CHINA

Question 1

China today

Answer 1

• fast growing
• industrial powerhouse
• communist state (capitalism with socialist characteristics)

Question 2

Historial characteristics still applicable to today

Answer 2

state patronage
kinship networks
Rituals

Question 3

Imperial Period: Ming (14-17th century) and Qing (17-19th century) dynasties

Answer 3

• until 1820: largest economy in the world
• centralized state
• merchants
• family business
• state patronage
• after 1860: economic stagnation
  - opium war 1840
  - officials corrupt
  - too family oriented
  - opposed modernizaiton because opposed western things

Question 4

Confucianism

Answer 4

• political and moral philosophy
• hierarchy of obedience
• rituals instead of hierarchical control

Question 5

Imperial Period

Answer 5

• before 1895: private business enterprises only in small-scale industrial production
• Chinese officials refused to give up control and became even more involved in industrial management
• merchant managers replaced by officials
• large joint-stock companies sponsored by the state but gradually declined due to corruption and inefficiency
• no law guaranteeing individual ownership of property

Question 6

Company Law of 1904

Answer 6

• western style corporate code of governance
• better legal environment to encourage private investment
• many important enterprises structured as public-private (today too): financed in part by equity capital but effectively governed by state

Question 7

Republican Period (1912-1949)

Answer 7

• civil wars and political unrest
• ruled by Kuomintang (hold on power exceedingly weak, little political authority)
• by 1949: China’s share of an expanding world economy had shrunk to 5%, the sick man of Asia

Question 8

People’s Republic of China (1949-1978)

Answer 8

• Mao Zedong (communist)
• state-owned enterprises
• planned economy, closed to the outside world, no private enterprises
• soviet conception of rapid, forced industrialization (high priority of heavy and military industries)
• economic development thanks to modest but crucial assistance from Soviet Union
• gradual takeover of ownership of almost all sectors of China’s modern economy

Question 9

PRC after 1978

Answer 9

• market economy, open to foreign trade, foreign investment in special economic zones
• tight Chinese government regulations
• economic growth and privatization incentives
• after 1993: privatization of small and medium-sized state-owned enterprises
• problems: slow reform in state-owned enterprises, fragile financial systems, widening income inequality
• government intervention gradually reduced
• corporate enterprise (issuance of minority ownership and share market, legal and regulatory framework to protect shareholder rights and insure managerial responsibility)
• foreign private enterprises
• but control over most of the largest economic sectors (communication, transportation, etc.)
• modern Chinese enterprises: public-private structure

Question 10

Kinship

Answer 10

• Guanxi= connections
• prime criteria for recruiting employees
• Confucianism: self is extended to family, family and friends to create a harmonious community (obligation that one has to another, individuals exist in relation to others)
• economic organization without laws or formal rules
• conditions: 1) prior existence of a guanxi base, 2) further development and maintenance of gaunxi (loyalty)