ss pt 1

Economic departments

National Development & Reform Commission → economic development

Ministry of commerce → trade affairs (domestic / international), finance → fiscal policies, industry and information →plans for industry

People's Bank of China → monetary policies

China's current economic regulation

① fiscal policies > utilise changes in government spending

② monetary policies→ currency stability, interest rate & money supply

③ administrative commands→ direct control over resource allocation or production

Socialist economy

Planned economy and collective/public ownership

Planned economy measures

Planned economy T public ownership of production resources

Gov: highly directive& determining

Policy characteristic→ reliance on administrative commands

Five-year plans» map out goals & directions (The great leap forward)

① private firms → state owned enterprises (SOEs )

② massive steel-making campaigns by mobilising peasants and communes

③ people's communes: people had to give up their land, animals and tools and government rationed necessities to them

Reasons for decreasing agricultural and industrial production

① low incentive to work → goods rationed to people + individual contribution to production x affect goods received → low efficiency

2 low technological level

Four modernisations

Agriculture, industry, national defense, science and technology

Rural reforms

Household responsibility system: contract publicly owed farmland, submit required quantity of crops, use remaining for self use or sell in markets

Impact: personal efforts tied closely to earnings, higher work incentive leads to higher efficiency and agricultural development

impact two: due to the income, farmers have higher purchasing power and combine more necessities, increasing living standards.

impact two: due to the income, farmers have higher purchasing power and combine more necessities, increasing living standards

Township and village enterprises: market oriented Enterprises focusing on light industries

Impact: absorbed surplus labour and non-peak seasons causing increased job opportunities and living standards, knowledge about management expertise and scienceincreases ability to land high skill jobs, increases social status by becoming managers and entrepreneurs, increasing contribution in China’s GDP

Urban reforms: industry and trade

Development of Enterprises in non-public sectors: light industries, restaurant businesses and retailing.

Impact: businesses bears risk, more responsive to market demands, goods that suit consumers needs

Impact: business and employment opportunities gives more income.

Industrial responsibility system: after fulfilling production target set by government, state owned Enterprises can increase production and sell according to market demand, bearing gains and losses while having autonomy

impact: because of autonomy, higher incentive to work in higher productivity.

impact: because of autonomy, higher incentive to work in higher productivity.

Modern enterprise system: separation of management rights and ownership and diversification of ownership. Become a publicly listed company and sell shares.

Impact: clearly established ownership, self management, self finance and responsibility to shareholders, expanded production and management capability

Opening up policies

special economics zone: Shenzhen

Industrial production centres annd open economic system.

Preferential tax treatment and favourable tax rate

Opening up of 14coastal cities like Guangzhou

Preferential tax treatment and favourable tax rate

Economic clusters

Yangtze River Deltaand Pearl River Delta clusters

Coordinated development to complement their strengths and weaknesses

Joining world trade organisation in 2001.

Platform promoting international free trade

import side: open up market in accordance to international trade regulations

Export side: export to other countries at lower tax rates

Impact:

Attract foreign investorsto set up businesses, bring foreign capital technology and management expertise.

After joining WTO, China has access to overseas market, lower export rates to other countries and becomes the world factory.

increased competition between domestic and foreign companies as China imports goods from other countries and and efficient local businesses cannot survive intense competition.

East west income disparity: coastal and east cities have good economic development yet in England and western cities are under developed

Economic characteristics after reform and opening up

Socialism to socialism economy with Chinese characteristics.

Planned economy in market economy can be seen in Chinese economy which is a socialist market