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.