The one china principle: economic perspective
China has an exceptional position the today world's economy. There are several reasons for what makes the Chinese economy unique. These are the rapid growth rate, the characteristics of the Chinese economy and how china's economic reforms resulted in increased productivity despite government control. If that is so, then what is the need of Chinese authorities to re-evaluate their economic growth (rebalancing)?
Hu and Khan, 1997 analysed the reasons of Chinese economy rapid growth. They suggested that economy boost in China is a reality and began in 1978 (economic reform program). The annual growth rate increased by 3 to 7% and the individual annual income increased four times. There are factors helping the rapid growth of Chinese economy, first is the political stability of the post 1978 era compared to the environment before. Change from Marxism Mao beliefs, the Sino-Russian conflict, the Cultural Revolution and the Great Leap are examples to political instability prior to 1978. Second, before 1978, China directed most investments to urban area, because of the economic reform policy, starting from 1978 investments were directed to rural areas and the government encouraged rural and private businesses investments. This produced an increase in China's capital assets in the form of new factories and industrial machinery besides increasing the number of skilled workers. Third, developments in China's economy are not stationary; the dynamically progressing economy reflects that Chinese government transferred the preliminary productivity gains to develop other economy area. Fourth is the change in workers pattern and distribution, before 1978 80% of Chinese workers practiced agricultural work, in post 1978 era only 50% are working in agriculture. Fifth, enterprises managers were given autonomy to determine their goals, sell some goods in private market at competitive prices, however full scale pricing...
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