Premium Essay

Economic Transition of China

In: Business and Management

Submitted By villekuusela
Words 1081
Pages 5
Two Years after the death of Mao Zedong in 1976, it became apparent to many of China's leaders that Economic reform was necessary. By 1978 " Chinese leaders were searching for a solution to serious economic problems produced by Hua Guofeng, the man who had succeeded Mao Zedong as CCP leader after Mao's death" (Shirk 35). As Susan L. Shirk describes the situation in The Political Logic of Economic Reform in China, restoring the CCP's prestige required improving economic performance and raising living standards. After the communist take over the country, Mao contained his emphasis on moral force by demanding that Chinese citizens demonstrate what he referred as "correct consciousness".
It is noteworthy that shirk feels that the Chinese communist party leaders saw economic reform as a way to regain their and their party moral virtue even after Mao's death thus, paradoxically, by demonstrating their expertise in a moral political area of competence, the leaders of CCP felt they could demonstrate how they were serving the people. To a great extent, the issue of economic reform became politicized as the issue was used as a means by Deng Xiaoping to attain the leadership of the Chinese Communist Party. "Reform policies became Deng's platform against Hua for post-Mao leadership" (Shirk 36). Given this history of economic reform, it is evident that "under the present system economic questions are necessarily political questions" (Dorn 43). China was "still a state in which the central government retain[ed] the dominant power in economic resource allocation and responsible local officials work[ed] for the interest of the units under their control" (Solinger 103). China's economy retains these characteristics of potential for growth--and inflation--to this day. Another important aspect of Chinese economic reform was the decision of China to join the world economy. Deng…...

Similar Documents

Free Essay

Economic Reform in China Post 1978

...also how economic reform started out in 1978. Then I will go on to cover the four major economic institutions that needed to be reformed in order for China to become a market economy. These four major economic institutions will then be discussed in detail. This paper will then go briefly into China joining the WTO and will conclude with China’s economic situation at present. Chinese economic policies and institution have undergone a number of extreme changes since the establishment of the Communist regime in 1949. After the Communist Party took national power in 1949, the disorder caused by the imperialist invasions and domestic wars were put to an end and China began to strive for development by following Russia’s example in pursuing Leninist and Marxist doctrine. By following this doctrine they would replace free market and private ownership with socialist planning and public ownership. In order for this to become a reality China had to pursue radical revolutionary domestic and foreign policies to overcome the resistance to the Chinese Communist movements. After closing its doors to western concepts of capitalism and free market economy it seemed like China was doing well but it was soon evident that the rigid planning and the command market economy was becoming inefficient. In contrast to the western economies China was indeed falling behind. Even China’s neighbors such as Taiwan, Singapore, Korea and Hong Kong were growing rapidly after adopting market economic......

Words: 2342 - Pages: 10

Free Essay

Economic Growth in China

...What are geographic features? Geographic features have are things such as mountains, lakes, rivers, or natural events such as hurricanes and monsoons. Geographic features such as the Yellow River, and the Monsoon floods help fuel the economic expansion of China. China’s economy has been fueled by these geographic features so much that it is considered a major player in the world. In this paper I will discuss of America. the Yellow River floods, the monsoon rains, and the effect they have on both the Chinese economy and the economy of The United States First, physical features of a nation can have a tremendous effect on that country’s history and culture. One example is the Yellow River floods. The Yellow (Huang He) River is the most important single land form in China. Over one hundred million people live along its banks, trying to make a living off the extremely fertile soil it carries in its current. However, this amazing resource is also referred to as "China's Sorrow". It is referred to as “China’s Sorrow because yearly it floods, killing hundreds to thousands of people who could not flee. The main reason these people die is because there is no early warning system to indicate they should evacuate. Next, another example is monsoon rains. They come yearly, and are much more predictable than the Yellow River floods. You can usually tell two days previous to its arrival when it will come. The monsoons start with a slow start and stop rain. However, they will......

Words: 596 - Pages: 3

Premium Essay

Case Study Economics: China

...globalisation has had strong impacts in China and thus is predicted to be one of the 4 largest economies by 2050(BRIC). China has benefited greatly from the onset of globalisation and their economy would not be the size it is today if it was not for globalisation, however globalisation has had some strong negative side effects on China. Effect of the 2008 GFC As a result of increased globalisation in China, it has been vulnerable to the Global Financial Crisis in 2008. In the period between 2006 and 2007 China was operating with high GDP growth rates, with an average of 12%. When the GFC hit in 2008, the impact was clear when: * GDP growth rate had dropped down to 9% in 2008 and 8.5% in 2009. The decrease in GDP growth rate was due to worldwide demand for the Chinese exports decreasing and TNC’s closing down factories and putting millions out of work, leading to a stall in domestic industrial production. * Inflationary rate was negatively affected. In 2007 China’s inflation rate was 4.7%, in 2008 it grew to 6%, and when the GFC hit, the impact was clear when inflation had dropped down to negative 0.6% in 2009. * China’s unemployment rate had increased from 4% in 2008 to 4.3% in 2009. * China’s government debt as a % of GDP rose from 16% in 2007 to 19.5% in 2008 In November 2008 the Chinese government introduced a stimulus package worth $586 billion, which was aimed at encouraging growth and domestic consumption. After 2009 China experienced gradual......

Words: 1312 - Pages: 6

Free Essay

Ambiguous Property Rights in China's Economic Transition

...property rights in the case of China and its non-state sector as a transitional economy; can they be efficient? Index Introduction I. Past to present People’s Republic of China, towards transition Property rights, defined p. 3 p. 3-4 II. III. p. 5-6 The Chinese Model p. 6-8 Evolution vs. Big Bang, and the employment of ambiguous property rights Current p. 8-11 China, mid-transition and the functionality of ambiguous property rights in transition Future China, post transition, and does one size fit all? p. 11-12 IV. V. Conclusion Bibliography p. 13 p. 14-15   2   Introduction China’s remarkable and unmatched growth of the past decades, regardless of it ambiguous property rights and a relatively weak legal framework, have puzzled governments and economists to date. The contrast between China’s transitional economy and those in Eastern Europe and the former Soviet Union could not be more striking. Whereas the transition of the latter two has been a struggle and have sparked recession, China’s transition has brought about an economic boom and its gradual reform path has challenged the belief that gradual reform and public ownership cannot work as a transitional strategy. This paper aims to analyse the Chinese Model of economic transition with a focus on the structure of property rights in the system, primarily in the rural sector. First, a brief historic background of China and its course towards transition is provided, after......

Words: 3656 - Pages: 15

Free Essay

Economic and Trade Relations of Japan and China

...Economic and Trade Relations of China and Japan China contains more than 5,000 years of history. This remarkably long past earns china the title of the oldest civilization in the world. The country possesses the largest population of 1.344 billion and a Gross Domestic Product (GDP) of $7.318 trillion in U.S. dollars ("World bank, china," 2011). Although China has an extremely high GDP, the extremely large population is a problem since they cannot provide enough resources for the entire population. This makes it imperative for China to trade and have relations with the world around them and participate in the global economy. That being said, with there incredibly dense population, they have a labor force of 795.5 million which allow them to be very large competition for the rest of the world. Since the 1970s, China has evolved from a closed, central system to a market-orientated system that makes China the world's largest exporter. This was accomplished by the gradual liberalization of prices, fiscal decentralization, creation of a diversified banking system, the growth of stock markets, the opening to foreign trade and investment, rapid growth of private sectors, and the decrease in collective agriculture ("Index mundi: China," 2012). In the more recent years, China has once again brought back their support for state-owned enterprises (SOE) for the purposes of economic security. The restructuring of the economy and resulting in efficiency gains have brought China to......

Words: 1889 - Pages: 8

Premium Essay

Economic Relationship Between the U.S. and China

...President Richard Nixon, the United States resumed its economic relationship with the nation of China; in 1979, a bilateral trade agreement was signed by the two countries. Today, China has become one of the largest trading partners with the United States, trailing only behind Canada and Mexico. The United States benefits with this trade agreement due to the large and growing consumer market for U.S. firms and the Chinese imports cost less due to the low labor cost in China. The nation of China benefits due to the increased integration with world economy through overseas education and trade, creating awareness on issues such as environment and human rights. The numerous benefits of this union between two powerhouses of the world economy bring many negative issues. The first issue that affects many Americans today is the loss of jobs due to outsourcing and importing rather than producing goods here in the United States. From the years 2001 to 2010, the trade deficit with China caused the loss of 2.8 million jobs in the U.S. This affects the Untied States’ economy by increasing the number of Americans receiving unemployment insurance and food stamps. One example of this outsourcing is Nike, Incorporated which produces an estimated forty percent of its shoe output in Chinese factories. However, Nike Inc. justifies this outsourcing because profit margins are dependent on labor cost. Another issue with the union between U.S. and China is the lack of flexibility of China’s......

Words: 885 - Pages: 4

Premium Essay

China Economic in 2008

...USQ-SCNU International Accounting College Assignment Chinese Economics in Global Financial Crisis of 2008 Prepared for F.S. Helmut Submitted January 10th, 2014 Ludacris Yu As for the financial crisis of 2008 in the world, which is the most serious economics crisis since the Great depression in 1930s, and caused globalized influenced. Many major economics have had flat and passive development over the last two years. Whereas in China, the economics still have been growing stabilized. According to the Wikipedia “China is the world’s second largest economy by nominal GDP and by purchasing power charity after the United States of America. And it is the world’s fastest-growing major economy with growth rates averaging 10% over the past several years.[1]” The financial crisis also mean a financial storm. The meaning of storm that are the financial indexes such as short-term interest rates, monetary assets, securities, real estate, land prices, the number of business bankruptcy and the collapse of several financial institutions suddenly or short-period deteriorated in the largest number of countries and regions. The financial crisis can be divided into a currency crisis, debt crisis, banking crisis or others. The economic crisis in the year of 2008 was originated in the U.S. Sub-prime mortgage crisis, the development of the U.S. Sub-prime mortgage crisis, which evolved into a global financial crisis. In my opinion, the crisis in 2008 which...

Words: 1149 - Pages: 5

Premium Essay

Economics Comparison Essay Australia and China

...Australia and China have adopted different economic systems in order to cater for the society. The Chinese and Australian economies have many similarities and differences from Australia’s market based economy to China’s planned economy. Like all economies, they both face the problem of scarcity of resources, what to produce, how much to produce, who will produce. Both of these economies have adapted to changing the world in order to allow their economies to grow and develop. These similarities and differences include the economic growth and quality of life, the environment, employment and unemployment, distribution of income and the government role. Australia and China Australia have very little similarities in terms of economic growth and quality of life. Australia is a democracy and China is a one party rule socialist party. The quality of life also comes in the size and the population of the country. Australia’s area of 7,682, 300 sq km is 80% of China’s 9,595, 960 sq km, yet its population is 22 million which is only 1.7% of China’s 1.35 billion. For Australia’s GDP per capita is $43,000 ranking 10th in the world and China’s is only $7945 which is 98th in the world. Due to the extreme difference in the density of population and per capita income. Basically there isn't a lot of similarity except the large gap between rich and poor and for a few wealthy individuals who could afford the same luxuries. Employment and unemployment are one of the many similarities and......

Words: 642 - Pages: 3

Free Essay

Economic Impact of Industrial Pollution in China

...Economic impact of industrial pollution in China Outline I. Introduction Brief overview why China is the target country II. Overview of the problem a. Large population are suffering from the pollution b. Industrial growth based on coal uses; serious air pollution in most cities in China III. Economic effects c. Reduction of the labor force: high death rate to workers due to the pollution, especially air pollution; high risk for children to grow up in such environment. d. Fewer foreign investments: Foreign companies’ policy or culture require good environment for their employee; high rate of employee turnover because of pollution IV. Possible solutions e. Solution 1: Increased oversight on industrial operations f. Solution 2: Restrictions on development of new industries g. Solution 3: Use of change leadership to overhaul current policies tax subsidy/ mandates /cap and trade invest in new technology V. Conclusion/Recommendation The Chinese government needs to create new laws, borrow a leaf from The Sarbanes-Oxley Act. Introduction In an economically competitive world, most countries around the globe constantly compete to attain the top position in the international market in order to reap the benefits that come with such progress. For this reason, most countries insist on industrialization with some showing more zeal as compared to others through political......

Words: 3813 - Pages: 16

Free Essay

Pak China Economic Corridor - Analysis

...Pakistan-China Trade and Economic Corridor Economic Analysis Submitted to: Dr. Mehmood Karim Qureshi Business Economics for Mathematics MBA – 2 years (Evening) Submitted by: Asad Akram Roll No. 14I – 1216 Introduction: Pakistan and Chinese governments are planning to execute a trade and economic corridor through the length of Pakistan, from Gwadar in Baluchistan to Kashgar in Xingjiang. It will be a land based transport route alternate to the conventional sea route spanning Persian Gulf to China’s coastal regions. This corridor development can prove vital to bringing Pakistan’s economy back on its feet and also helping China in increasing trade with Middle East and African Countries. More than half of the world's proven oil reserves are located in the Middle East, the top region-based supplier of crude oil to China. In 2012, China imported 5.4 million bbl/d or 56% of its daily consumption in crude oil, of which 48.1% originated from the Persian Gulf. Up till now, all of this volume has been moved by seaborne oil tankers hauling over some 10,000 nautical miles to terminals along the east and southeast coast of China. Each journey is beset with one of the world's most perilous chokepoints - the Strait of Malacca. This leaves Beijing with tough choices in guaranteeing security in energy supply, practically because nearly 60% of annual oil consumption of this emerging economic powerhouse has to be imported and is still growing. Moreover, superior naval......

Words: 2349 - Pages: 10

Premium Essay

Pollution Problem in China : Suntainable Economic

...The Barrier to China sustainable economic growth: Pollution Problem China, the world’s second largest single-country economy, has achieved economic growth over the past 30 years, however, growing the GDP at any cost has created many environmental problems. China’s facing severe pollution and environmental degradation for many reasons such as rapid industrialization, reliance on coal as an energy source and manufacturing industry. One of the environment problems for China is pollution. The current air pollution has become a threat to Chinese people health. 33 shocking photographs were posted on social media under the caption ‘Pollution in China is out of control’ catching world’s attention. This problem has thus become serious problem which call for rethinking of government policies. The Chinese Prime Minister, Li Keqiang, also responded to this problem declaring war against pollution and fighting it with the same determination China battled poverty. From my point of view, it’s the big challenge for China to improve the environment quality while achieving rapid economic growth therefore I think one of the greatest barriers to sustainable economic growth for China is the pollution problem. The impact of China's economic development on the environment has become increasingly serious, China has been facing a growing imbalance between economic achievements and the quality of the environment. At present with economic growing, China's energy consumption and......

Words: 721 - Pages: 3

Premium Essay

Special Economic Zones in China

...Why did special economic zones succeed in China? Word Count: 2479 November 26, 2013 Why did special economic zones succeed in China? !2 Abstract The purpose of this paper is to find out the reasons behind the success of China’s special economic zones (SEZs). This paper examines different policies that China implemented in the SEZs and other advantages that SEZs possess while other regions in China do not in an attempt to find out factors made so successful. The reasons behind the success of SEZ in China can be divided into two different aspects: economic and political. This paper is mainly separated into two parts. The first part describes the political changes that China has made and how these changes benefit SEZs. The second part explains how different economic policies that are implemented and advantages SEZs have contribute to their success. Introduction Ever since its establishment, the Chinese government had been following the Stalinist economic model, a communism political-economic system created by the Soviet Union (Zhang, 1989), in which there was absolutely no consideration for the role of the market. This economic system undoubtedly benefited China in the very beginning. Yet, China’s economy had dropped significantly after a few decades, especially the time during the Great Leap Forward (Zhang, 1989). Not only did China suffer from domestic problems, such as outdated production technology, low industrial productivity, and......

Words: 2735 - Pages: 11

Free Essay

China - New Economic Giant

...China is called ‘The New Economic Giant’ for three reasons. Firstly, its economy has doubled in size every eight years. Secondly, China now has the largest sustained GDP growth in history. Thirdly, China controls 3% of the world’s oil reserves. A centrally planned economy is an economic system in which economic decisions are made by the state or government rather than by the interaction between consumers and businesses. In 1986, China introduced an ‘Open-Door Policy’ to overseas investment. It allowed China to transform into a more capitalist economy, allowing individuals to accumulate wealth by producing goods and services without State interference. This allowed China to rise as an economic superpower. Car ownership is expected to jump from 16 cars per 1000 people in 2002, to 267 cars per 1000 people by 2030. By 2020, China is expected to have 140 million private cards on the road, which is more than the USA. An increased number of cars and rapid urbanisation will lead to an increase in energy demand therefore, increasing China’s energy requirement. The problem with increased number of cars and rapid urbanisation is that China doesn’t have the required resources and therefore will rely upon importing oil to meet the requirements. China’s dependence in imported oil is expected to 60%, which raises issues about China’s long-term energy security. China is still largely an agricultural society and 60% of the population lives in rural communities, and 45% of the workforce is......

Words: 318 - Pages: 2

Free Essay

Early Economic Prosperity: Fine China

...Early Economic Prosperity: Fine China For centuries, the common theme of global politics and economics has been focused on the relative prosperity of the West compared to the rest of the world. It’s a trend with roots as early as the 15th century and that has characterized the world we live in today. In the 9th through the 14th century, however, China was starting to become one of the more prominent powerhouses in the world and played a major role on the international level in both politics and economics. China’s impressive strength during this time period insists that certain policies must have been put into place at the governmental level in order to spearhead the country into prosperity. To just credit this success to a more centralized approach than the rest of the world would be an unjust oversimplification of China’s illustrious history. Instead, we must look at China’s emphasis on both technological advancements and centralized business practices as the sources of their ensuing dominance in the several centuries prior to the arrival of Europeans in the Americas. While some say that just a general policy of centralization helped to spur Chinese advancement during this time period, it is actually more accurate to hone in on their reformative business practices as the most probable cause. As Abu-Lughod (1989) stresses, China’s reforms occurred both on a national and a global scale. Within borderlines, one of China’s first steps was to adopt paper money (especially in......

Words: 740 - Pages: 3

Premium Essay

China Macro Economic Variables

...Analysis of Macroeconomic Indicators Of China Section-2 Group-11 Anup Pandit Gaurav Bhatia Logesh Kumar RC Naveen Kotni Prasun Parashar Ronil Sinha Tuhinadri Sarkar Analysis: Macroeconomic Indicators along with values is provided in the below table Macro Economic Indicators | Value | GDP Growth Rate | 9.1% | IIP Growth Rate | 14% | Agricultural Growth Rate | 4.3% | Fiscal Deficit | 800 billion yuan | Interest Rates | 6.56% | Exports | 180.2 billion USD | Imports | 148.5 billion USD | Current Account Deficit | 59.8 billion USD | Inflation | 7.65% | Foreign Exchange Reserves | 3.24 trillion USD | GDP Growth Rate: * GDP (purchasing power parity) of china is $11.3 trillion second largest in the world. * Most of the GDP is comprised of the exports. China is an export based economy. * GDP of China rose rapidly over past 33 years, Chinese households do not appear to have shared equally in that growth. * The Growth rate of GDP is averaged at 10% from past 5 years. Even during recession periods china GDP continuously grew at an average rate of 9%. There is a serious concern in the distribution of china’s GDP in which household expenditure and private consumption is low. * Falling share of private consumption and disposable income relative to GDP is largely caused by two main factors: China’s banking policies and the lack of an adequate social safety net. Chinese households put a large share of their savings in domestic banks. ...

Words: 1614 - Pages: 7