Examine how and why the Economy of China has changed in the last 30 years

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Lawrence Armitage-Brain

Examine how and why the Economy of China has changed in the last 30 years

Through Mao’s reign, China became increasingly isolated from the rest of the world. Political policies such as the Great Leap Forward and the Cultural Revolution had a major, and in some people’s opinion, negative influence on China’s development. One of the main problems was the difficulty of managing a huge economy centrally.

After death of Mao in 1976, Deng Xiaoping (the new leader) introduced the Open Door policy, which was designed to overcome China’s isolation from the world economic powers. He recognised that central planning was ineffective as there were too many tiers of responsibility. Deng noticed that the world and neighbouring nations were developing quickly, and leaving China behind. China moved towards a socialist market economy. Today China’s leaders are focused and determined on ‘economic growth at all costs’.

 

Between 1949 to the late 1970’s, manufacturing in China was undertaken by mostly ‘State-Owned Enterprise (SOE’s). These were mainly heavy industries, for example, power (Shenzhen Energy), iron and steel. Once Deng took over in 1978, focus turned to productivity, which forced SOE’s to reform. A key incentive towards independence in the market economy was enabling SOE’s to keep some of their profits. Industry quickly replaced agriculture as the leading growth sector in 1980’s as large SOE’s improved management and efficiency, whereas smaller SOE’s were privatised. This led Chinese firms to westernize. For example each work unit had a director or manager with a clear responsibility (a change to the old ‘revolutionary committees’ set up during the cultural revolution). They also started to hollow out work to improve technological infrastructure and acquire modern ‘know-how’ which can then be transferred into domestic firms. Many businesses calibrate through this success by the use of Joint Ventures, having accepted more efficient management and business strategies of global firms. Good examples of these are United Technologies and Caterpillar that have been a great success.

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The government also started to allocate resources to these SOE’s to achieve max benefit from investment, as decentralisation was essential. The state started to control the prices and strong links developed between high-level state officials and the SOE’s.

The SOE reform has led to huge success, with 40% of businesses still public sector. Industrial output has increased by 13% per year as well as improvements in technology, management and efficiency, SOE’s have attracted TNC’s as partners, which brings western experience and skills-which can be taught to Chinese. FDI (foreign direst investment) also increased in China from $3.5billion in 1990 ...

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Here's what a star student thought of this essay

There is a good use of geographic terminology. However, more about development could be incorporated as well as the term 'NIC'. The word 'economy' should not be spelt with a capital letter even in the title (as it is not the first word of the title). 'Private' in 'private sector' should not be spelt with a capital letter either. On the other hand, spelling and punctuation were excellent.

Analytically there is a good map and pie chart to support the candidate's essay. There is a detailed analysis on the effect of policies on particular businesses such as Shenzhen Energy. There was a satisfactory quantity of statistics, which are vital to have in an A level essay. Statistics show the candidate's understanding of the level of impacts. Long term impacts are also mentioned, although very briefly; 'Within 30 years private sector...2007'. The short term responses are better illustrated. By including more long term impacts, such as what could happen to China by 2020, for example, the candidate would gain substantially more marks, as it shows more depth in research and understanding. Also the fact that China is now an NIC is not mentioned, which is important to include as this economic development status contributes significantly to China's modern economy.

The response to how and why the economy of China has changed in the last 30 years is initially good as it outlines policies introduced by Chairman Mao. These policies catalysed the development of China's economy. However, these particularly important policies are not further discussed, which lowers the response, as it highlights that the candidate does not fully appreciate the importance of their role. The response should have only been from 1982 - 2012 (last 30 years), so including pre 1970s was slightly irrelevant. The response only mainly focuses on economic development. However, other aspects of development, such as political, social and environment could be incorporated to give a synoptic nature to the essay. Overall there is an intricate response to the question through Chairman Deng's policies and how they have changed China's economy. The conclusion was excellent and perhaps the most well written part of the essay as it got straight to the point and summarised the whole essay very well.