Introduction
The Chinese economic reforms are long in the making, an unfolding process that has spanned most of the twentieth century. In fact, it completely fit the definition of a full reform. Unlike the other countries reforms, Chinese economic reforms can be characterized overall as very successful. When the other countries, such as Russia, were trying to do the same thing but did not success, China has increased its country s economy greatly. China has the fastest growing economy in the world within the past two decades, with an average annual growth rate of approximately 10 percent since its economic reforms began in 1979. Between 1979 and 1996, Chinese real GDP has quintupled from US$150 billion to US$750 billion. Recent Chinese economic policies have shot the country into the world economy at full speed. As testimony of this, China’s gross domestic product has risen to seventh in the world, and its economy is growing at over nine percent per year , which is very amazing. Starting in 1979, the Chinese have implemented numerous economic and political tactics to open the Chinese marketplace to the rest of the world. Just a few areas China’s government is addressing are agricultural technology, the medical market, and infrastructures, like telecommunications, transportation and the construction industry. China is one of the very few countries that have made a successful transition from a centrally planned economy to a market economy.
The Term Paper on Chinese Economic Reform
... this day. Another important aspect of Chinese economic reform was the decision of China to join the world economy. Deng Xiaoping and his allies hoped ... suffering losses by letting foreigners make profits in our country?'" (52). The Chinese were as vociferous about issues of sovereignty. Nathan maintained ...
Worldwide China has friends who would like to see it march on to socialism and communism through reforms. In this regard, ever since China took up the reforms promoted by Deng Xiaoping, commentators have been concerned that these reforms to the Chinese economy lead to the restoration of capitalism and will once again bring China under the yoke of foreign domination. Many Chinese leaders did not believed that economic reform of China was necessary until after Mao Zedong died for a couple years. 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 (Chinese Communist Party) leader after Mao’s death. Unfortunately, the movements by Mao and Hua left China in a state where agriculture was dormant, industrial production was low, and the people’s living standards had not increased within over twenty years. The gross output value of industry and agriculture has only increased by 810 percent and national income grew by 420 percent [between1952 and 1980] average, and individual income increased by only 100 percent. From the late 1950s to 1979, the economy of China was at a standstill.
The living standard of the Chinese citizens was not improving and becoming worse. Industry was producing at only fifty percent. However, attempts at economic reform in China were introduced not only due to some kind of generosity on the part of the Chinese Communist Party to increase the populace’s living standards. It had become clear to members of the CCP that economic reform would fulfill a political purpose as well since the party felt, properly it would seem, that it had suffered a loss of support. All members of the leadership of the Chinese Communist Party accepted the idea of economic reform enthusiastically in 1978. 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. Deng took advantage of the economic crisis to discredit Hua and aim for leadership of the party. Reform policies became Deng’s platform against Hua for post-Mao leadership. In fact, for the history of the economic reform of China, under the system economic questions are necessary to be the political questions.
The Essay on Economic Reform
Many diverse countries such as Poland, Ghana and Jamaica have been forced to borrow money from the World Bank and the International Monetary Fund (IMF) under the structural adjustment programs. The main goals of these economic reforms comprise of need to reduce both rural and urban poverty need to increase exports as well as induce a high and sustainable economic growth rate. In Ghana, ...
In late December 1978, the “Deng Era” began. During the “Deng Era,” Deng Xiaoping proved thoroughly that he was a force of good by spending the remainder of his career reforming China for the better. One of the first things Deng Xiaoping did for the country was to make Mao less “Godlike.” To make Mao less “Godlike,” he convinced the people that Mao did make mistakes while he was in power. Deng Xiaoping told people in China that Mao’s greatest mistakes were the Cultural Revolution and the Great Leap Forward Policy . After Mao was made less “godlike,” it became easier to reform China. The first policy Deng Xiaoping reformed was the land policy. In 1979, he eliminated communes and began to give greater independence to the 800 million peasants. He leased the land to the peasants and allowed them to decide what to grow. Due to this policy, production of food greatly increased and the net income of a farm family more than doubled. Soon the Chinese were enjoying a higher standard of living (to be discuss later on in this essay).
Deng also wanted to improve the industry of China. He did this by allowing small private enterprises do business. These enterprises were usually small restaurants and other types of shops. In 1979, Deng Xiaoping also created four special economic zones (discuss later on in this essay), where foreign investors could invest their money. In 1984, fourteen more special economic zones were opened. Deng has implemented economic reforms in a way that there are no losers at all. Therefore, no Chinese citizen is made worse off as the result of the Chinese economic reforms. Moreover, Deng had China had an abundant supply of new resources, and most of them were invested efficiently. Approximately 80 percent of the capital stock in 1996 is due to the investment made since 1979.
Under Deng s leadership, having no losers is enable the economy of China is to be fully efficient. The Chinese economic reforms have actually achieved the gain without pain which is the dream of all economic reformers. The economy grew so quickly that inflation occurred and the government had to re-institute price controls. One of the important aspects of Chinese economic reform was the decision of China to join the world economy. Deng Xiaoping and his allies hoped to affect this 1979 revolution in two ways: by expanding foreign trade, and by encouraging foreign companies to invest in Chinese enterprises.
The Essay on How China became Chinese
Jared’s Diamond’s “Guns, Germ and Steel” is an historical narrative that focuses on alternate explanations to the rise and fall of civilizations and the development of cultures and societies by tracing evolutions and nuances in world and human history dating as far back as 13,000 years ago to the present. It is an historical treatise that moves away from a largely Eurocentric model of the world ...
In this paper, the main focus will be on the Dual-Track approach by Deng Xiaoping and the Three Elements of the Chinese economic reforms since 1979.
THE DUAL-TRACK APPROACH
By making the principle no one loses – of the Chinese economic reform works, China had developed the Dual-track approach. The dual-track approach can be defined as two parts: the planned track and the market track .
It started at the end of 1978 with rapid and comprehensive liberalization of the agricultural sector when the other sectors remained under the traditional planning management. The first policy Deng Xiaoping reformed was the land policy. In 1979, he eliminated communes and began to give greater independence to the 800 million peasants. He leased the land to the peasants and allowed them to decide what to grow. Part of his policy was to have the peasants give up a certain portion of their harvest (usually one-third) for a price guaranteed by the government by contract. The rest of the harvest was theirs to sell or keep. Because of this policy, production of food greatly increased and the net income of a farm family more than doubled. Farmers now enjoy a high degree of production freedom: only 5 percent of their production in 1993 was set by the state plan. Soon the Chinese were enjoying a higher standard of living. Before this policy, the people of China usually did not have enough to eat. After the policy, the Chinese were enjoying eggs, meat (which used to be almost nonexistent) and other treats.
A) Dual-Track Production and Price
Other than improving the agricultural in China, Deng also wanted to improve the industry. He did this by allowing small private enterprises do business. These enterprises were usually small restaurants and other types of shops. In 1984, China set quotas for consumer goods much lower than for producer goods. This proportion of plan production has helped to reduce the total industrial output vale from over 90 percent in 1978 to approximately 5 percent in the early 1990s.
The Business plan on Market Plan Cafe Internet Marketing Business
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By 1984, they were producing more than $1 million worth of rice and a range of side products, including rice wine. Their residential earnings were up to about $200 a year. This meant that they could begin replacing their mud-and-straw hats with solid brick houses. With the introduction of the free markets and the dual-track price system, people continued to be able to purchase freely at any quantity of any good at the free market price.
There are always two prices on one good: the planned price and the market price. All market prices are determined by the equilibration of the supply and demand in the market with the remaining fixed planned price.
Under the dual-track strategy, the central plan remains. All markets are instantaneously open. Producers are completely free to plan what they want to produce and sale. Consumers are also completely free to plan what they want to consume. This led to furious rebuilding and inflow of foreign investments. All this enabled China to remake itself into Asian’s hub of finance, trade and culture.
B) Dual-Track Ownership
foreign investment has played an important role in developing economic reforms in China. Dual markets were permitted the existence of foreign exchange in China from the mid 1980s to the end of 1993. During this period, the government of China did not control the transactions in the swap market, and the exchange rates in the swap market were mostly determined by the supply and demand. This exchange rate reform has turned out to be a complete success.
Indeed, the increase in foreign investments in the last eight years is striking. China has received 3.3 billion dollars in foreign investments during the 1980s. The area received the same amount from foreign investments in 1992 alone. Even more amazingly, in only the first ten months of 1993, the area had received over six billion dollars worth of foreign investments. Approximately 67.5 percent is from Hong Kong, Macao, and Taiwan. Chinese investors make a considerable portion of the investments from the United States and Japan from these countries.
The Essay on India, China Economic Growth
... However, China’s and India’s economic growth history starts after economic reform in both countries. Economic Liberalization ... and investment as well as foreign trade have also grown progressively ... market. It helped to increase agricultural productivity dramatically (IMF, 2012). Before economic reform ... Chinese people’s welfare was phenomenally improved; this may be the enormous world’s economic ...
The Chinese pharmaceutical market, much like Chinese industrial markets, is experiencing rapid growth due to reforms in China’s economic strategy. For instance, the nation’s government has decided to lower import tariffs and remove the necessity of an import license to bring pharmaceuticals into the country. Also, patented foreign drugs, such as Tylenol, are now being protected from counterfeiting by administrative action. The result of these provisions are overseas contractual investments totaling $1.5 billion in the past five years, and income from the medical industry’s exports reaching 2.6 times the amount five years ago, according to Zheng Xiaoyu, director of the State Pharmaceutical Administration. The open policy and the coastal development strategy have allowed Deng to entrench his political power, and allowed his power to be sustained even after death. With the billions of foreign dollars coming into the area, it has become necessary to improve the city’s facilities. To that end the central has allocated forty billion dollars worth of public works projects government for Shanghai within the last year. These public works projects include new sewers, a new water system, new gas lines, a new bridge, and extensive roadwork. Future plans include the construction of a second international airport, a container port, a new subway system, and more roads and bridges. China and foreign investors in a joint venture are also rebuilding the financial district, which will feature a new stock exchange.
C) Dual-Track Regional Development
In 1979, Deng Xiaoping has chosen four special economic zones where foreign investors could invest their money. The purpose of this act was to minimize the impact on and interaction with the new economic activities on the old-style domestic enterprise, which operate under the state plan. Shantou, Shenzen, Xiamen, and Zhuhai were the four zones, namely Special Economic Zones (SEZs).
These four areas were given autonomy to test with the economic reform. For example, they were responsible from many of the regulations that govern foreign investments. The main success of this approach were made possible through (a) the existence of overseas Chinese enterprises were willing to invest in China although the uncertain economics and political background to them, and (b) the existence of the cheap labor in China. In 1984, fourteen more special economic zones were opened. The main effect of this regional development is that the whole country would experience the high growth of economy in the coastal areas due to the more rapid development of the non-state sectors but to the state of industrial reform.
The Research paper on Factors of Chinese Art Market
... economic growth in Asia, the fine art market rise sharply within Asia, especially China, changed the geographical structure of the global art market. The Chinese ... trade after it(Wang. A, 2012). Actually, modern Chinese fine art market starts after the reform and open up in 1978 and ... done by both Chinese and other foreign people, this essay will focus on some factors behind the market and analysis how ...
D) Dual-Track Marketisation
Both central plan and market plan existed under the dual-track approach. The output produced outside the plans has grown rapidly due to the frozen central plan at the original level. The proportion of the output at the plan price for both selling and purchasing have declined continuously after the dual-track strategy started in 1978. The plan price of agriculture products in 1978 was 94.8 percent whereas the market price was 6.4 percent. Compared to the 10.1 percent in plan price in 1993 where the market price was 88.3 percent of the output value. It is very clear that by the early 1990 s, the plan price has dropped dramatically to the market price. The plan has phased out many goods. These statistics have proven the importance of demand expansion due to the rapid economic growth that takes place inside of the market price.
The THREE ELEMENTS of CHINESE REFORMS
In order to maximize the gain without pain in the Chinese economic reforms during the 1980 s, three essential elements of Chinese economic reforms have been developed. They are including (1) The open door Policy, (2) Marketisation, and (3) The contract responsibility system . The results produced by these four elements had led the Chinese economic reforms characterized overall as very successful.
The OPEN DOOR Policy
China’s capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. This led China to venture into free-market economics, although they were still under the communist political system. When President Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. The open door element that created by Deng is the opening of the Chinese economy to international trade and foreign investment. This policy has been extremely successful. Chinese international trade has been increased dramatically since after 1979. The People s Republic of China is now the world s fourth largest trading nation. It is also the largest recipient of foreign direct investment among developing countries. With the introduction of the “open-door policy” which is proving to be very beneficial, they followed in the footsteps of their strong rich neighbors. He invited different countries in the world to do business in China. He opened the doors to the world, willingly, for the first time in China s history.
MARKETISATION
Stock markets were established in China in the 1990s. College and University graduates are no longer trapped in a particular area. They can work wherever they wish to. The government for welfare purposes controlled prices of low-graded grain. More than 95 percent of the producer goods and consumer goods have been determined into the market of China in the early 1990 s.
The Contract Responsibility System
This is a system of arranging the devolution of economic decision power. Whether different level of leaders should have the right to make certain economic decisions. Deng had decided which leaders in the country would have the right to make different kind of decisions according to their positions.
Conclusion
China’s capitalism and boom was born when their president, Deng Xiaoping permitted the provinces to dismantle their communes and collective farms. In February 1978, Deng Xiaoping led up the Chinese economic reforms, making breakthroughs that only he at the time had the initiative to spearhead. This led China to venture into free-market economics, although they were still under the communist political system. When Deng announced that they needed Western money and expertise, China flung their trade doors wide open and China went on a capitalist drive without ever looking back. By mid 1960’s, the Chinese Revolution settled down to the job of ruling China. Its main goal was essentially nationalist: a prosperous modern economy. While there continued to exist substantially economic inequalities, distribution of wealth was probably a bit more equal than in most Western countries. While there were great variations in income between different villages, and between different jobs in the urban sector, the overall averages showed a clear pattern: the cities were much richer than the countryside. Most capital investments were going into urban industries. The urban workers, using considerable amount of heavy machinery, had a much higher average level of productivity compared to the rural workers. The natural consequences were for the city people to arrange themselves an average income level twice as high as that of the people in the countryside.
The most obvious way to attack this poverty problem was to increase production, in all sectors of the economy. Though the easiest way to increase production was to increase capital inputs, China could only afford a limited amount of capital construction. In accordance to this, China went on a construction binge. Whole factories were purchased from abroad while others were built with local resources.
China has quickly become a world leader in trade and will only increase its importance to the global economy. These facts are proven with China’s current economic statistics: growing at over nine percent per year and economists’ projections of the nation’s future China will double its gross domestic product of the year 2000 in the year 2010. The way the Chinese government achieved these impressive economic figures are through a complete renovation of Chinese trade policies. Reform measures in the country range from reduced trade barriers and technical contracts for agriculture.
The dual-track strategy that designed by China in the late 1978 had proven that economic reforms without losers are possible due to the fact that there is a surplus of agriculture labors in China. Moreover, Chinese economic reforms are considered to be gradual. It has the gradualism from easy to hard. It has started with the easy problems first then leave the hard ones for the end. This is one of the main reasons and components, which make Chinese economic reforms so successful even though there are many problems when Deng was trying to carry out this action.
The Chinese people have good reason to be glad with their government s economic policy during the 1980 s. China’s economy is doubling every eight years, and its GDP quadrupled between 1980 and 1995. Real GDP growth was 9.7% in 1996, slowing to 8.8% in 1997. China has achieved the average annual growth rate of 9.5 percent since the economic reform. Economic reforms have also attracted a great deal of foreign investment with total investment in China now exceeding US$170 billion. The proportion of labor force engaged in agriculture dropped from 71 percent in 1978 to 53 percent in 1993. The direct foreign investment was $29 billion in 1993 compared to $2 billion in 1981 and the rose from 10 percent of GNP in 1978 to 36 percent in 1993. The Chinese now are going home with fat wallets, stocks, bonds and large bank accounts. Banks are reporting that savings have increased sixty-fold and is still growing. The economic reform has led China to join the world economic community and has become the globe’s third largest economy. China is now ranked 11th in the world in exports of trade goods (excluding Hong Kong), with 2% of world trade, and foreign trade accounting for 35% of its GNP.
In addition to its rapid emergence in goods markets, China has also become a major player in international capital markets. China is now the leading developing country destination for foreign direct investment. The stock of inward foreign direct investment now exceeds $100 billion, though some of this is due to “round tripping” as Chinese investment is routed through Hong Kong to take advantage of the more favorable treatment of foreign investors. Firms with foreign equity participation accounted for two-thirds of the increase in Chinese exports in 1992 and 1993 .
Key elements of the economic reforms include: increased openness of the economy to the outside world, relaxed direct planning controls, decentralized economic decision-making, increased reliance on market forces to determine prices and output, and privatization of 300,000 state enterprises.
During the reform process, the State, the enterprises and the people have had sufficient time to make adjustments to the new market system. The reforms benefit the majority of people as the economy has maintained strong growth throughout the whole process.
Given the apparent strength of the Chinese economy as shown by huge public works projects, extensive foreign investments, participation in the world economy, and a generally higher standard of living by the populace, it would appear that China is now ready to join the world as a modern capitalistic and democratic society.
Deng Xiaoping led an interestingly up and down life. He was the leader of the world s most populous nation, and he also spent time in jail. It is difficult imagine the workings of China in the pre-modern periods and the communism only makes it that much more intricate. He, for sure, did the best that he possibly could within constraints such as a lack of freedom and personal expression. He always did things his way, and good or bad, he lived by his decisions. He was never one to shift the blame. As the most important man and leader in China since the death of Mao Zedong, Deng changed the face of China forever.