China Flashcards
what was chinas great leap forward and chinas great famine?
it was an urban biased rationing system for food which had compulsory grain procurement from communes. the enlargements of communes led to a fall in incentives and productivity. there was a series of natural calamities combined with policy errors such as the great leap forward which caused a famine of 30 million deaths approx 5% of chinas population
what were the 4 modernisations ?
in 1973 premier Zhou Enlai launched the 4 modernisations which were agriculture, science and technolgy, industry, defence. however it was crushed by the old guard
what were the chinese economic reforms after 1978?
communal agricultural system dismantled and replaced with household responsibility system
there was dual track pricing with a plan track with fixed price and fixed output quota for farmers and also a market track with any surplus sold at market determined prices created incentives to increase production
there was an expansion of township and village enterprises producing labour intensive manufactured goods
how was china a successful example of catch up?
- Re-allocation of labour from low to high productivity sectors(“household responsibility system”)
- Very high rates of physical capital accumulation induced by high rates of saving and investment
- Gains from scale economies - huge internal market
- Modernisation of the capital stock - FDI and new ideas(adoption not innovation)
- Gradual opening up to international trade
- Increasing role for private sector enterprises
was chinas growth below potential?
chinas growt of gdp per capita was 6.1% over the period of 1978-2004 which was lower than japan, south korea and taiwan even though china had higher investment rates
what were chinas investment rates in the period of 1978-2004?
40%+ I/GDP
what was the ratio of physical to human capital and what does this mean?
china allocated only 3.35 of GDP on education but 45% of GDP on physical investment in 2002 so chinas ratio of physical to human is very high. this means china is underinvesting in education
what was chinas 13th 5 year plan involve?
Promote consumption driven growth - reduce reliance on investment and manufactured goods exports
Maintain commitment to openness of the economy
Shift emphasis from physical to human capital accumulation and innovation
More balanced development between rural and urban areas
More inclusive development - improve income distribution - reduce inequality - expand social services
Commitment to green development & improve environment
what are the chinese headwinds?
End of structural shift
Diminishing marginal returns to capital
High inequality
Slowing growth of global trade
Environmental deterioration
Political/economic freedom tradeoff
what are chinas projection for 2050 for the percentage of population aged 65 or over?
38.9%
what proposed ammendement to the countrys 1982 constitution is the most controversial?
the removal of presidential term limits which would break the custom of leadership change once every decade and could pave the way for XI to stay in power indefinetly
why does china have such a high savings rate?
HIGH CORPORATE SAVING REFLECTS HIGH PROFITABILITYSINCE EARLY 1990s
PRIVATISATION OF STATE ENTERPRISES - HIGHER PROFITS
TAX REBATES FOR EXPORTERS
CONTROLLED WAGE RATES - HIGHER PROFITS
WEAKNESS OF CHINA’S CAPITAL MARKETS - INVESTMENTVIA RETAINED ENTERPRISE EARNINGS
RISE IN GOVERNMENT TAX REVENUES
GROWING INCOME INEQUALITY
DEMOGRAPHIC FACTORS - AGEING POPULATION AND DECLINE IN CHILD DEPENDENCY
LACK OF DEVELOPED SOCIAL SECURITY SYSTEM AND UNEMPLOYMENT INSURANCE
DECLINE IN PUBLIC PROVISION OF HEALTH AND EDUCATION
CULTURE?
why will chinas savings rate fall?
SLOWER ECONOMIC GROWTH
INCREASE IN GOVERNMENT SOCIAL WELFARE PROGRAMS
POPULATION AGEING
DEMANDS FOR WAGE INCREASES—WILL REDUCE SAVINGS FROM PROFITS
