Chapter 17 Flashcards
(12 cards)
Social transitions of China
Qing dynasty: China was trying to catch up and modernise but didn’t achieve it and in 1911, they collapsed and this was the war lord period. Japanese war broke out, when the second war ended and they entered a civil war. Nationalist government retreated to Taiwan and this is where they developed. Government in mainland China was communist and called themselves the peoples republic of China. Pre 1949: Turmoil
Economic development of China before 1949
Pre-1949: China was behind Western Europe in terms of living standard. Stagnated and didn’t manage to catch up because of the political turmoil and these hampered the chances of catching up
Unstable domestic environment
FDI and investment is concentrated in certain areas
Extensive growth
Improvements in health and education
China during the Mao era
Mao era: China did achieve some success, focusing on heavy industry instead of market mechanisms. Extensive growth, not per capita growth
Instituted anti-economic policies
Socialist planning and planned resource allocation
Limited labou mobility
Cultural revolution led to political instability
Great Leap Forward led to great Chinese famine
China since 1978
Changing political landscape so they were a market orientated economy
Reform led by Xiaoping
Driven by 2 concerns
- Food security
- Economic gap with Hong Kong, Taiwan, legitimacy threatened
Less top down decisions - room for experimentation
Household responsibility system
Agricultural households assigned land for 15 years. National policy in 1981. Reap the benefits of improvements
Sell excess produce, grain production rose, which boosted industry
CRS: Provided more local responsibility to local owners so they had more economic freedom, delegate business to the owners and not the government
Under the previous system, there was no incentive to produce more
Transfer from government to the private sector of yield and profit: incentivise production and liberalise the economy
Grain output grew by 1/3 between 1978 to 1984
Role of special economic zones
Encouraging investment from those regions
Different regulations and policies compared to the rest of the country in order to make them more capitalist
What was the role of the state?
State provided incentives, economic fundamentals (USSR replaced fundamentals)
State decentralised economic power and economic decision making, therefore it’s not a command economy, as there is more freedom and more economic growth
Per capita
1850; $600
1950: $439
1980: $1067
What was the sectoral shift?
30% of TFP growth
Agricultural employment
1978: 70%
1991: 55%
Contract Management Responsibility system
Firms managers acquire discretionary powers:
Employment (hiring, firing, wages, bonuses)
Production planning and sales
Investment and use of retained profits
Autonomy and responsibility levels varied by area and by firm
1989: 85% of firms under this system
Special economic zones
FDI magnets
What was the foreign assets stock in 1998?
$260 billion
Annual growth in foreign trade of 16%
