¶ … political economy of China explores the following issues and questions:
When did Deng Xiaoping start China's economic reform? What were some of the motivations for his open-door policy?
What achievements has China made since then?
What are the major problems in today's Chinese political economy?
Why is China not a democracy yet?
The roles of Deng, Jiang and Hu's three generations of Chinese leadership in China's political economy.
Deng Xiaoping's Economic Reforms
Deng Xiaoping emerged as China's de-facto leader in the years following Mao Zedong's death in 1976. Under his tutelage, China entered an era of sustained economic process that continues to date.
Deng started China's economic reforms in 1978 with the announcement of the "Open Door Policy."
Prior to the introduction of the new Policy, China had followed the radical, centrally directed economic policies of Mao that emphasized self-reliance and closed its door to trade with foreign countries on the premise that the rich capitalist countries exploit the poor third world countries through international trade.
Motivations for the Open-Door Policy:
Deng initiated his "Open Door Policies" to generate sufficient surplus value, through increased foreign trade, in order to finance the so-called "four modernizations." The 'four modernizations' were to improve the existing fields of Agriculture, Industry, Science and Technology, and the Military -- areas in which China had fallen behind after decades of isolation and repeated revolutionary upheavals under Mao.
Deng, a pragmatic rather than an ideological Marxist, was acutely aware that China needed to accelerate its economic development urgently or it would face food shortages, falling living standards, and would not be able to defend itself against foreign aggression. He realized that the only way to achieve the goal of the 'four modernizations' was through the creation of surplus value by increased foreign trade.
Deng implemented his "Open Door Policy" by setting up Special Economic Zones (SEZs) in four southern cities, i.e., Shenzhen, Zhuhai, Shantou and Xiamen. These cities were specifically chosen due to their close geographic proximity to Hong Kong, Taiwan and Macau. Deng's aim was to attract investment from ethnic Chinese living in these areas near Mainland China and to invite Foreign Direct Investment (FDI) by offering incentives such as tax exemption and reduced tariffs.
Achievements by China Since the Initiation of Economic Reforms
Since the initial economic reforms by Deng Xiaoping in 1978, China has experienced consistently high levels of economic growth during which its economy has grown faster than any other in history and incomes of people more than quadrupled. ("Economic Overview" Country Watch) China's success is particularly remarkable since it has tackled the daunting tasks of converting from a command economy to a market economy, moving from a rural society to an urban society and maintaining its political stability -- all at the same time.
Since the early eighties China's economy has grown at an average rate of about 8%. This has enabled hundreds of millions of people to rise out of poverty and its per capita GDP now stands at $5,600
that is four times the level in 1978("China" CIA World Factbook). Agriculture and industry have posted major gains especially in coastal areas near Hong Kong and opposite Taiwan and in Shanghai, where foreign investment has helped spur output of both domestic and export goods. Modernization in the fields of agriculture, industry and technology has also been significant mainly due to the success in attracting foreign investment.
The country has managed to retain social and political stability and avoided major upheavals except for a period in 1989 when the Tiananmen Square Protests demanding greater democracy, were brutally crushed by the government. After a sustained diplomatic campaign lasting over 15 years, China was able to join the World Trade Organization ("WTO") in 2001.
It has improved its foreign relations with most countries including the United States, Russia and India
and managed to regain sovereignty over Hong Kong and Macau
by adopting the flexible "one country two systems" policy.
Major Problems in Today's Chinese Political Economy?
Corruption, Unemployment & Inequality:
Despite considerable economic gains made by China in the post-1978 period, it is still faced with a number of serious politico-economic problems. Corruption and other economic crimes have proliferated in China as it has moved towards a market-oriented economy. Unemployment, though not too high in terms of percentages (3% according to official figures
), translates into more than 20 million unemployed workers due to the large Chinese population. ("Economic Overview" Country Watch) In addition to the unemployed, it is estimated that 50 to 100 million surplus rural workers are adrift between the villages...
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