Background of the Country and its Economy
* 2nd Largest Economy in the World. Largest Population in World * Fastest growing economy in past 2 decades averaging <10% p/a. * China has made immense economic and human growth and development in recent decades due to a combination of change in government and policies and globalization. * Is now more a Market Driven Capitalist economy and is now Globally Integrated. = Greater levels of global trade and investment. * High Growth, Better living standards, less poverty.
* Gov background, 1950 Mao Tse Tung’s great leap forward failed increasing poverty and hunger. * 1960’s Cultural Revolution failed as it isolated China from global economy. * 1978= Mao’s successor Deng Xiao Ping. ECONOMICS REFORM of CHINA between 1978 and 1997. * Included; (rapid industrialization, high economics growth, one child policy, agriculture reform, globalization, open door policy, taxation reform, banking laws, tariffs.) * Open door policy= special economics zones (sez) in southeast China where TNC’s MNC’s welcomed with cheap labor, low tax and import duties. * Agriculture Reform= abandoned commune system. Households could now produce and sell on free market as long as quota was met. Raised industrial output. * Foreign trade increased from 10% of GNP in 1978 to 36% in 1996. * Efficiency increased due to global access of skills and technology * 1992 Tariff cuts were used to increase domestic efficiency against cheap imports.
* Averaging over 10% p/a last 2 decades up until 2008 * 2009 growth = 9.2% due to GFC due to global integration * Government stimulus package kept china above 8% and led to stronger recovery than most countries in 2010 and 2011. * 4 main economic amendments * Moved from planned, socialists to market based capitalist * Moved from being an economy based on agriculture to industrialize.