CHINA’S MODERN ECONOMIC DEVELOPMENT 2016

MAIN IDEA China’s economy has developed from an weak, command-driven system into the world’s fast growing and second largest system that is now shaped by an increasing market-oriented approach.

KEY ELEMENTS OF CHINA’S ECONOMIC TRANSFORMATION Gradual introduction of market-based reforms Opening the nation to external investment Allowing for private domestic investment Lessening state control of agriculture Selling off failing state-run enterprises Integration with the global economy

HISTORICAL: COMMAND CONTROL 1949-80 Government made all the basic economic decisions Communist government sought to eliminate capitalism Sought to industrialize and improve agricultural sector by using “Soviet-style plans” Mao’s personal dictates dominated economic programs

HISTORICAL: COMMAND CONTROL 1949-80 With one exception the Chinese economy grew at a slow rate leaving most people in poverty and tied to the land. https://en.wikipedia.org/wiki/Historical_GDP_of_China#/media/File:GDP_per_capita_of_China_and_India.svg

PERIOD OF REFORM The death of Mao (1976) allowed for reforms under the leadership of Deng Xiaoping Agricultural reforms started with the slow dismantling of the commune system Management of industry slowly shifted to a profit and merit-based model Focus on light-industry consumer goods Creation of special-enterprise zones

INCREASE AGRICULTURE

INCUBATORS OF CAPITALISM

PERIOD OF REFORM Results of the reforms in the 1980s were so impressive that the government sought greater private development

Reforms 1990-2000 Creation of a socialist market economy Development of 2,000 special economic zones http://en.wikipedia.org/wiki/Special_Economic_Zones_of_the_People%27s_Republic_of_China Continued to encourage foreign investment, often in exchange for infrastructure development

FOREIGN INVESTMENT

2000-Present Began to address economic in-balance Major reform was the protection of private property http://www.china.org.cn/english/China/89680.htm http://news.bbc.co.uk/2/hi/asia-pacific/6456959.stm Continued to dominate export market Shifting economy away from its narrow focus http://en.ce.cn/Business/Macro-economic/201101/11/t20110111_22130848.shtml http://www.greenbiz.com/blog/2010/12/07/7-technologies-where-china-has-us-beat Tackling corruption

Changing role of government As a whole the government plays a much lesser role than it did 30 years ago. On the production side the government (particularly in heavy industry) continues to manage from a top-down model. In regards to consumer spending market forces answer the basic questions In short, the Chinese government is attempting to do what no communist government has done: mix a high level of market forces with a command economy

TRADE ISSUES BETWEEN CHINA AND UNITED STATES Government subsides (dumping) and barriers http://wtoandchina.blogspot.com/ Trade deficit http://www.census.gov/foreign-trade/balance/c5700.html http://economyincrisis.org/content/how-trade-deficit-affects-you Under-valued currency http://caleaders2013.wordpress.com/2013/08/24/the-impact-of-the-chinese-currency/ Piracy and copyrights http://www.freakonomics.com/2012/01/12/how-much-do-music-and-movie-piracy-really-hurt-the-u-s-economy/ https://www.google.com/search?q=images+of+fake+u.s.+items+in+china&rlz=1C1ASAC_enUS477US484&es_sm=122&source=lnms&tbm=isch&sa=X&ei=XDJyU--RMcywyAS5-YIQ&ved=0CAgQ_AUoAQ&biw=960&bih=533 Debt-level http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm