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Economic development of china
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China's transition from a planned economy to a market economy began at the end of 1978. When China started the process, the government did not have a well-designed ‘blueprint’, and so the approach to reform can be characterized as experimental. The process of reform has been gradual and incremental in nature and is still incomplete. In fact, China can’t be treated as a full market economy nor can it be treated as a centrally planned economy in which the Government substantially influences prices of goods or monopolises international trade. It is somewhere in between.
Reform measures:
1) The introduction of enterprise taxation.
2) The new wage system which linked with the productivity of workers (this would give workers incentive to work harder as they’d get paid more. Getting paid more than others would motivate them further now that pay isn’t equal.)
3) A new system of banking finance for enterprise investment.
4) The decentralisation of foreign trade through a rapid increase in the number of foreign trade corporations.
Prices:
Prior to 1978, prices of all major commodities were controlled by the Central Government, and those of virtually all less-important commodities were set by local governments. Price inflation barely existed prior to reform, and many prices remained fixed at the same level for decades.
Price reform has allowed the introduction of freely-operating market signals in most sectors of the economy. Liberalising prices has allowed supply to be much more responsive to demand from consumers. Price reform is now almost complete as most prices have been substantially deregulated and the state’s role in guiding or fixing prices is now minimal.
By 1994, over 90 per cent of retail prices and approximat...
... middle of paper ...
...converge’.
Evidence, from analyses of China’s profit rates over the past years, suggests a reduction of entry barriers across Chinese industry and a significant growth of competition. Profit rates of the industrial sector in China have converged considerably since 1980. This indicates that resources are now much freer to move around in the economy. Entry restrictions still apply to oil and gas extraction, oil refining, and beverages.
Source of graph: http://www.dfat.gov.au/
Conclusion:
Now, while the market mechanism has been introduced throughout most sectors of the economy, the complex task of establishing the necessary procedures in order to facilitate the operations of a market-based economy is still in progress. However, it is clear that China’s transition to a free market is advancing strongly, and that this process is most likely irreversible.
Following the Chinese Revolution of 1949, China’s economy was in ruin. The new leader, Mao Zedong, was responsible for pulling the economy out of the economic depression. The problems he faced included the low gross domestic product, high inflation, high unemployment, and high prices on goods. In order to solve these issues, Mao sought to follow a more Marxist model, similar to that of the Soviet Union. This was to use government intervention to develop industry in China. In Jan Wong’s Red China Blues, discusses Maoism and how Mao’s policies changed China’s economy for the worse. While some of Mao’s early domestic policies had some positive effects on China’s economy, many of his later policies caused China’s economy to regress.
Deng Xiaoping felt that the quickest way to build a better China was to improve living conditions immediately, to give people the level of morale they need for further development. At that time, he realized that China’s economic need to reform; he found very effective ways to reform the China’s economic. His goals were to open up the China’s market to the outside world, breaking down the collective farms, getting rid of state-run enterprises and providing more jobs for people in the industry. He found that the most important thing was the modernization of agriculture because 80% of the population derived their living primarily from agricultural production. The new contract responsibility system allowed farmers to rent land for individual farming families. Farmers had to sell a certain percentage of their crops to the State with the State’s price, and they could sell the remaining for their own profits. This system had helped the rural income to be doubled (Benson, 47). It marked a successful modernization of agricultural.
A considerable viewpoint for answering these questions has been presented by Professor Dwight R. Lee, in his article "Market and Freedom". This article is an attempt of providing some visions to protect the values of free market economy.
Improvements in the economy and authoritative political leadership brought forth changes in the raising of living standards. ...
There are very few improvements that were made during this time. The first on is that throughout the years the work day decreased, yet the daily wages had a bit of an increase (Doc 1). This change could have been made due to labor unions campaigning
Higher wages eventually created high inflation. High inflation means that a person could buy less with their money or the money value decreased. This not only affected individual consumers, but small manufacturing industries as well. High inflation motivated competition. Other industries producing similar products began to compete in price. The industries that felt threatened “attempted to maintain their position by getting laws passed regulating who could enter their industries.” In 1351, there was a law passed called the Statute of Laborers.
China’s success was first observed after it experienced a key change in the political and economic structure, when Deng, a pragmatic leader, came into power. He consolidated his power and began to put his realistic policies to work, in order to bring China back from the destruction that the Cultural Revolution had brought. Since 1978, China has begun to make major reforms to its economy. Political and social stability, economic productivity, and public and consumer welfare were considered paramount and indivisible.
Many Chinese social changes occurred during the Han dynasty. Nuclear families became more common due to the free peasantry that developed in China. However, joint families also remained common throughout the countryside. Women in China continued to be less dominant than men in society. They were expected to be selfless, humble, diligent, and courteous. Advanced cities increasingly developed along trade routes and rivers, despite many Chinese people persistently living in rural regions. The biggest and most extravagant of these cities was Chang’an, the capital.
Laissez-Faire economics which was named by Adam Smith played a significant role during that time because it allowed businesses to have complete control without the interference of the government. The overall goal was that with this in place employers would be more profitable which they would in turn pass down to the employees, but greed reared its ugly head once again and as a result you had harsh treatment of the workers and disregard for consumer safety which required the government to become more involved to protect the people of the
From the 1970s, there has been a wave of liberalization in China, which was introduced by Deng Xiaoping. This is one of the key reasons to the rise of China to be one of the economic giants in the world. In the last 25 years of the century, the Chinese economy has had massive economic growth, which has been 9.5 percent on a yearly basis. This has been of great significance of the country since it quadrupled the gross domestic product (GDP) of the country thus leading to saving of 400 million of their citizens from the threats of poverty. In the late 1970s, China was ranked twentieth in terms of trade volumes in the whole world as well as being predicted to be the world’s top nation concerning trading activities (Kaplan, 53). This further predicted the country to record the highest GDP growth in the whole world.
As in other centrally planned economies, most consumer prices in Romania were fixed before the 1989 revolution. However, with the liberalization of economic policy dramatic changes occurred and high inflation was, and still is, expected to remain one of Romania¡¦s key short-term economic concerns.
“Marketization of the Chinese labor market and the role of unions.” Global Labour University Working Papers, vol. 4. [03 April 2014] 36. Zhu, Y. & Warner, M. (2000). “An Emerging model of employment relations in China: a divergent path from the Japanese?”
The rise in China from a poor, stagnant country to a major economic power within a time span of twenty-eight years is often described by analysts as one of the greatest success stories in these present times. With China receiving an increase in the amount of trade business from many countries around the world, they may soon be a major competitor to surpass the U.S. China became the second largest economy, last year, overtaking Japan which had held that position since 1968 (Gallup). China could become the world’s largest economy in decades.
When the new Chinese Government was set up in 1949, the new government faced a lot of problems. First on their agenda was how to re-build the country. As Communist Party of China (CPC) is a socialist party, their policies at the time were similar to that of the Soviet Union’s. Consequently, the CPC used a centrally planned strategy as its economic strategy when it first began. For a long time, the Chinese economy was a centrally planned economy in which none other than the state owned all companies. In fact, there were absolutely no entrepreneurs. As time went on, the problems of a centrally planned economy started to appear, such as low productivity, which was the key reason for restricting the development of China. With the population growing, the limitations of the centrally planned economy were clear. In 1978 China started its economic reform whose goal was to generate sufficient surplus value to finance the modernization of the Chinese economy. In the beginning, in the late 1970s and early 19...
A market economy may therefore also be known as a free market economy. It is a type of economic system in which the trading and exchange of goods, services and information takes place. The phrase is normally applied to countries or management regions that follow this approach. It functions primarily depending upon the forces of the market, namely demand and supply. Every commodity is allocated and distributed based on the principle of “price”.