C1 china's economic rise & current landscape - hu wanli
China’s Economic Rise & Current Landscape Wanli Hu UMass Boston National Chinese Language Conference April 7, 2013
Table of ContentsI. Deng’s Economic Reform Deng’s pragmatism replaced Mao’s ideology of class struggle A “revolution” of ownership transformation Top-down state owned enterprises reformII. Open-Door PolicyIII. Economic MiracleIV. China’s Current ChallengesV. Discussion
I. Deng Xiaoping Resumed his Power andLaunched China’s Economic Reform in 1978
I-1. Pragmatism Replaced Mao’s Ideology of Class StruggleNew mindset: Deng remarked that “a liberation of thoughts” was necessary and the leadership must “seek truth from facts” - Third Plenum of the Eleventh CCP Congress, Dec. 1978 "To get rich is glorious” Deng’s economic reform delivered this message indirectly. To Get Rich is Glorious: China in the 80s-Orville Schell One fifth of humanity…… are now fully unleashed in an epic pursuit of material wealth.- New York Times, January 2, 1994.
Focus of the Chinese Communist Party: Economic Development is the core of the “ Party work.”Approaches: “It doesn’t matter whether its is a white cat or a black cat, it is a good cat as long as it catches mice” “ Planning and market forces are not the essential difference between socialism and capitalism.” Both planned economy and market economy are acceptable. “Cross the river by stepping over stones”
I-2. A “Revolution” of Ownership TransformationThree marginal bottom-up “revolutions” Household responsibilities in the countryside in 1979 Xiaoguang Village: A harvest output larger than previous 5 years combined, per capita income increased 20 times Agricultural production increased 6.7% every year from 1979-1984 Township & Village Enterprises (TVE) Its output in the national GDP reached 26%, and hired 130 million people in 1996 -Harold Coase & Wang Ning Individual economy in cities Individual businesses (个体户）appeared & solved 20 million people’s job in 1980s
State Owned Enterprises (SOE) ReformA top-down economic reform from 1980 to 2006 A failure of SOE reform in 1980s led to the June 4 Incident 52% of SOE enterprises were in debt in 1994To invigorate large enterprises while relaxingcontrol over small ones (抓大放小） 85% of SOE enterprises ownership were transformed to shareholding or private companies from 1997-2006 Non-state owned economy reached 65% of China’s GDP in 2008 2010: 42 SOE enterprises in 500 Strong
III. The Open-Door Policy• New thinking: • Mao: If you are not with us, you are against us. • Deng: If you are not against us, you are with us• Normalization with Japan (1972), US (1979) & the Soviet Union (1989)• 2001: China entered the WTO • China’s tariffs dropped to 9.8% from an average of 15.3% in five years• 2003, China surpassed the US as the largest recipient of FDI, 2012:$100 billion• Study abroad and welcome foreign students to China• 2011-12:194,000 Chinese students in US• China’s three “ten thousands” plan
IV. China’s Economic Miracle 1. GDP has grown at an annual average rate of 9.5% from 1978-2010 2. China becomes world’s second largest economy in 2011, and largest exporter and second largest importer 3. China’s development is a powerful driving force behind the global economic growth. In 1990-2002, China was placed first, with a contribution as high as 27.1%. 4. Foreign reserves: $3.2 trillion (2011; ranked 1st).
Since 1978, 400 million people have beenlifted out of poverty in China—about 75percent of the worlds total poverty reductionover the last century.In two decades China has experienced thesame degree of industrialization, urbanizationand social transformation as Europe did intwo centuries - Newsweek, Issue 1, 2008 Newsweek, Issue 1, 2008
IV. Current Challenges• Imbalance between Economic Great Leap Forward & Stagnation of Political Reform• Imbalance between the Rich & the Poor• Imbalance between Wealth Increase & Integrity Decline• Imbalance between Economic Growth & Environment Deterioration
IV-1. Corruption in ChinaHu Yaobang, Zhao Ziyang, two enlightenedreformers were dismissed.China suffers from widespread corruption.For 2010, China was ranked 78 of 179countries in Transparency InternationalsCorruption Perceptions Index.Some 668,000 party members have beenpunished for corruption in the past five years(2008-12), according to official figures thatrepresent only the tip of the iceberg, expertssays. Peter Ford, The Christian Science Monitor, November 24, 2012
Continue“Naked officials” (裸官） phenomenon(officials who stay in China while theirwives and children live abroad).The term "naked official" was selected asone of Chinas top 10 buzzwords in 2009From 1978 to 2003 about 4,000 corruptofficials left China, taking at least $50billion out of the country- 2010-02-24, China Daily
Corruption in the eyes of Chinese people & new leader of China• Corruption remains the No 1 concern among Chinese people• Xi Jinping warned that corruption could lead to "the collapse of the Party and the downfall of the state."
Continue• “Wealth Drain” phenomenon Nearly 60% of people who have more than 10 million yuan ($1.53 million) claim that they either consider emigration abroad (47%) or have completed the process (27%).
IV-4. Imbalance between Economic Growth & Environment Deterioration“Made in China” is the largest brand product in the world, which made China the second largest economy and largest exporter globally.What is the cost of this economic development?
Land Challenge to China• Only 7 % arable land supports 20 % population of the world• 28 % of its territory turned to desert• An estimated 100 square miles of land is lost to desert per year• 400 million people are affected by desertification• A sandstorm brought 330,000 tons sand to Beijing one night in April 2006
Water Challenge to ChinaWater Resources:• With 20% of the world’s population but only 7% of global water resources (China has only one-fifth as much water per capita as the United States).• More than half of China’s 660 cities suffer from water shortages, affecting 160 million people.• 90% of cities’ groundwater and 75% of rivers and lakes are polluted.• As a result of widespread water pollution, 700 million people drink contaminated water every day.
Greenhouse GasIn 2008, China surpassed the United States as the largest global emitter of greenhouse gases by volume. It contributes to sulfur dioxide emissions and acid rain, which falls on over 30 percent of the country.Only 1 percent of the country’s 560 million city inhabitants (2007) breathe air deemed safe by the European Union.
ContinueEnvironment pollution and relatedhealth issue cost China 9 % of theannual income in 2008, World BankThe government received six hundredthousand environment-relatedcomplaints in 2006, a figure that hasincrease roughly 30 percent each yearsince 2002.
Energy Challenge to ChinaEnergy crisis:•China has passed the U.S. to become the worlds biggest energyconsumer in 2010.
危机：Turn Crises into OpportunityChina is a world leader in green energy &China is about to be the largest greenenergy market hydropower, wind, solar, and biofuels.China is the largest hydroelectricityproducer, representing around 17 percent ofdomestic electricity use.China is home to about 80% of the world’ssolar panel manufacturing capacity
ContinueBloomberg placed China as the establishedglobal leader in wind industry for the past fouryearsChina’s wind power is 26.8% (US 21.2%)globallyApproximately 9.5% of China’s energyconsumption is green energy by 2015.
Discussion1. Why did Deng Xiaoping call the Economic Reform asa “second revolution?”2 . What factors lead to China’s economic miracle?3. What kind of difficulties/challenges did Deng haveduring the Economic Reform?4. What kind of crises and challenges is China facing?5. Is China’s development pattern sustainable? If not,how to change it?