CHINA Flashcards
How has China moved towards a market-based economy?
Agricultural reform between 1978 & 1994 involved the abandonment of the commune system of agriculture and its replacement with the household responsibility system
which allowed households to make their own production decisions
1993-1997 most state owned companies/enterprises were privatised
What were the results of these policies?
In 1950, China accounted for 1% of world GDP - in 2018, that number was 18.7%
China’s rate of growth in real GDP averaged 10.5% between 2001 & 2010, making it fastest growing state for many years in that decade
The growth rate peaked at 14.2% in 2007
What were the benefits of pursuing privatisation?
China is the world’s largest economy in terms of GDP purchasing power parity
China is the second largest economy in the world measured by nominal GDP
Reduced government spending on SOEs has led to increased productivity
Increased farming productivity, incomes, access to food and allocative efficiency
What strategies has China pursued to improve economic development?
China has aimed to eliminate illiteracy through such strategies as:
9 years of compulsory schooling
Increased construction of higher education institutions
Improving teacher training and qualifications
China has increased expenditure on health care and government transfer such as welfare payments and pensions to reduce income inequality
What has been the result of China’s policies to achieve economic development?
China’s HDI value rose from 0.588 in 2000 to 0.752 in 2017
Life expectancy in China rose from 63.2 years in 1975 to 76.4 years in 2017
China’s GNI per capita is US$15,270
In 2000, nearly ⅓ of Chinese workers were illiterate or semi-literate
As of today, 95% of China’s population are literate
How has China pursued policies aimed at increased trade?
Since 1992, China has cut tariffs and other forms of protection
China’s average tariff rate was cut from 32% to 19% in 1996 and then to 15% in 2000
China has also entered the WTO in 2001, and have joined 24 preferential free trade agreements since then
China has been accused of undervaluing the Renminbi, making Chinese exports and imports more internationally competitive
What has been the impact of China’s policies to trade?
In 2018, China accounted for 10.7% of world exports of goods & services
Currently, exported goods make up 20% of China’s GDP & imports make up 19%
China has become the world’s largest exporter & second largest importer
China’s exports are greater than its imports, resulting in a US$509.7b trade surplus
What have been China’s strategies to increase investment?
Since the 1980s, China has adopted an ‘open door’ policy to foreign investment
This has been facilitated via the establishment of Special Economic Zones
SEZs are areas where business and trade laws are different from the rest of the country
China’s SEZs involve low tax rates, exemption from import duties, cheap labour and power, and less stringent government regulations
China has also used capital controls to encourage FDI over portfolio investment
Capital controls are limits on the amount of money that can be brought in/out of China
What has been the impact of China’s policies towards investment?
China is the world’s second largest recipient of Foreign Direct Investment
In 2019, China’s total FDI was valued at US$140b
Many TNCs have located in China to manufacture goods for China’s growing middle class
