China Stats Flashcards
US-China rapprochement
After 1971 PingPong diplomacy between Henry Kissinger and Zhou Enlai
brought in tech and infrastructure from the US
Sent students to the US to learn about business administration and science and tech to bring the knowledge back to China
Bilateral Trade Agreements 1979 and Most Favourable Nation (MFN) status
Duties on China exports from 50% to 8%
China exports up $4billion in 1979 to 183 billion 1997
2005: 80% of Fortune 500 in China
SEZ
Special economic zones as part of Open Door Policy
Self contained economic zones set up for local experiments in export processing unique in its sheer scale. It offered special privileges with lower taxes and private ownership while also removing the restrictions on foreign ownership. By 2000, 124 SEZ in China employing 18million people
- exposed to international economy while rest of economy remained relatively insulated (except dual-track approach towards reform - new enterprises to create new jobs while old public sectors maintained to avoid displacement of existing jobs)
- Enjoyed special privileges like lower taxes, private ownership. Removed restrictions on foreign ownership and employees to establish factories in the SEZs and use cheap Chinese labour to produce goods for export.
- Could also import resources at low-tax rates, then export finished products with minimum regulations and taxes (one-stop application for relevant permits to do business) → attracted new tech, capital and production goods which were then exported for hard currency → speed up modernisation and development and increase international trade
1997: 45 billion in FDI from SEZ
Shenzhen SEZ 3x wages of other regions
500% growth of exports 1981-1991
TVE
Surplus labour and profits earned from efficiency and market sales in farmland produce were directed to non-agricultural production through the TVE. Collectively run by peasants organised and managed by local government units, which were township administrations and the village, which were restored in 1982 - acted as basic units of governments at local level. They were small-medium businesses which encouraged consumer products instead of products requested by the government. Subject to forces of the free market, they were much more efficient than SOEs
Contributed the overall dynamism of Chinese economy: raised rural incomes substantially more than than would have been with merely agriculture, thus keeping the rural-urban gap manageable. They were also flexible, autonomous → fuelled competition and reform in SOEs.
Value of TVE up to 27% of GDP
8% annual GDP growth till 1994
10x increase in value of exports to $80 billion from 1988-1997
HRS
- What: government contracting individual pieces of land to farming households. These households took over management of the agricultural production cycle on that piece of land, subject to contract agreements that they hand over a certain amount of procurement and tax grain annually. Initially contracts lasted a year but eventually extended validity to 15 years. This was crucial since guarantee of long-term yield and stability triggered investment of inputs into production. Any surplus they produced was free to go up on the open market. Thus significant shift towards free enterprise methods in agriculture
- HRS represented compromise between the commune system and household ownership of land - “responsibility” not “ownership”: Local administration could still impose quotas and tax production, although peasants could sell their production surplus.
- Dual-track system - not fully ‘capitalist’ yet. No land market existed. Farmers pay for use of land and most of the crops they planted were still set by the state.
- Forced upon most places quickly due to its success - 1982 90% of China’s farmland under HRS and then 98% by 1983
1985 China self-sustaining in grain
127% increase in grain output’
fed 22% of the world’s population with just 7% of land
Other leaders (Zhao Ziyang)
1985: Coastal Development Strategy
Open up Yangtze River Delta, Pearl River Delta when realised that current SEZ were not enough
Coastal region as a % of China GDP: 52 to 56 due to great domestic and foreign investment
Other leaders (Jiang Zemin)
Jiang Zemin
“Socialist market economy” 1993 - force SOE reforms to privatise (Company Law and Labour Law) - legal background for China to restructure SOE into limited liability corporations with majority state ownership, written contract to stipulate duration of employment
Employment fell 20% and 90% of SOE transformed/broken up
32.8% annual growth rate in number of private enterprises > hires 22% of workforce and accounts for 1/3 of GDP
Deng economic reforms
Political hardliner but economic reformer
Under solo political party, CCP consolidated power and had no concern for needing to win democratic votes and elections, allowing them to impose economic reforms without challenge and overcome oppsosition
Deng high credibility due to trusted by Mao and close ties with the army
1992 Nanxun Deng requested to showcase high-tech production of SEZ + re-emphasise growth as key goal of Chinese economy, bringing and explosion of SEZ across the Yangtze and overcoming the Tiananmen interlude which forestalled reforms
9.5% real GDP growth per annum 1972-1995
Double digit growth rates 1992-1995
Ties with other Asian economies
1970s Open Door policy coincided with the economic restructuring of East Asia. By the 1990s, labour-heavy industries (textiles) had completely left TW and HK and moved to China which had comparative advantage in cheap labour
Then electronics sectors started to move (eg. Taiwan Semiconductors, Acer set up production plants throughout the Southern Coast)
Linkages between these 3 regions in greater China created an extremely competitive, flexible and low-cost manufacturing network
Stats:
- China trade with Japan quadrupled Japanese imports from China were worth US$2.8billion 1994 but jumped to US$6billion by 2000.
- Benefitted provinces like Hebei, Liaoning (Bohai Bay Area)
