Government-Business Relations in China & Australia

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Table of Contents

Introduction
Government-Private Sector Cooperation
Oil Policy in China
Oil Policy in Australia
Education System in China
Education System in Australia
Policy Comparison
Conclusion
References

Introduction

Public-private cooperation is one of the most important developments that have occurred in modern history (Spackman, 2002). The policy-making of governments and the innovation capacity of the private sector create a valuable combination. There are several ways in which the public and private sectors collaborate. The ultimate goal in these endeavors is relayed to citizens and the consumers. Governments have been known to facilitate the establishment of the private sector (Gerrard, 2001). On the other hand, the private sector is a major component that finances government functions through tax.

China and Australia are two of the most powerful nations in the world. The former is known as the sleeping giant that has awakened and starting to rise as a superpower. The latter is a model of consistency and founded on strong political and economic fundamentals. China and Australia, however, have contrasting government policies. Australia is more liberal and influenced by the Western form of government. China has been practicing socialism and has started opening a once closed government.

The effects of policies provided by China and Australia are evident in the development of each country’s private sector. Australia has an established private sector because of the nation’s Western roots. China is different because government control is an established fact. The difference in the policies provides an interesting topic for discussion. To specify the process, the next discussions will focus on two elements: oil and education. These two aspects are valued in both countries and provided with government and private attention.

Government-Private Sector Cooperation

Guo and Li (2005) enumerated some of the most compelling government policies that changed the private sector. The primary action implemented by the government is related to legislation. Specific amendment to China law involves the expansion of private ownership. Owners are protected from the encroachment of private property. In provinces, local governments have started opening their economies to private developers. The initial goal of these local authorities is to improve the private sector environment. Rules on investments and other related activities have been adjusted.

A working paper authored by Gwartney, Lawson, and Holcombe (1996) provided some insights as to the value of government intervention in a state. Based on some figures presented, the Australian government has increased outlays by 16% from 1960 to 1996. The Australian government has recognized the value of media in the economy. Hence, the Broadcasting Services Act of 1992 came into existence (Livingston, 1994). The policy was important because it promoted private participation. Firms that started erecting broadcast stations were accorded with privileges and other perks.

Both China and Australia have valued the role of the private sector. Chinese legislations are crucial in opening the economy. But it has to be noted that China remains conservative with the government implementing various control methods. Australia has established legislation and improved focus on the role of the private sector. The lack of control, however, means that private firms have sufficient control of the market.

Oil Policy in China

China is regarded as one of the highest consumers of oil in the world. The domestic oil production in China has shown a decline lowering the reserve capacity to 14 years (Energy Information Administration, 2005). The price control of oil in China is a known reality. The government implements floor and ceiling prices to prevent the impact of increasing oil prices. The price control is also used to prevent local and foreign oil distributors from making the unnecessary price increase. The government has been active in ensuring that oil prices are within reasonable rates that consumers can afford.

The benefits of price control are designed for the consumers. The ultimate beneficiaries of this policy are the citizens. Through price control, oil companies are prevented from fully adjusting oil prices. The government provides subsidies in events when an oil price increase is inevitable. Moreover, the government is seeking to protect local manufacturers. The dependence of China on the industry of manufacturing is the main reason for price control. As a social state, China is obliged to implement these price control agents. China is more accountable than oil producers and exporters.

Price control, however, is considered a violation of free-market ideas. Despite the control, a rise in the prices of oil products is expected. In the long run, the government will run out of funds to sustain the subsidy when the oil price increases. Moreover, the oil processing industry in China has suffered major losses because of the control (People’s Daily Online, 2007). As the price of raw materials goes up, oil firms in China sell their products at low prices.

Oil Policy in Australia

Australia implements oil policies in the same manner as other liberal countries. Aside from North America, Australia charges the lowest tariff on exported oil. The government is 60% oil sufficient but 85% of the oil consumed daily is exported (Robinson, et al., 2005). The demand for oil continues to rise as the volume of vehicles increase. In terms of policies, the government is more focused on information than price control. The government relies on the population to lessen oil use and decrease oil dependency. Suggestions on the increase of oil tax have gained the support of the public.

The importance of these open policies relates to Australia’s goal to promote competition. When oil prices increase, manufacturers are in a dilemma when making the adjustments. This is expected because competitors are likely in a wait-and-see mode. The government believes that competition has to be the driver of price. Moreover, government subsidies are helping to lessen the impact of a sudden increase in oil prices. The government allows financial aid to consumers through these subsidies.

But the policies on oil implemented by the Australian government are marked with flaws. The most common misconception is that competition has a strong impact on price. Oil firms, however, create a cartel-like environment where an increase in oil price will push oil companies to make adjustments as a group. Since oil is a highly needed commodity, any movement in price will have less effect on the demand. Subsidies, on the other hand, are temporary aid and can run out when an increase in oil prices is continued.

Education System in China

The Chinese government is a major stakeholder in the education system of the country. The major policy of China when it comes to education is related to financial support. China implements free education from pre-school to the secondary level. In addition, the government supports approximately 1550 institutions that provide tertiary education. The mode of reforms in the education system is geared towards modernization. High-end facilities and education hubs are constructed by the government to improve education provision. China is also particular to the improvement of the country’s literacy rate.

Aside from the public schools, China has several educational houses owned by private individuals. The participation of the private sector in the education system is interpreted in many ways. Education provision is a good venture that businesses explore. In addition, a strong education system means that the Chinese will become technically adept before employment. China recognizes the role that the private sector plays in filling the gap in the education system. Moreover, some private firms support the government’s education initiatives through the provision of financial aid to public learning institutions (Yang, 2004).

The government observed that the number of individuals who lack the financial capacity to acquire education is still high. This is evident in rural areas where literacy is low. To decrease this figure, the government has designed programs for scholarships and loans (Ngok and Lee, 2006). Students with physical capacity but financial inadequacy are accorded support by the government. Perks such as free tuition, lodging, and allowance are given.

Education System in Australia

Australia has one of the most comprehensive education systems in the world. Schools in Australia are ranked as the best school in the U.S., Europe, and Asia. Government schools are overseen by local territories and cities. The government implements a no-fee rule on public schools. These institutions, however, accept donations and levies from private groups and individuals. Open schools are available to all students as provided by the law. Selective schools are more focused on gifted students. This distinction is further expanded by the manner in which both school classifications operate.

The government has been supportive when it comes to the existence of private schools. The government is only capable of providing education through its means. Shortage in funds is a major issue that can alter that capability. With the presence of these private institutions, that government incapacity is replaced by private learning. Private education is vital because it sets a trend for changes and modernization. In addition, private institutions have the financial means to provide consistent top-notch education.

There are several issues, however, that the Australian government needs to address. Concern over the increase in the number of private schools is highly indicative of Australia’s openness. Brown (2004) stated that the prevalence of private schools has affected the quality of education. These schools exist without proper authorization accorded by the government. The bigger problem is that these schools are incompetent. The government has been taking the necessary actions to eliminate these profit-seeking schools.

Policy Comparison

In general, the government of China covers a wider role when dealing with the private sector. The Chinese government emphasizes the control it has over the private firms in the country. Australia, on the other hand, follows a more liberal approach. The government has enacted laws to allow private firms to freely operate. Regulations and restrictions are limited but the government is strict in implementing laws beneficial to the population. Both countries support the private sector but use different philosophies.

The policy of China when it comes to oil is simple. The government has price control agents to maintain the price at low levels (Aldhous, 2005). Australia, meanwhile, has a different approach. The country relies upon competition as an element that controls the prices of oil products. It is important to note that Australia has more oil reserves than China. Both countries also provide subsidies to aid consumers when oil prices increase. Moreover, China and Australia are taking extra steps to improve the alternative energy sector.

The education system in Australia is more established. The country fully supports its public learning institutions. Australia is also more open to private firms willing to invest in education. China is more dependent on the government’s capacity to provide education. Private learning centers exist to fill the gap that is left by the public sector in China. Both countries have invested in their respective education systems. The development of students to adept graduates is useful to the private sector. In exchange, private firms have provided financial aid and donations to schools.

Conclusion

The role of the government in propagating the public sector is established. The government has the capacity to create an environment that will allow private firms to operate effectively (Barro, 1990). When dealing with oil prices, China has been maintaining maximum government involvement. Price controls are made to benefit consumers and industries. Australia maintains an environment that allows oil firms to compete. When oil prices increase, competition ensures that adjustments are done minimally. Both strategies are beneficial but also have flaws that need to be corrected.

In the field of education, both countries value public investment in pushing for sustainability. China has been allocating a huge chunk of the countries budget to fuel public education. Private schools are also encouraged to support the government’s initiatives. Scholarships and loan programs are also offered to provide opportunities to students that have limited financial means. Australia also has been investing to modernize the countries public education system. Private schools exist to provide top-notch education. The government supports private research to enhance the system.

The policy of China catered to the private sector is slowly evolving. From being a strict government economy, China has realized the need of improving the private sector. Despite the loosening of the market, China still maintains strong control mechanisms. Australia has a progressive private sector. But the government recognizes the need to protect the consumers. Balance in policies is imperative to ensure government participation and private sector growth.

References

Aldhous, P., (2005), Nature: International Weekly Journal of Science, “China’s burning ambition,” Pp. 23-67.

Barro, R.J., (1990), Journal of Political Economy, “Government spending in a simple model of endogenous growth,” Pp. 103-125.

Brown, G., (2004), Degree of Truth Pty Ltd, “Protecting Australia’s Higher Education System: A proactive versus reactive approach in review,”

Gerrard, M.B., (2001), Finance and Development, “Public-Private Partnerships,” Pp. 48-51.

Guo, X. and Li, J., (2005), China Business Times, China’s Burgeoning Business Sector – Top Ten News Stories in 2004,”

Gwartney, J, Lawson, R., and Holcombe, R., (1998), The Size and Functions of Government and Economic Growth, Pp. 1-32.

Livingston, K., (1994), Australian Historical Studies, “Anticipating Federation: The Federalising of Telecommunications in Australia,” Pp. 97-118.

Ngok, K. and Lee, M.H., “Localization of Higher Education and Its Social Consequences in Mainland China, 1993-2006.

Robinson, B.W., Fleay, B.J., and Mayo, S.C., (1995), Sustainable Transport The coalition, “The impact of oil depletion in Australia,” Pp. 1-3.

Spackman, M., (2002), Economic Systems, “Public-private partnerships: lessons from the British approach,” Pp. 283-301.

Yang, R., (2004), Higher Education: Handbook of Theory and Research, “Toward Massification: Higher Education Development in the People’s Republic of China Since 1949,” Pp. 311-374.

Energy Information Administration (EIA), (2005), International Energy Outlook, Pp. 147.

People’s Daily Online, (2007), “Soaring oil price exposes weakness of China’s oil product pricing system”. Web.

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