Economic Growth And Development In China Research Paper

Type of paper: Research Paper

Topic: Economics, China, Economy, Business, Production, Development, World, Growth

Pages: 10

Words: 2750

Published: 2021/01/05

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Introduction

The paper discusses the features of economic development of China. Economic changes in China cause a significant and growing interest in the world. Interest in this country is not accidental. China, being one of the oldest countries in the world, the first time in its long history has achieved impressive success in the real economy. Since the founding of the PRC its position in the world economy has changed dramatically. It has evolved from a backward industrial-agrarian country, has set a goal to achieve in the first half of the twenty-first century, a high level of development and become one of the leading world powers. China is one of the largest countries in the world. On its territory is home to more than 21% of the world population. Her farm produces 4% GWP in the calculation at current exchange rates. For potential mineral resources, China trails the US and Russia. It occupies a leading position on reserves of metals such as tungsten, zinc, lithium, tantalum, copper, lead, nickel. In recent decades, the country has a translation of the economy from a centrally-planned economy to market methods of regulation. A number of features can be seen that the country in the near future will be developed on the uplink. China has a chance to repeat the experience of Japan and South Korea.

Body

In the development of the economy of the Republic of China there are several periods characterized by different modes of reproduction. The first period (1950-1970s) was characterized by the policy of industrialization based on central planning, the second period (1980-1990s) - development of industrialization on the basis of market relations and conversion methods to control and production activities of the state. This period is divided into two sub-periods - 50s and 60-70s. In the 50 years of industrialization was based on state ownership and centralized distribution of production assets. There were nationalized foreign-owned enterprises, performed an agrarian reform. There were appeared new industries which were created with help of Soviet Union. At the end of 50 years with the leadership of the Communist Party and the government the views were prevailed that it is possible to catch up in terms of production the level of leading Western countries in a short period of time. There was stimulated the development of cottage industries, including the production of heavy industries. In agriculture, collectivization was done quickly with the socialization of farmland and the organization of production on the factory principle. It is limited inequality of wealth in rural areas, paved the way for the accumulation of capital, infrastructure, ensure the existence of a huge, growing rural population, but did not lead to an increase in productivity and raise living standards. The Chinese economy has experienced leaps of uneven - the peak recovery in 1958 (21, 3%) and the peak of the fall in 1961 (27.3%).
The second period of economic development of China is characterized by the transition from a centrally planned economy to a market economy. This transition is seen in China as a complex and ambitious task that requires a systematic approach and a long period of time. It is directly linked to changes in the social structure of the economy and society. The strategy was based on the interpretation of the transformation of socialism as a planned commodity economy, the use of various forms of ownership and management forms and strict state control (Starr, J., 1997).
The first sub-period changes in the mode of reproduction covered the 80s. Its characteristic feature was to improve the existing system by the time of planned economy to create a socialist commodity economy. The reform of the economic mechanism until 1993 was aimed at expanding the economic independence of state-owned enterprises, which have received the right to sell unscheduled products (then planned), price changes, choice of suppliers and consumers. All large and medium-sized state-owned enterprises were transferred to a contract form of economic responsibility, which included an agreement with the parent organization for a certain volume of production and amount of deductions to the state budget. An important component of economic reform was the transfer of certain powers of ownership from the highest to the lowest administrative levels and economic entities.
Thus, ironically, in the 80 years was carried out restructuring of the public sector to build systems-oriented enterprises on the principles of business. States shall establish the functioning of the business entities and required compliance with not only corporate, but national interests and do not carry out the transfer of state-owned enterprises to private ownership. The main focus of reform was to expand the economic independence of enterprises and regions without fundamental changes in the system of ownership. There was changed pricing system. In 1990, the market prices spread to half of retail trade turnover, 30% was based on its solid state prices and about 20% were controlled by the upper limit. Formation of market relations faced with interregional wars for raw materials and other means of production (Jalil, A., 2011).
In the early 90s, there was the second phase of the social and economic structure of the economy. It was the period of deepening reform, including a broad introduction to the economy of commodity-money relations, the gradual democratization of public life, but without prejudice as to the priority of public property, and the crucial political role the state and the Communist Party. These features define the concept of "socialism with Chinese characteristics."
The economic development of China in the 1990s was characterized by high growth rates. GDP increased by more than 5.5 times, production per capita - more than twice. Average annual growth rate has exceeding 9%, which was higher than in the previous three decades. In terms of economic growth China surpassed all developing countries in two or three times. High growth rates provide a significant increase in the rate of accumulation. It increased from 35 to almost 40%. The increase in investment provides increased domestic savings, as well as the inflow of foreign capital, which corresponded to 13% of the investment. As a result, the country has huge capacity and upgrade production facilities. In the mid 90s the average life of the 90% of industrial equipment does not exceed 15 years, and 26% of the equipment in line with international standards. An important feature of the present stage of development of the Chinese economy was the growing role of scientific and technological achievements. Until 2000, the country implemented a new course of development of science and technology. Some indicators of scientific and technological potential of China have reached the level of developed countries. However, the overall cost of R & D (GDP 0.7%) is much lower than in Western countries.
Increased investments and R & D expenditures contributed to decline in the share of military spending. If in 1985 it was 4.9%, in 1999 is has reached 1.3% of GDP. Economic growth occurred at a constant state budget deficit, which in the late 90's was 0.8 - 1.8 of GDP. High rates of money supply grew. As a result, the issue of money amount of cash in circulation in the 80-90 years increased annually by 23%, exceeding 2.4 times GDP growth.
Budget deficits and monetary expansion did not lead to serious inflation. Signs of inflationary pressures manifested in the late 80's and mid 90's. For 80 years, the average annual inflation rate stood at 7.2%, in 90 years - 7.5%. This is 2.5 times lower than the level of all developing countries in the last decade, but higher than in Asia. A significant increase in the money supply due to the fact that it caters to the manufacturing sector of the economy. The growth of production and consumer demand prevented the sharp depreciation of the money supply. The unused portion of the proceeds was converted into savings. High growth rates were provided primarily manufacturing and services. One of the most dynamic sectors of the manufacturing industry was engineering. However, the overall range of engineering products is still limited compared with the industrialized countries and does not reach the world level - only 10% of engineering products meets international standards. Rapidly growing electrical and transport machinery, significantly increased production of electronics. Production growth in the electronics industry was provided by the home appliances: TVs, VCRs, microwave ovens. Markedly was increased the production of basic chemistry, such as hydrochloric acid, soda ash, chemical fertilizers. The structure of the chemical industry restructured: increasing production of organic chemistry. Changes have taken place closer structure of industrial production to the level of the leading industrial countries; they had a few decades ago. It takes a great place textile industry (9%), ferrous metallurgy (10.6%), industrial chemicals (10%), ceramics, porcelain (7.7%), and all mechanical engineering industries accounted for 24.5%. Significant rate increased agricultural production (5.9 and 4.4% for the 80 and 90 years). In the structure of agriculture is dominated by crop and livestock production occupies a relatively modest place. Grain production reached 500 million tons, or 0.4 tons per person. Qualitative changes in the structure of production are considered to be an important part of improving this area.
Now China has entered a "period of record-high level of mergers and acquisitions," during which about 90% of the country's state-owned enterprises will be transferred to the private sector, ie, will be privatized. The government hopes that private owners make money-losing company, lying heavily on the Chinese economy, cost-effective. It is recognized that privatization will lead to an increase in the army of the unemployed, the more that 25 million people have already lost their jobs. It was therefore decided that the proceeds from the sale of state-owned enterprises will go primarily to support the poor, including health care, pension and social security system. Also, one of the ways to solve this problem is the creation of small enterprises, the development of individual sectors, which can solve the problem of employment from 50 to 80 million. People employed in manufacturing in the cities of the country.
Significant changes have occurred in the investment policy. System resource mobilization and allocation of investment resources in the period prior to the implementation of reform policies based on full withdrawal to the state budget profits of enterprises and further distribution of funds between regions, industries and enterprises. The provision of the economy was gratuitous character with a focus on administrative methods of economic management. During the implementation of the reform were to diversify its sources of funding. Along with public funds are widely used means of collective, individual, private and joint ventures, the accumulation of the population. Decentralize public investment towards increasing the role of sources of funding in the hands of local authorities and state-owned enterprises. Budget funding is increasingly replaced by lending capital, which is carried out by specialized banks. Private enterprises, under the laws of the PRC economy are the number of employees of more than eight people. The private sector began to develop on the basis of individual sectors. The program documents of China noted that the need to encourage private sector development, as it operates within an economy based on public ownership, and cannot take a dominant position in the country and certain private sector development stimulates production, increases employment market revives. Greater economic independence gained collective enterprises sector. Currently, the collective sector covered almost the whole countryside and most of the city. An important element in the economic life in the village began to rural enterprises: 70% of the gross production of these enterprises accounted for industry, 10% - for transport, followed by construction, trade, public catering. The share of rural enterprises in the production of gross social product in the village was in 2003 at a level of 13.5% (Bardhan, P., 2010).
The public sector continues to occupy a dominant position on such indicators as a share of gross industrial output, retail turnover and number of employees. However, by the early 90s of XX century the share of public sector enterprises gradually began to decline. In general, the structure of the Chinese economy has been significantly changed. The ratio between primary, secondary and tertiary sectors has changed in favor of the latter, while high growth in each of them. The share of services has increased to 1/3 of GDP, agriculture - declined to 17%. At the same time the country has been basically solved the food problem and overcome the lack of basic necessities. The share of manufacturing fell slightly. Economic growth has led to a change in the position of China in the world economy. Its share in the GWP has increased over 80-90 years, 2 times the share in global manufacturing - 4 times. In terms of absolute size of 26 kinds of products, mainly low and medium technology, the country is among the 10 largest producers in the world. China produces ¼ of the world's toys, clothes and shoes, 17% of the carpet. It ranks first in the world in the production of food, cotton, coal, steel, cement, glass, cotton fabrics, porcelain and earthenware. Have developed machine tools, shipbuilding, office equipment and nuclear and aerospace. In terms of per capita GDP of China is inferior to all developing countries by 1.6 times and 33 times the developed countries.
In China is recognized the role of domestic demand as the driving force of economic growth. With the onset of the crisis is largely compensated for the decline in external demand. So, to produce for export consumer goods were partly turned to the domestic market, thus increasing the incomes of the population, providing them with goods and services. Thus, the external demand to some extent has been replaced by internal. At present, China's economic system managed to avoid the crisis the fall, because the economics and politics of the Chinese state ensure full independence of the internal purchasing power of the yuan against the dollar or any other foreign currency.
Expansion of external openness of China after accession to the World Trade Organization affected such areas as trade in goods, trade in services, intellectual property rights protection, transparency and harmonization of customs and tax regulations. In 2001, an agreement was reached on the phased establishment of a free trade zone China - ASEAN. In subsequent years, China has signed bilateral agreements on the liberalization of bilateral trade with Chile, Pakistan, New Zealand and Singapore. Elements of foreign trade protectionism is still used by the Chinese authorities as part of an industrial policy aimed at solving problems of import substitution on a particular group of products (Bao, S., 2006).

Conclusion

In conclusion, the work may be noted that China sees its contribution to improving the global situation is mainly to improve the management of its own economy, and international cooperation considers an additional tool. The basic approach of the Chinese coincides with the global: the stabilization of markets, restoring confidence among economic agents, lower interest rates and a decrease in reserve requirements. In the stock market, the main emphasis in correcting the situation makes China on macroeconomic policies. This is a transition from policy to curb inflation multifaceted stimulate domestic demand, supported by small and medium-sized businesses as the basis for the national economy. Chinese innovative small and medium business has not suffered losses, but on the contrary, continues to evolve rapidly due to the reduction of export and other taxes, as well as a package of measures to promote social housing, rural infrastructure, etc. According to the calculations of Chinese economists in 2010, these measures should provide additional GDP growth of 1%-1.5%. In parallel, the country is developing international activities. In October, 2008 China, Japan and South Korea have created a regional financial controller. China's approach to the world of finance is based on the desire to ensure a balance in three areas: between financial innovation and regulation, between the virtual and the real economy, between savings and consumption. In strategic terms, China is trying to use the crisis to strengthen their status. In this he is supported by those Asian countries that are expected of him the greatest contribution to the stabilization of the global financial economic situation.

References

Bao, S. (2006). The Chinese economy after WTO accession. Aldershot, England: Ashgate.
Bardhan, P. (2010). Awakening giants, feet of clay: Assessing the economic rise of China and India. Princeton, N.J.: Princeton University Press.
China's gross domestic product (GDP) growth. (2014). Retrieved March 30, 2015, from http://www.chinability.com/GDP.htm
China, Australia and Asean - New Dynamic for Future Growth. (2012, November 25). Mondaq Business Briefing. Retrieved March 30, 2015, from http://www.highbeam.com/doc/1G1-309976478.html?
Jalil, A., & Feridun, M. (2011). The impact of growth, energy and financial development on the environment in China: A cointegration analysis. Energy Economics, 284-291.
Starr, J. (1997). Understanding China: A guide to China's economy, history, and political structure. New York: Hill and Wang.

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