Quiz #2 material (session 6 class/session 7 materials)

Question 1

How was China’s economic condition in 1839?

Answer 1

China was still a relatively wealthy nation, was still the largest economy in the world, was a magnet for western merchants

Question 2

Is it true that large trade deficits were present in European countries (like Great Britain) because of China’s distaste for trading with western manufacturers?

Answer 2

Yes

Question 3

How did China decide to get into exporting and trading with European nations?

Answer 3

Opium trade

Question 4

How did the Opium trade work?

Answer 4

Tea was traded from China to Britain, Textile was traded from Britain to India, and India sent opium to China

Question 5

Who did China fight in 1839 over opium?

Answer 5

in 1839, China went to war with Britain to stop the opium trade, lost, and had to cede Hong Kong to UK and opened 5 treaty ports for trade

Question 6

When did China’s “century of humiliation” begin

Answer 6

1839

Question 7

What event led to the end of China’s humiliation?

Answer 7

The founding of the People’s Republic of China (PRC) in 1949

Question 8

How did China’s bubble move in thd chart during their century of humiliation?

Answer 8

Moved down and to the left, becoming very poor, and suffering from a low life expectancy

Question 9

Who led the People’s Republic?

Answer 9

Mao Zedong

Question 10

What were Mao’s 2 main pillars for his vision of the Chinese Economy?

Answer 10

1) Self-sufficiency (aka ISI)

2) Centrally-planned economy (SOE’s, private enterprises disallowed)

Question 11

What happened to China’s red bubble under Mao’s vision from 1949 - 1978?

Answer 11

China increased their Life expectancy, nowhere near USA and UK, Mao’s promise was unfulfilled

Question 12

Who led China’s economic reform?

Answer 12

Deng Xiaoping

Question 13

What was the pillar behind Deng’s economy?

Answer 13

Build globally competitive sectors (focusing on the manufacturing sector) – he wanted to implement ELI

Question 14

What 3 things are necessary for ELI conditions?

Answer 14

Cost advantage, Capital, Expertise

Question 15

What did China do to meet the ELI conditions?

Answer 15

Began with labor intensive sectors, Mobilize domestic sources of capital, Welcomed foreign capital

Question 16

What were the conditions of China’s difficult circumstances in 1978?

Answer 16

China was far poorer than other east Asian countries at the beginning of their ELI, Foreign firms were very wary of China due to 1) the memory of Mao’s isolationism 2) the country’s appalling infrastructure

Question 17

What was China’s post 1978 solution to their poor economic conditions?

Answer 17

Drastic measures to encourage savings (such as the one child policy)

Question 18

When was the One and a half child policy implemented?

Answer 18

1979

Question 19

Why was the one and a half child policy implemented?

Answer 19

It was implemented so that Chinese families would spend less money on raising their children and put more into savings and back into the Chinese economy

Question 20

What are some examples of China’s special economic zones?

Answer 20

Shenzhen (HK), Zhuhai (Macau), Xiamen (Taiwan), Shantou (Singapore)

Question 21

How did Xiaoping’s ELI implementation work for China?

Answer 21

China’s FDI did improve (which allowed for sufficient funds to fund ELI), a large portion of China’s exports are produced by FIF’fs (foreign invested firms)

Question 22

What have FIF’s helped with?

Answer 22

FIF’s have helped with transferring efficient manufacturing technology to China, and Distribute Chinese-made products to Western buyers

Question 23

What is EUPA?

Answer 23

EUPA is the “yellow factory”, produces insane amounts of exports, is more like a city, owned by a Taiwanese firm of the same name

Question 24

What was the % of SOE’s generating industrial output and urban employment under Mao?

Answer 24

80% of the gross industrial output, 70% of the urban employment

Question 25

What was the % of SOE’s generating industrial output and urban employment Post Mao?

Answer 25

30% of the gross industrial output, 27% of the urban employment

Question 26

What happened to China’s bubble after the start of the economic reform?

Answer 26

Their bubble advanced upward and forward drastically, caught up with US and UK

Question 27

What are the two British Colonial Rules of the Indian Subcontinent?

Answer 27

Company Rule (1757-1858) - the rule of the British easy India company 
British Raj (1858 - 1947) - the rule by the British Crown

Question 28

When did India gain independence?

Answer 28

1947

Question 29

What was India’s first economic strategy under Nehru?

Answer 29

Was the same as Mao’s, milder version of centrally planned economy

Question 30

What was the result of Nehru’s strategy?

Answer 30

Not good, same as Mao

Question 31

What happened to India in 1991?

Answer 31

They went broke and were bailed out by the IMF, then went on to start the economic liberalization program

Question 32

What is the result of the liberalization program?

Answer 32

Succeeded for India, their blue bubble pushed far right