China eg and development

Question 1

P1 (open door policy)

Answer 1

WHAT HAPPENED:
* In response to global financial deregulation and the rise of capital flows in the 1980-90s, China opened their market to global economy.
* Started with SEZs (special economic zones) implemented near big trade partners (Hong Kong, Taiwan) with a range of incentives,
* Lax enviro regulations, low tax, cheap labour;
TNCs increased.
* Big increase in FDI for the Chinese economy. CN surpassed the US as largest FDI recipient in 2002, reaching 116bn by 2016.

ECONOMIC GROWTH:
* Led to increased technical efficiency cuz firms increased their capacity
* Increased aggregate supply and long-term e/g. (economic growth increased from 4% in 1979 to 14% in 1994)

LIMITATION: creation of a rural-urban divide which worsened DOI. Gini: 0.16 (1978) -> 0.49 (2008)

EVALUATION: Still effective in taking advantage of IBC boom cuz it increased growth but at the expense of economic development

Question 2

P2 (Trade liberalisation 1996-2002)

Answer 2

WHAT HAPPENED: In response to growing trade liberalisation, and the exponential increase in global trade volume, CN reduced their own protectionism to take advantage of global export markets.
* WTO entry in 2001, average tariff went from 32% 1979 to 15% 1994.

GROWTH: Allocative efficiency increased due to reallocation of resources into efficient industries -> increased growth.
* Evident as X as % of GDP increased from 16% 1979 to 36% in 1994.

LIMITATION:
* worsened enviro-degradation as due to CN’s air pollution
* estimated 1.2 million premature deaths/year -> lifespan decrease

Question 3

P3 (OBOR)

Answer 3

WHAT HAPPENED:
The Belt and Road Initiative is a massive China-led infrastructure project that aims to stretch around the globe.

In response to growing trade, the BRI was introduced. Aims to improve the diversity and volume of trade by
* Building regional relationships
* Building infrastructure
*nearly 70 countries

EFFECTS:
* BRI related investments can contribute to lifting 8.7 million people from extreme poverty and 34 million from moderate poverty at the global level
* BRI related trade cost reductions changes in volume and structure of economic activity would have negligible impacts on CO2 emissions with an aggregate increase of 0.5% at a global level
*Between 2014 and 2016, China’s total trade volume in the countries along the Belt and Road exceeded $3 trillion

GROWTH: Additionally, in 2012, China’s outbound foreign direct investment (FDI) was $82 billion, but in 2020, it was $154 billion, ranked as the world’s number one overseas investor

LIMITATION: annual loss of 7% of GDP because of pollution

Question 3

P5 (Western development strategy)

Answer 3

GOAL: Strategy was a response to the growing regional poverty and poor educational quality.
* Rapid growth centred in urban areas left rural areas behind
*
WHAT HAPPENED: govt implemented 1 trillion into infrastructure projects in the west
* West-east gas pipeline project (2002-2005) - created employment opportunities, attracted foreign investment opportunities

GROWTH: China’s west has maintained steady and rapid economic development.
* GDP china’s western region - from 1.73t yuan (2000) to 17.1t yuan (2017)
* Annual GDP growth of 11.6%
* In the last 2 decades: contribution to GDP from 12 western provinces increased from 4% to above 20%

EVALUATION:
The implementation of the Western Development Strategy has resulted in a 19.69% increase in GDP for western counties under study than would have been seen without the policy.

Question 4

P6 (GFC)

Answer 4

WHAT HAPPENED: In response to the global recession and the effects of financial contagion, China implemented heavily expansionary FP and MP alongside a shift in focus to domestic policy.
* 4bn RMB stimulus, 72% allocated to investment expenditure
*12% of 2008 GDP
* Would increase govt expenditure, AD, ST e/g
Developments in investment infrastructure can boost LT e/g, and that’s more sustainable.

EFFECT: As a result, CN e/g went from 6% (2008 Q4) to 10% (2009 Q3) alongside a decrease in u/e 4.3% (2008) to 4.1% (2010)
Therefore effective in responding to global recession

GRAPH: Kuznet’s Curve. bonus content essay graph cheat sheet. CN focused more on enviro-policy.