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Notes on the economic transformation of China.

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CHINA CASE STUDY GDP: US$5.8 trillion (2nd largest eco PPP) Govt. Policies for eco growth + development 1978 Deng Xiaoping: ‘socialism with Chinese Characteristics’: BEFORE: 1. Central planning, govt. allocating resourcesï open mkt eco 2. Initially: rapid industrialisation, improvements in life expectancy + literacy rates 3. Later: great Chinese famine in ‘Great Leap Forward’ in early 60s ECO GROWTH: (gradual move towards more open mkt eco) 1. Dual Track Reform Approach (in ag sector) Existing features of co-exist with product mkts. BEFORE: 1. Govt. specified quantity produced + price paid for ag produce 2. Ag producers set certain quota of output purchased by govt. at fixed price AFTER: 1. Producers sell at mkt prices any output above the quota 2. New mkt based incentives for farmer to earn additional Y Decollectivisation/Household Responsibility System: farmers make own production decisions + sell surplus output in free mkts once state quota met Highly successful when applied to other industries. Chinese eco outgrew central planning as production above quota dwarfed size of govt. plan. 1993 – central planning become obsolete + mkt main instrument for distributing + allocating eco resources. 1. X ↑ 15% annually. 0.8% 1978 ï 8% share of world X now 2. TVE output ↑ 25% p.a 1. Coastal Development Strategy/Open Door Policy Allow China’s coastal regions to participate in global eco. BEFORE: 1. Interior development through industrialisation of China’s inland cities AFTER: 1. ...read more.


Gini Coefficient b/w 0.41 -0.47 2. Driven by urban/rural divide 3. Hukou household registration historically disadvantaged opp available to rural pop 4. Those previously promised life time welfare support from gov. now left to support themselves ? often with few skills/access to meaningful employment opp 5. Under president Hu Jintao govt. ?Harmonious Society? development vision ? incorporates provision of social welfare e.g. healthcare, affordable housing in pursuit of humanistic society 6. Minimising public dissatisfaction 30% pop: 87% Y, Urban: 3x more per capita Y ECO DEVELOPMENT: 1. 12th fifth year plan 5 year plans devised to allow govt. to strategically plan + allocate resources across eco. Nowadays, used to present policy vision for short-medium term. MARCH 2011 ? ?higher quality growth? 1. Achieving annal GDP growth rate ~7% 2. Inflation at 4% 3. Increasing min. wages 4. Increase retail sales of consumer goods by 16% Reduce Carbon intensity of GDP by 3.5% INVESTMENT & TNCs 1. Greenfield Investment 1. New I expenditure to increase the productive capacity of eco e.g. building new factories + development of manufacturing industries 1. Most of China?s FDI consist of the above, where it has a comparative adv. (US FDI ? generated more by takeovers of existing enterprises) 2. Strong growth in FDI inflow driven by TNC?s GI to take advantage of relatively cheap costs of production, tax benefits + minimal regulatory oversight 3. ...read more.


Banned logging domestic timber since 1999 2. Passed environmental impact assessment in 2003 3. Increased spending on environmental protection from 0.8% GDP ï 1.3 % GDP under the country’s 10th ‘5 yr plan’ running from 01-05 4. Signed + ratified several int. environmental agreements: 1. Antarctic-environmental Protocol 2. Montreal Protocol (minimising ozone layer depletion) 3. London Convention (preventing marine pollution by dumping) 4. Kyoto Protocol (greenhouse gas emissions + climate change) (however, china has no bound targets) 1. 2007- national climate change policy 1. Increased proportion of electricity generation from renewable energy sources + nuclear power rather than solely relying on coal 1. World Bank lent China $1.64 B for environmental projects 1. Aim to effectively use infrastructure while conserving biodiversity + forests, reducing land pollution + improving sustainability of water supply 1. China spent US$34.6 B to obtain renewable resources for its production facilities in 2009 1. Invested more than any other country in clean tech. LOBALISATION -forefront in embracing globalisation - emerged from recent financial crisis quickly + strongly - Policy initiatives resulted in dramatically ↑ trade, I + financial flows ï boost in s.o.l. - chinese eco still faces major challenges to sustain eco success - Under close global scrutiny, Chinese govt. has taken steps to address major problems of environmental degradation + pollution, as well as, inequality b/w regions - if govt. is successful in providing remedies for these growing problems, china will be on fast track to becoming world’s leading eco within next few decades ...read more.

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