Chinese Economy Essay, Research Paper
If China’s economy grows as fast for the next 20 years as it has for the past
14, it will be the biggest economy on earth: I feel that China’s drastic
improvements over the last 14 years are overwhelming, with their Real GNP
growing at a rate of 9% a year, which means by, 1994, China’s economy will match
the performance of countries like Japan and Taiwan. China’s standard of living
has also increased, and the number of people who were considered absolutely poor
decreased approximately 63%. I feel with the vast amount of people living in
China, and the economic activity booming like it is, China’s exports will
continue to grow, as well as the standard of living. This will create more
revenue, and more capital for them to produce even more goods and become even
larger, prospering as one of the biggest economies on the earth. I also feel
that China should try to overcome its corrupt system and steadily move into a
free enterprise system. Competition has been the key to China’s success: I
believe that competition has been the key to China’s success. When Mr. Deng
opened the free market, it brought the first signs of the farmers becoming more
rich since the 1950s. His political genius allowed the farmers to become rich.
He also introduced the "open-door policy" which is proving to be very
beneficial, as they follow in the footsteps of their strong rich neighbours. Mr.
Perkins believed four conditions must be met for a market system to work well in
reforming centrally planned economy. I believe if China continues to improve its
productivity, and the number of monopolies decrease as studies show, China will
move into a capitalist front only to prosper. An Inflationary crisis within two
years will test the government’s reformist mettle: The 14th Communist Party
Congress, set the official seal on the fourth wave of economic reform. Market
Splintering: l feel that China should allow labour to become freer, because this
will allow workers to be better suited towards their jobs, and therefor they
workers will be more effective. Infrastructure: l believe that China has to
build a railway system, so it will not have the highest utilisation rates for
freight traffic. l also believe that China should give incentives for students
to enter higher education. Government Finance: l think that the government
should stop making up for losses of state-owned firms, and stop paying subsidies
to these firms and consumers, hence the budget gap would be more than closed.
Why privatisation may not be needed: Privatisation in many cases may not be
needed because the government supports many businesses and purchases their
products. If the company’s are open to the market, many jobs will be lost. If
foreign ownership buys it up, many jobs will also be lost, as well as many
profits and products. State owned firms are not ready for the market, because
they are geared for the bureaucrats and not customers. They are more concerned
with the welfare of the employees rather than efficiency. In the past, communism
led to low productive workers, because the more profits they made, were taken
from government. Now things have changed, the more the retained earnings, the
more the employees receive in bonuses, and that will make them work harder. A
bracing wind is blowing through the open door: China follows the policies of its
East Asian neighbours on foreign trade and investment. In 1978 China had an
isolated economy, with a minimal share of world trade, commodities, especially
oil which was China’s main export. It has now blossomed into a $300 billion
trade by 1995. Exports has five-fold. China will also receive a lot of foreign
investment from countries, especially japan, which will hit poor parts of China.
China will also be joining GATT soon, and have reached an market-opening
agreement with the US in October. I believe that China should allow as much
foreign investment as possible because it has helped other countries surrounding
them, and may help them. The Communist Party has nowhere to go but down l partly
disagree with this statement, l feel that once a country like China has
accomplished itself economically like it has (strong and prosperous future), it
will take a lot to bring the party down even though there might be some good
reasons to. Also it may be difficult to go down, because China is still three
quarters rural, and the people in the country still prefer communism because of
the small favours received. Another factor why the party won’t go down is
because if it goes, it will be replaced by the army, the secret police or
warlords. Even though the communist party has not functioned like it was
supposed to, it will not go down. The communist party has been operating very
much like capitalist, because of the capitalist society which has been
introduced over the last several years. The party has a large role to play in
China’s transition to a full market economy. China is on its way. the West
should prepare China’s interests lay in foreign investment, trade and economic
reform. China’s main driving force was competition, and they proved that
privatisation and settling the matter of ownership are not so critical in the
early stages of reform. In the years ahead, China must choose between keeping
the communist party or kepping the stunning economic growth. If they continue to
grow at the rate China grows, and keep improving their economy, and join the
likes of Japan, they can combine forces in all aspects against the west,
military wise and economically wise. if China’s economy grows as fast for the
next twenty years like it has for the past fourteen, it will be the biggest
economy on earth.