricultural production and rural incomes. High personal saving in the rural economy lead to an exponential growth in rural industry. Both industry and agriculture grew at a faster rate.

Establishment of SEZ’s. Special Economic Zones were set up. State had a centralized role in setting up of China’s economy. China become the most important destination for Foreign Direct Investment (FDI) anywhere in the world. It led to large foreign reserves that now allow it to make big investment in other countries.