Chinese economic reform: Difference between revisions

Browse history interactively ← Previous edit Next edit →Content deleted Content addedVisual WikitextInline

Revision as of 02:08, 22 November 2002 editHephaestos (talk \| contribs)22,414 editsm copyedit← Previous edit		Revision as of 05:17, 22 November 2002 edit undoOlivier (talk \| contribs)Administrators98,448 edits FDI = foreign direct investment NOT direct foreign investmentNext edit →
Line 5:		Line 5:
	Chinese economic reform has consisted of a large number of different changes. There are several principles which appear to underlie the program. The first is pragmatism, which is embodied in Deng Xiaoping's dictum to ]. The criteria for success are determined by experiment rather than by ideology. The second is incrementalism. Instead of announcing and implementing a national program, typically, an idea is implemented locally or in a particular economic sector, and if successful it is gradually adopted piecemeal throughout the nation.		Chinese economic reform has consisted of a large number of different changes. There are several principles which appear to underlie the program. The first is pragmatism, which is embodied in Deng Xiaoping's dictum to ]. The criteria for success are determined by experiment rather than by ideology. The second is incrementalism. Instead of announcing and implementing a national program, typically, an idea is implemented locally or in a particular economic sector, and if successful it is gradually adopted piecemeal throughout the nation.

	The first parts of Chinese economic reform involved implementing the ] in agriculture, by which farmers were able to retain surplus over individual plots of land rather than farming for the collective. This was followed by the establishment of ], which were industries owned by townships and villages. An open door policy was introduced by which China began to allow international trade and ~~direct~~ foreign investment. These initiatives immediately increased the standard of living for most of the Chinese population and generated support for later, more difficult, reforms.		The first parts of Chinese economic reform involved implementing the ] in agriculture, by which farmers were able to retain surplus over individual plots of land rather than farming for the collective. This was followed by the establishment of ], which were industries owned by townships and villages. An open door policy was introduced by which China began to allow international trade and ]. These initiatives immediately increased the standard of living for most of the Chinese population and generated support for later, more difficult, reforms.

	The second phase of reform occurred in the 1980s and was aimed at creating market institutions and converting the economy from an administratively driven command economy to a price driven market economy. This difficult task of price reform was achieved using the dual-track pricing system, in which some goods and services were allocated at state controlled prices, with others were allocated at market prices. Over time, the goods allocated at market prices were increased, until by the early-1990s they included almost all products.		The second phase of reform occurred in the 1980s and was aimed at creating market institutions and converting the economy from an administratively driven command economy to a price driven market economy. This difficult task of price reform was achieved using the dual-track pricing system, in which some goods and services were allocated at state controlled prices, with others were allocated at market prices. Over time, the goods allocated at market prices were increased, until by the early-1990s they included almost all products.

Revision as of 05:17, 22 November 2002

Chinese economic reform refers to the program of economic changes in China that were started in 1978 by Deng Xiaoping and are ongoing as of 2002. The goal of Chinese economic reform was to restructure and replace the command economy which had been instituted as a result of Maoism, as well as to develop the Chinese economy and improve the standard of living. The challenge of economic reform was to simultaneously resolve problems of command economies, in addition to the problems of developing economies.

Although there are still a number of serious and (some believe) ultimately intractable problems with the Chinese economy, Chinese economic reform, unlike perestroika, has been regarded as a success. The standard of living of most Chinese has improved markedly since 1978, and from the point of view of the government, economic reform has been a success in that it has contributed to the fact that the Chinese Communist Party has remained in power.

Chinese economic reform has consisted of a large number of different changes. There are several principles which appear to underlie the program. The first is pragmatism, which is embodied in Deng Xiaoping's dictum to seek truth from facts. The criteria for success are determined by experiment rather than by ideology. The second is incrementalism. Instead of announcing and implementing a national program, typically, an idea is implemented locally or in a particular economic sector, and if successful it is gradually adopted piecemeal throughout the nation.

The first parts of Chinese economic reform involved implementing the contract responsibility system in agriculture, by which farmers were able to retain surplus over individual plots of land rather than farming for the collective. This was followed by the establishment of township and village enterprises, which were industries owned by townships and villages. An open door policy was introduced by which China began to allow international trade and foreign direct investment. These initiatives immediately increased the standard of living for most of the Chinese population and generated support for later, more difficult, reforms.

The second phase of reform occurred in the 1980s and was aimed at creating market institutions and converting the economy from an administratively driven command economy to a price driven market economy. This difficult task of price reform was achieved using the dual-track pricing system, in which some goods and services were allocated at state controlled prices, with others were allocated at market prices. Over time, the goods allocated at market prices were increased, until by the early-1990s they included almost all products.

In the 1990s, the focus of the reform was to create a viable banking system which could control the economy via monetary policy and issue loans on the basis of profit and loss, rather than by political orders. In the late-1990s and early-2000s, the focus was also on industrial reform, which involved the painful closing of unprofitable state-owned factories and the development of social security systems.