Key Factors Explaining China's Extraordinary Economic Rise

Posted in Business on June 09 2021 at 02:07 PM

Introduction

Recently the world is impressed with exclamations of wonder and excitement about Chinese miracle. Indeed, there are good reasons to call a miracle what is happening in China.

In the Peoples Republic of China in the ten years since the beginning of reforms, Gross Domestic Product more than doubled. In 1988-1992, the average annual increase was 7.9%. Over the years, steel production increased by 42%, coal production rose by 20%, power generation increased by 46%, the gross agricultural product increased by 4.9%. By the end of the century, China's GDP has doubled again, and judging by the way things are going now, there is the confidence in successful solution of this problem. For example, in 1993 the growth of GDP in China was 13%, industrial production increased by 25%. According to estimates of the International Monetary Fund, China today in terms of GDP came in the second place in the world after the USA.

More surprising side of Chinas economic take-off is that this rise is accompanied by a steady rise in the life standard. In the first half of last year, the average monthly income of the citizens rose by 12.5%.

As something phenomenal in many opinions, China, being a communist country, firmly pursues an independent foreign policy, without seeking assistance and support from any rich and powerful countries in the international arena. The country successfully provides tremendous business ties with all countries of the world. It enjoys preferential treatment in its relations with major world forces. In the first nine months of 1993, Chinas foreign trade reached 129.4 billion dollars, up to 17.7% compared with the corresponding period of the previous year. Over half of the country registered 43,704 companies with foreign capital, foreign investments in which contracts exceeded 57.5 billion dollars by the end of 1993. Overall, the number of joint ventures in China exceeded 134 thousand, and their foreign capital was 169.2 billion dollars in 1992, joint ventures giving 6% of industrial output and 25% of export products of China.

As shown by a comprehensive analysis of the development of the PRC, the factors that determine speed and efficiency of the reform process in the country cannot be reduced to some kind of specially invented techniques and tactical tricks. They stem from fundamental necessities of Chinese peoples life, which are the basis of domestic and foreign policy. The main reasons of reforms in China are that the society as a whole and every citizen in particular know what these reforms are implemented for. Therefore, these reforms are the means to achieve a well-defined and clearly recognized goal. It is explained by the fact that Chinese reforms are constructive in nature. The need for continuous self-affirmation of reform makes the reform process never-ending and permanent.

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The productiveness of Chinas reforms embodied in a number of specific basic facilities can be described in the following aspects.

Great goal gives birth to great energy

Reforms in the PRC were preceded by identification and nomination of the Communist Party of China corresponding to the historical aspirations of the national goal of Chinese people, that is, transformation of it into a modern, powerful and prosperous country with a high standard of living. The formula was not an accident. It carried a deeper meaning: it appealed to the national and patriotic spirit of the heirs of China, which was the cradle of an ancient civilization, a country with rich culture. For many centuries, the powerful nation had never known any peer rivals. Such a goal, on the one hand, answered the highest aspirations of Chinese people and therefore met the approval and support. On the other hand, there was a strong incentive to mobilize the countrys creative activity.

The objective of making China a thriving nation formulated in general terms was disclosed and specified in four modernizations industry, agriculture, national defense, science and technology. Implementation of the program was divided into three phases, which cover the period up to the middle of the 21st century. Such a long-term nature of the program charges the Chinese Society with historical optimism.

Naturally, the purpose of revival of China was meant in both the internal and external dimensions.

Economy as a team force

When Mao Zedong ruled China, he operated under the slogan politics is a team strength. Economy then was placed in the center of the countrys life. In justifying the course of reform, their chief architect Deng Xiaoping pointed out, "China needs to concentrate its efforts on economic construction and become a modernized socialist economic construction of power ... for us it is a matter of prime importance. Everything else is subordinated to it.

With this approach, the social forces in China were not wasting their energy on political bickering. Particular attention was paid to the adoption of thesis that a planned economy is not equal to socialism as well as a market economy is not equal to capitalism. The plan and the market are economic levers.

Political stability is the key to success of reforms

Understanding the primary importance of this factor is literally suffered through China, passed through a devastating shock and lasted ten years of cultural revolution. Strengthening of law and order, prevention of chaos and tension in the country are the most pressing concerns of Chinese leadership. Instructive is the fact that Chinas leaders do not oppose the political stability and reform. Beijing does not believe that reforms required tightening mode and the use of extraordinary measures, that is, transformations can be forcibly implemented. In contrast, reforms and stability are discussed in dialectical unity: reforms should contribute to the economics recovery, and the recovery, in its turn, will strengthen the political stability.

Consistent social orientation on reforms

This principle is the milestone of a three-stage program of transforming China into a powerful flourishing state. It is quite clear that implementation of this system in the most populous country, which once was one of the most backward countries in the world, is a matter of extreme difficulty and complexity. Nevertheless, PRC successfully and steadily moves in the intended direction. The consumption of meat, eggs and milk doubled and tripled. In rural areas, houses were built with a total area of 9.5 billion square meters. The area of ??new apartments in cities exceeded 1.8 billion square meters.

Social orientation of economic policy in China finds its fundamental reinforcements regarding agriculture as the basis of the entire economy. Jiang Zemin in one of his speeches filled it with an even wider content. Agriculture is the basis of economic development, social stability and independence of the state. The decision of the CPC Central Committee plenum also states that problems of agriculture, rural areas and rural residents were fundamental in the economic development of China. Plenum demanded to strengthen the Government's support of agricultural production and protect the interests of the peasantry.

Gradualism and circumspection

Carefully justifying the need for economic reform, pointing to the necessity and feasibility of change, Chinese leadership shows no haste in their implementation. During 16 years of its reform, history of China has gone through a series of successive steps. The reforms were born in the village, where they also developed in stages, and only after five years, they spread to the city. Of course, this has changed not only their geography, but also the content that evolved from simple to the complex one. The main thing was that opposition was overcome by a planned commodity economy. Chinas economy has become classified as planned commodity economy, based on the public ownership. In the second half of the 80s, it was decided to reform the management of science and technology, as well as the educational system.

An important place in economic reforms is taken by experimentation, synthesis and critical assessment of the gained experience. Those who carry out Chinese reforms are guided by the fact that the criterion of truth is practice.

The economic reforms in China are not something that has been brought in from the outside and forcibly introduced in Chinese reality. They were born in this very reality, developed and implemented by Chinese theoreticians and practitioners. They did not follow the path of land privatization, as it would dramatically increase social differentiation of the rural population and lead to extremely negative consequences for the rural economy as a whole. Instead, privatization is arranged as the lease of agricultural land in the conservation of collective ownership. The reforms, both in the city and in the countryside, are constantly taken into account.

Conclusion

The above-said does not mean that Chinas reforms go off without a hitch. In the course of their implementation, the country faces many difficulties and challenges, and experiences serious errors. This is largely because of the fact that the above-mentioned basic installation is not always implemented in practice. Nevertheless, the fact remains that Chinese reforms are working, and this is achieved through compliance with certain conditions.

In conclusion, it would be appropriate to stress that there is no need to think that the key to success of reforms in China is stamped, Made in China. They just went out there checking, confirmed their reliability. Talking about universal values, they first need to include such features, common to all nations, as welfare, patriotism, concern for the interests of the country, deep faith in their own strength, respect for national traditions, and sober sense of reality. This leads to the conclusion that Chinese experience is to be treated with all the attention and respect.

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