Role of international developments in the Chinese economic transformation Flashcards
The Sino-American rapprochement of 1972 had opened up various trade opportunities for China, increasing trade, competition and increased production which led to economic growth
1972 put together the US-China communique in Shanghai to normalise relations
1979 established formal ties to further strengthen economic, cultural, educational, scientific and technological ties
Lifted 20 year trade embargo with China leading to a surge in economic activity due to the integration into a global economy
→ FDI directly heps to relieve domestic capital supply bottlenecks and to promote employment and economic growth
→ increased competitiveness of Chinese economy (share of world trade quadrupled to 3.7%) , increased employment (up to 6M), increase the net exports
→ 1990s China became the largest FDI recipient behind US
Friendly economic climate of development allowed China to quickly progress up the production chain and mature its economy faster, leading to rapid growth
Flying Geese
Transferring FOPs from one country down to the other once that particularly industry sets in one country
Lowers COP, gain access to RnD done by other countries at cheaper costs, lesser competition, tech transfer
Rapid development track of manufacturing leading to rapid growth that hit China at the right time
Warming of relations and the opening up of China to trading with other regional powers and blocs led to increased bilateral and multilateral trade and capital investment which led to LT growth
Japan and China
Sino-Japanese Long Term Trade Agreement, 20B in 2 way trade from 1979-85
China exports oil, 15M tons which is a doubling from the initial plan
China imports 10B worth of industrial plants, equipment and construction materials
Japan promised to provide China with a second economic aid package totaling 2.1B to help finance the construction of 7/13 projects
→ 3.8B worth of industrial plans and equipment including a steel mill
→ 2-way total trade increased to 13.2B in 1984 from 3.2B in 1978
→ increased tech transfer led to increased productivity of workers
ASEAN
CHinese premier Li Pen emphasised the need to uphold economic relations based on equality and mutual benefit as well as joint development
Trade between ASEAN and China rapidly increased from 14.29B in 1994 to 25B in 1997
ASEAN increased foreign investment into China up to 3.62B from 1.21B within the same time frame
