China Flashcards
China growth stats
1978 China’s real GDP per cap was 1/40 of US but after 2000 it was 1/5 US
GDP per cap was around $200 in 1978 , S1000 by 2000 (usd)
gdp increased 13 times from 78-06
SEZs resulted in a 10fold increase in FDI in 10 years
household responsibility system resulted in a 61% increase in agricultural production in a 6 year period
Role of Deng (4)
- Paramount leader, set course for china
- Made pragmatic policies that created growth
- maintained pol stability and managed problems - Responsible for policies that sustained growth
- Even continued growth after death by institutionalizing himself
Pragmatic policies egs
Household responsibility system: introduced profit motive, became more efficient at production
Special economic zones in 1980, encouraged FDI . FDI was $500 billion in 2000
sustained growth egs
Managed political stability
- Tiananmen in 1989
- got rid of destabilizing forces in gov, eg general Baibing who created a power base in the military
Managed problems of growth eg inflation
- by cutting government investment and restructring the economy in the 1990s
continued growth after death
by institutionalizing himself
electing reformers as successors (eg zhou ziyang and hu jintao)
HU IS THE PRESIDENT OF CHINA
qualify mao’s role
Mao did not come up with policies himself
o Zhou Enlai pioneered the Four Modernizations years before Deng
• To strengthen the fields of agriculture, industry, science and tech, and national defense
o Many reforms were introduced by local leaders, and only adopted by larger areas and eventually the nation, if they were successful
• Household responsibility system was first secretly implemented by a rural village
o Many reforms were influenced by the experiences of the Asian Tigers
HOWEVER, he was the one who looked at those policies and decided to use them for china
Policies of pragmatism (4)
- Household responsibility system
- allowed peasants to work the land and sell the produce for profit (profit motive) so they would become more efficient
- (but didnt allow them to fully own it to safeguard supplies of foodstuffs)
Results: - more efficient farming, people freed up for industrialization
-can feed growing population
- Reformed industry
- also profit motive, got rid of central planning –> improved efficiency
- introduced Town and Village enterprises where each specialised in a product (comparative advantage????)
- tolerated private enterprise by 1990s as they had high production and employment - Open door policy which ended china’s economic isolation
- SEZs: 1980s: Shantou Shandong, Xiamen Zhuhai, Hainan, Shenzhen and coastal cities in 1984
- SEZs brought in a lot of FDI which accelerated growth - Chose not to privatise inefficient state industries and instead absorbed losses bc they employed many people and they did not want unemployment which could cause political volatility
Skill at managing growth
- controlled inflation when the economy was in danger of overheating in the early 1990s
o Inflation was around 30% throughout the 80s, but Deng and his leadership decided to reduce inflation by cutting state investment and a rigid control of food prices although it came at cost of growth, and in 1991 he restructured the industrial sector to ensure that overheating did not happen again
-Reformers above ideologues were chosen to lead the party
o Chose Zhou Ziyang because he was instrumental in carrying out policies set by Deng
o also Hu Jintao
Policies of ruthlessness (aka lack of political reform) (3)
- maintained centrality of power of the CCP (so party itself was stable)
- -> Reformers eg Ziyang (post 1979) and hardliners removed if they did not toe the party line, Yang Shangkun and general Yang Babing who created a power base in the military
- retained power even after retirement (1992 tour of southern china) - Removed political opposition to maintain stability
- –> Tiananmen square in 1989. suppresed protests. Foreign investment didnt even drop as a result
- -> outlawed falungong as it was a threat to their power
- -> restricted press, internet (high human and political rights costs) - growth came at high economic and social prices for the people
- -> china kept itself competitive through disgustingly low wages and terrible conditions
external circumstances/fortuitousness
- liberal global trade regime
- asian work ethic
- foreign capital in search of investment opportunities even w/ china’s human rights record
- huge and cheap labour force
policies that led to china’s transformation [4]
- reform of agriculture
- -> 200 million rose out of poverty
- -> allowed farmers to grow what they wished after fulfilling state quota
- -> provided tons of food for the industrialising nation and also freed up workers - open door policy
- -> allowed FDI to pour in eg Gap, Nike
- -> export driven growth: in 1988, exports were 14% of china’s GDP, but 40% in 2008
- -> SEZs particularly important
- —> Shenzhen exports @ 9 million in 1979, 563 million in 1985
- —> in 1981, they accounted for 59.8% of total FDI - one child policy
- -> controlled population growth because necessary for 0% pop growth to sustain - encouraged overseas education/returning sea turtles
- -> many went overseas and gained education, skills, and ideas, and came back
- -> however also brain drain. as of 2008, 1.4 million went overseas but only 390K returned
bad things about china
disparities
- -> country dwellers earn 1/3 of what city dwellers do
- -> china’s GDP growth at 9.6% but Shenzhen’s at 40%
poor social welfare
–> lack of healthcare system
environmental degradation
- -> desertification
- -> water pollution in rivers
- -> air quality
financial system not very good, corruption exists
