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Japanese domination & civil war



Neolithic China

Early settlements 6000BC
Myths and heroes 2400BC
Xia Dynasty 2100-1600BC


Ancient China

Shang 1600-1050BC establish writing, religion/tradition, centralised state
Western Zhou 1050-750BC the ancient golden age
Eastern Zhou 750-256BC politically tumultuous but philosophically active include the founders of six great schools of thought


What were the 6 great schools of thought

Confucianism: follow tradition and hierarchy, including Mencius
Daoism: laozi taught inaction, non intervention, everything is connected, according to zhuangzi, everything is relative/changing
Legalism: inspired by Confucian Xunzi and Daoists, humans are bad and need laws; strict use of incentives for all; strict rule of law
Naturalism: yin-yang, understand nature in order to win
Mohism: treat society as your family; paleosocialism, technocratic.
Logicians: evolution of Mohism into a debating society


Middle Kingdom - classical

Qin 221-207 BC unified China under huangdi
Han 206BC-220AD golden age, Silk Road, collapsed into many
Sui 589-618 reunification and population growth
Tang 618-907 another golden age, collapsed into many
Song 960-1279
Yuan 1271-1368 established after Mongolian invasion. War with song. Widespread use of paper money, eventual hyperinflation and crisis.
Ming 1368-1644 early internationalism, global influence and tributes. Later isolationism though. Refused foreign trade.
Qing! 1644-1911 lead by Manchus


Traditional economy

Agriculture based, 90% living in countryside
Agricultural technology - selected seed varieties, organic fertiliser, irrigation


Population growth 1400 to 1820

70mil - 380mil
0.4% growth rate
36% of world population


Traditional economy living standards

Stable until early 1800s
Close to average living standards
1/3 of world GDP in 1820


Sophisticated institutions of historical China

Institutional economics
Written contracts for both business and life
Firms and organisation based on lineage and clans
Use of middlemen
Competitive markets
Social mobility for moving up the social order


Describe the small scale economy

Agriculture: no large land estates; based on individual, small scale households

Non agriculture production: mostly small scale, done by households.

Village and household based


Describe the century of humiliation

Failing Qing dynasty compared to Europe

Triple threat:
Europe: threat to culture, trade and dignity, seeking to impose a new world order that was incompatible with the idea of Chinese exceptionalism.
Russia: also refused to assimilate to Chinese culture, more looking for land
Japan: wanting territory and to replace China as the dominant force in Asia, existential threat to the dynasty


Chinese strategy against barbarians

Using barbarians against barbarians
Russia & Japan fought wars for influence in north eastern China and Korea.


Century of humiliation lost wars

Two opium wars
Permanently lost territory to Russia including Mongolia and parts of Central Asia
Europeans controlled various towns and trading ports
Japan takes Taiwan in 1895, dalian in 1905 and Manchuria in 1932


List internal rebellions

1850-1864 taiping rebellion
1856-1877 Muslim rebellion in the west
1852 workers rebellion in central China


Qing economic challenges

Government failures - declining reserves of food, lack of stability and central authority
Depreciation of infrastructure and the environment - deteriorating irrigation networks
Population growth (Malthusian theory)


Malthus population critique

Argued that population growth would tend to exceed food production, resulting in occaisional wars of famines.
In China population growth became and increased burden on relatively fixed resources.
1928-1931 two million people died in catastrophic famine after three years of consecutive drought


Qing inequality

Income inequality
Between gentry and everyone else
When comparing China with the west
Many poor farmers lineage extinguished, creating incentive for rebellion.
Population was vulnerable at the time


Republican revolution

Wuchang uprising in 1911 by sun yatsen
Qing military leader yuan shikai defected to the republicans and negotiated end of Qing dynasty in exchange for being made president.
Then Yuan tried to establish a new Chinese empire which gathered little support.


Warlord era

Shifting coalitions of competing provincial military leaders
May 4th movement of 1919
1921 sun yatsen tries to unit China with help from USSR and CCP, dies beforehand.
Chiang kaishek takes over



1926-27 Chiang unifies most of China, then breaks ties with society and backflips on the communists, which started the KMT-CCP civil war


Early industrialisation

Tiny base of modern factory production. Grew at 8-9% annually between 1912-1936, by 1933 had 1 million workers.
Mostly textiles and tobacco.
Concentrated in treaty ports.


KMT-CCP-Japan war

1931 Japan invades Manchuria and forms puppet state under former emperor Puyi who was a massive turncoat

KMT-CCP team up and tried to beat Japan while still fighting each other. Japan didn't leave until they were defeated in WW2

After that the KMTCCP war kept going till communists won and KMT retreated to Taiwan.


War economics and inflation

War years 1937-1949
Before the war the government role in the economy was small, wartime pressures led to increase in state intervention.
Gov wanted to build military industrial capacity so they ran government sponsored development.
State run firms accounted for 70% of capital and 32% for labour.
The reason for inflation is they tried to print more money to pay for the war. This accelerated inflation and hyperinflation and caused KMT to lose support.


Stalinist China

Collectivisation of the economy
Korean War and Taiwan conflicts against USA
100 flowers moment &a anti-Rightist campaign


1960s death and terror

Great Leap Forward & mass starvation
Conflict on all sides including India and soviets
Cultural revolution, Maos little red book and chaos and reeducation


1970s pivot to America

Henry Kissinger and Zhou Enlai
US recognition of PRC as the official China
Death of Mao & rise of the moderates


Early history of Chinese communist party

Early on backed by soviet communists, set up Chinese soviet republic in 1931
Extended civil war against KMT which was interrupted by ww2
After CCP victory there were mass executions of landowners and counterrevolutionaries.


Korean War 1950-1953

North Korea invaded South Korea with the implicit approval of the Soviet Union but it was left to China to provide military support
North nearly defeated south; USA and allies entered the war and defeated North Korea
China subsequently entered the war and fought the IS to a stale mate back at the original north south border.


First Taiwan Crisis

1953 US withdrew navy from Taiwan
PRC launches artillery attacks on Taiwanese islands
Results in closer US-Taiwan coordination and China agreeing to stop attacks


100 flowers and anti rightist campaign

Anti flowers 1956 and anti rightist 1957
Encouraged academics to say what they thought and targeted individuals for having the wrong views.
Persecution of 1/2 million people mostly intellectuals.


Second Taiwan crisis

Chinese artillery and air attacks on Taiwanese islands, Taiwan responds with superior weapons and US support, soviets pledge support to China if needed.
Attacks mostly stopped in October 1958


Khrushchev and Mao

1956 Khrushchev denounces Stalin and Mao sees it as a betrayal of revolution
1957 Khrushchev calls for peaceful coexistence with west while Mao argues no.
1959 final meeting between the two


Post war economy

War damage and destruction of industrial capital and deterioration of agricultural infrastructure including irrigation were serious and crippled economy
At the end of the war the soviets took abu t half the industrial machinery of Manchuria
45% of land was violently redistributed
Helped CCP gain support from people who would receive free land


Soviet economic model

After 1949 the PRC followed soviet inspired development strategy
Government controlled economy and pumped resources into new factories
They restricted consumption goods and forced high savings
Soviets assisted with technology and organisational designs and technical assistance and advice in all fields.


Command economy

Government owned all large factories and stuff, agricultural collectives took over ownership of the land and management of farm economy.
Planners assigned production targets to firms and directly allocated resources and goods among different producers.
Careers determined by leaders in the CCP


Political instability under Mao

Mao repeatedly changed economic policies sometimes portraying them as part of a political struggle against opponents.
Utopian politics - incentive to attribute failure to enemies or that communism hadn't been implementing it properly. This results in
Unity spiral where previous failure is used as justification to pursue more extreme versions.


First five year plan

Increase public ownership
1956 first year of China operating as a fully socialist economy
Agriculture reform - by 1956 98% of land was collectivised
Factory reform - turned into cooperatives or joint public private in 1956


Great Leap Forward

Industrial development - goal to surpass Britain in three years and catch America
A vision rather than a plan
Resolving contradictions by doing everything simultaneously regardless of resource constraints.
Destruction of agriculture, workers drawn out of agriculture to work in factories and backyard steel mills.
Countryside collectives combined into communes, required to meet unrealistic targets.


Social and economic Changes during Great Leap Forward

State run education and cultural enterprises
Communal dining halls Childcare facilities and mass poetry writing sessions
Increase in industrial and decrease in Agri
Low quality output due to lack of incentives
Lack of accurate price signals


Consequences Great Leap Forward

1960 mass famine due to insufficient agricultural output
Most severe in inland provinces
By 1961 25-30 million deaths
Resulted in economic decentralisation and experimentation in provinces due to no central gov, more successful than shock therapy


War and conflict in the later years

China Indian war 1962 dispute over Himalayan border. Stalemate.
Final split with Soviet Union because they sided with India


Cultural revolution 1966-1969

Goal was to destroy traditional Chinese culture
Remove the four olds: old ideas old culture old customs old habits
Students who joined the red guards were above the law and education system shut down
Mao believed in continuous revolution


Growing American interest in China

JFK suggested an open mind regarding China in1957
China didn't want help
Nixon in late 1960s - committed to communicating with China once again


Strategic interest in America

Soviet threat and possible invasion


Setting the scene for the pivot to America

Subtle diplomacy through Romanian and Pakistani back channels, ping pong diplomacy
1971 secret mission by Kissinger to meet Premier Zhou Enlai which resulted in lasting friendship


Nixon to China

1972 Nixon goes to China
The week that changed the world weakening the strategic position of the Soviet Union and preparing the ground for future Chinese liberalisation


Political factions in China in the later years

Military faction and 1971 attempted coup organised by son of Lin Biao.
Radical factions - the Gang of Four controlled media and politics
Moderates factions - Zhou Enlai and Deng controlled the bureaucracy.


1970s economy

Return to normal socialism.
But this time focused on military spending and health and education spending.
2/3 population literate by 1982.
Usual problems of the planned economy still occurred.
Hints of reform by Enlai and Deng


Philosophical shift under Deng

Switched from planned economy to mixed market
Claimed it is "market socialism"
Privatisation deregulation tax cuts
Export oriented SEZs.
They pursued reform gradually.


Tiananmen Square incident

Students protested about corruption inflation and lack of democracy
Intially tolerated but protests were suppressed.


Jiang Zemin

Continued reform and economic development


Hu jintao

China becomes 2nd biggest economy and deals with a Great Recession
Hosts olympics
Housing boom for half a million people



More assertive
Conflicts with Japan and ASEAN
Proactive foreign policy with trade deals and belt and road initiative
Removal of term limits so he can be president for life


Reforms since 1979

Agriculture - from communes to family farms
Growth of private industry
International trade and special economic zones
Ongoing reform in financials sector fiscal policy and the future


Story of Deng

Loyal and skilled diplomat during rise of Mao
1966 purged in cultural revolution
1974 recalled to power to replace Zhou Enlai as the head of government. Starts to promote importance of innovation and individual initiative and opening up to the world
1976 purged after praising Zhou Enlai
1977 death of Mao prompted Deng to return to position of power
1978 while Hua remained nominally in charge Deng xiaoping was effectively the ruler of China for the next 14 years


Disagreement hua and Deng

Hua wanted socialism and Deng didn't
Deng wins


General strategy of Deng

Innovation education and individual effort
Opening to the world and learning from foreigners
Crossing the river by feeling the stones
It doesn't matter if a cat is black or white so long as it catches mice
Poverty is not socialism. To be rich is glorious


How Tiananmen incident start

Liberal democrat and close ally of Deng dies of heart attack
Mourning becomes protest
Government made up of traditional socialists, couple of liberal democrats, moderates who wanted economic reform but not political


First reforms

1978, 18 local farmers agreed to break the law and divide the land between them and let each family keep what they produced.
Productivity rose immediately and other villages copied
Eventually government revised family farms were preferable to communal farms and began policy reforms

State targets lowered and stabilised, price controls relaxed.
more productive


Dual track system ended when

1993 when state controlled resources were phased out


Reducing government spending

State spending dropped from 33.8% in 1978 to 10.8% in 1995


Tariff reform

Initially tariffs increased as part of their strategy to convert non tariff barriers into tariff barriers.
Then steadily decreased tariffs


When did China join WTO

2001 they joined but not before they reformed


Tax rates for China

Company tax rate 25%
Top personal income tax rate 45%
Income tax rate for average wage 25%
Sales tax rate 17%


Walrasian economists

LEDERER LANGE AND LERNER argued that economic planning had worked well during the war and could resolve many of the failures inherent in the market system.
Conventional wisdom sided wine walrasians at the time (1930-40s) in the socialist calculation debate


Austrian economists

Mises and Hayek argued market failrues existed but claimed markets are better than state planning because market prices provide better incentives and convey information across different industries.


Western domination and the collapse of the Qing dynasty