How & why is China’s economy changing? Key question 1.2.

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Presentation transcript:

How & why is China’s economy changing? Key question 1.2

Traditional industries

Traditional society factsanddetails.com/china.p hp?itemid=347&cati... Collective farming – using scientific methods

Global brands, energy production, disposable income…

Introduction China isolated from the rest of the world Mao’s damaging policies – Great Leap Forward & Cultural Revolution hindered development, even pushed country backwards Chairman Mao – died in 1976 & “Gang of Four” arrested Opened door to early reformers – “open door” policy (Deng Xiaoping)

Deng – gradual reform to encourage economic growth as recognised central planning ineffective - too many tiers of responsibility Industry replaced agriculture as leading growth sector in 1980s State Owned Enterprises (SOEs) retained Socialist market economy emerges Modern leaders less ideological, educated – realise need for economic reform

Some key principles underlie the change: Govt allocated resources to achieve max benefit from investment More transparent contractual relationships – everyone understands responsibilities are part of plan for economic growth Decentralisation essential – huge country. Cadres (local political leaders) took responsibility for local economic developments (mixed success – improved skills but some corruption)

China needed: Improved infrastructure – huge investment necessary over long period of time Well regulated banking system (strongly controlled) – financial institution reform Industrial reform pacific/country_profiles/ stmhttp://news.bbc.co.uk/1/hi/world/asia- pacific/country_profiles/ stm ynolds/ ynolds/

New (Chinese) industries in the Chinese economy 1. TVEs – town & village enterprises, collectively owned & controlled by local cadres 2. Private firms – mainly family-owned 3. SOEs – State-Owned Enterprises, mainly heavy industries, e.g., coal, steel, chemicals etc Read the paper on SOEs for next lesson. See Moodle.