Has Deng Xiaoping's Economic Policy–Reformation

Has Deng Xiaoping 's economic policy–reformation and opening had positive or negative effects on the Chinese economy?

Research Report
English for Tertiary Studies2

Lecturer: Tracie Wong
Student name: shangweiwei
Student No.: G0844037P

Tracie Wong
English for Tertiary Student Program
International Foundation Program Office
University of Newcastle
Newcastle, NSW

Date : 7th May 2010

Dear Ms Tracie Wong: Re: Research Report Submission
Good day to you
Enclosed here with is my reach report “Deng xiao ping’s economic “This report is researched with my major Economics in view .This topic is discussed with the economic policy of reformation and opening.

If you have any questions, please feel free to e-mail me at ([e-mail]),i will be happy to clarify your concerns.

Thank you

Yours sincerely.

shangweiwei

Table of contents

Justification Page
Summary…………………………………………………………………………………... 5
I. Introduction………………………………………………………………………… 6
A. Significance of this report ……………………………………………………… 6
B. Sources of information ……………………………………………………… 6
C. Scope of this report ……………………………………………………… 7
II Present organization ………………………………………………………. 7 A. China 's economic policy before reformation and opening …………………………………………. 8

1. Introduction of planned economy ………………………………. 8 2. The negative impact of the planned economy …………………. 8

B. Factors leading to reform and opening up ………… 8
1. The success of Taiwan 's economic reforms to promote economic reforms in the mainland ………… 9
2. China 's economic development slowly, and people live in poverty leading to reform and opening up ………… 9

C. The main elements of reformation and opening ………….. 10 1. The ten points of reformation and opening …………. 10 2. Analyze how reformation and opening ………… 11
III Planned development A. The changes brought about reformation and opening up 1. Changes in China 's domestic economy …………. 13 2. Changes in China 's national economy ………… 13 B. Plans concerning the policy of reformation and opening up
IV Conclusions ………… 14 A. National and international evaluation of the reformation and
Opening up ………… 14
VI Recommendations A. Analysis of report and give my ideas ………… 15

References

Justification:
This report topic was chosen, because reformation and opening up was a turning point in China 's economic history. In addition, this area’s study is related to the Bachelor of Economic, especially, macroeconomic Economics. Is a very useful and effective skill for my future employment. Moreover, the policy reformation and opening up is based on the whole country of China, so it is relevance to my major macroeconomic economics. Therefore this topic is very convenient for me to Using theory to explore the nature of policy. This will be helpful for my future economic study at university. Summary:
First, I will introduce the China 's economic policies- Planned economy, before reform and opening up, and explain this policy is negative to China 's development. In the analysis of Taiwan 's success after the reform and poverty in China, this can lead the Chinese new economic policy reform and opening up. Then, I will list out the specific measures of reform and opening let readers to better understand the political. Then I will make a detailed analysis of the process of reform and opening up and introduce the founder of policy Mr. Deng Xiaoping. This is the key paragraph of this article. Next step is to review the policy to bring about change in China. Changes in national life and the changes as a whole country .Finally I give the domestic and world comments of the policy and my own ideas.

I Introduction
In 1978, there was a dynamic revolution in China 's economic system . At that time, the Chinese leader Mr. Deng Xiaoping, proposed economic policies of reform and opening-up, in order to change the face of China 's backward economy. From 1978 to now, reform and opening up already after 32 years. Facts prove that generation after generation of Chinese people get the benefits of reform and opening up, such as more and more Chinese families have enough money send their children abroad for study, The next four years, the demand for private cars in China will maintain annual growth of 33% , and so on. This policy is successful in China, therefore, we should research and analysis reform and opening -up . About the reform and opening up, we can be studied from different angles. Here, I will take time Background, and achievements as a key to study reform and opening up.

A. Significance of this report
This report has three important Significances: First, it helps me review the knowledge of economy what I have learned. Second, I can show my professional knowledge and ability, through analysis of the nature of the reform and opening up. Finally, the adoption of the report, I can certainly justify the success of reform and opening up in China. This can be the example for other developing country learning.

B. Sources of information
The mainly source of information on this report, are from the Singapore National Library, some relevant professional books. In addition a small amount of information from the Internet web site and Singapore local newspaper. The final paragraphs was personal view.

C. Scope of this report
On the scope of the report, from the time, I will analyze from China after the founding until today. From the contents, first, I will talk of China 's economy before reform and opening up and why China need to reform . Then I will introduce the policy of the designer Mr. Deng Xiaoping and specific measures of reform and opening up policy, and then I will use Professional knowledge do some analysis of policies. Second, describe the changes in China after the reform and opening up, here I will give a lot of data and examples to show that the policy was a success in China. Finally, summing up, give my opinion. II Present organization
A country 's economic development is generally determined by two factors, one is technical, the other is the social system. China is a developing country, and the level of the economy in a backward. For China, efficient technology is widespread in developed countries, and also can be achieved, however, whether extensive use of these new technologies, depends on if the Chinese system can adapt these technologies. Therefore, in the two factors of technical and social systems, social system is more important. From 1978 until now, China 's reform and opening up has been 32 years, national economic strength and more powerful, people 's lives getting better and better. However, with the alternation of the National, More and more the next generation of Chinese has become confusing with history of China 's economic development!

A. China 's economic policy before reformation and opening

1．Introduction of planned economy
When the PRC was found in 1949, the immediate task for the new regime to tackle was the rampant inflation left behind by its predecessor, the nationalist government. After about two years of hard effort, the new government was able to achieve financial and monetary stability. In 1951, as part of the socialist transformation programme , the old financial system was systematically dismantled and restructured in the Soviet style. The general banking functions of intermediation of funds were changed to one of meeting the mandatory targets set by the new government. The so-called comprehensive financial planning was introduced and people’s Bank of China., which was established by the communist party before it took power in 1949, played a central role. In general, before the reform and opening up, china practices a policy of planned economy, the government controls all the elements of production.

2． The Negative development of the planned economy era
From the 1950s on, the Chinese economic system did not remain static but was subject to two very serious political disturbances. One was the Great Leap Forward Movement from 1958 to 1961.The rapid formation of agricultural communes from April to September 1958 was itself a serious political disturbance. The second Five-Year Plan (1958-1962) was severely interrupted. Mistaken agricultural and industrial policies of the Great Leap caused famines and the curtailment of industrial output. The other disturbance was the Cultural Revolution of 1966 to 1976. Having lost political power in the early 1960s as a result of the failure of the Great Leap, Chairman Mao attempted to regain political control by appealing directly to the Chinese youth to engage in a Cultural Revolution. Economic planning and agricultural production were disrupted. Intellectuals and social groups other than the peasants and workers were victimized. Higher education practically ceased, with total enrollment reduced from 674000 in 1965 to 48000 in 1970.

B. Factors leading to reform and opening up
1. The success of Taiwan 's economic reforms to promote economic reforms in the mainland
In 1965, Liguodian served as Minister of Economic Affairs of Taiwan. He has created many economic reform measures in four years, including tariff reform, creation of export-oriented economic policies. He set up the world 's first export processing area in gaoxiong. All production materials do not have to impose tariffs or other taxes and free import or export. Gaoxiong export processing area provide cheap labor and land, coupled with tax incentives and effective Rate management, attracting many foreign investors. From 1966 to 2001, export value of Gaoxiong export processing area was 99 billion U.S. dollars, Accounting for 5.95% of whole Taiwan, imports was 58.9 billion U.S. dollars, accounting for 4.04%. Employment, from the average of 4,600 people in 1967 to the average of 66,588 people in 2001. This measure copy by the mainland government in 1978. The success of Taiwan make the mainland began to think of reform. June 1993, the World Bank and the Chinese Communist Reform Commission and Ministry of Finance, held the meeting "International Seminar on China 's macroeconomic management," in Dalian , Premier Zhu Rongji, invited Li guodian through the World Bank.

2. People live in poverty and the difficulties in economic development, leading to reform and opening up.
1959-1961, Because of the error economic policy, China has serious economic difficulties, the most serious is the decline in food production. National food production situation: According to statistics, in 1959-1961, national food production to reduce 61.15 billion kilograms, 1959, the most serious of which, about loss of 37.8 billion kg of grain. In difficult period of three years, national economy has serious difficulties, country and the people suffered major losses: 1. Population: 1959-1961, this is a low point after the founding period. As China 's exploration of socialist construction turns twists, caused serious damage to national economy, people 's living standards decreased, death rate increased. 2. Industry: June 1958, in encouragement by wrong policies of government, whole of China join the steel production, waste much resources for steel, and affected the agricultural production. 3. Agriculture: agricultural production fell sharply, the rate of decline more than 10%. The 1960 grain production dropped to 1951 levels, the cotton production in 1962 fell to 1950 levels, the level of agricultural production decade back about ten years. National development difficult, people live in difficult, in this background, people want economic reform. At that time, the Chinese leader Mr. Deng Xiaoping start paying attention to the world economy model. Here, introduced Mr. Deng Xiaoping Under way. Deng Xiaoping(1904-1997), one of founders of the People 's Republic of China. In 1981-1992, he served as Supreme Commander of the Chinese army, at the same time served as China 's top leaders. He not only created the economic policy reform and opening up, but also created a policy of one country, two systems, in order to take back Hong Kong from Britain . He is one of the greatest leaders in china, and also world-famous generals. In 1997, he died in Beijing.

C. The main elements of reformation and opening
1. The ten points of reformation and opening
Here, I will make a brief introduction of reform and opening up policy. I.Rural household contract responsibility system solve the vast majority of farmers in food and clothing II.Coastal development strategy make the eastern regions get rich first. III.One country, two systems resolved in Hong Kong, Macao 's return and the smooth transition. IV.Pudong development and opening up led the Yangtze River Delta and Yangtze River basin development. V. Information technology and Internet applications so that they had the new arena.to learn, work, exchange. VI.Socialist market economy, the market plays in allocating resources based on role. VII.Western Development changed the backward western. VIII.WTO so that China fully participating in international economic circulation. IX.The scientific development concept, development focus for the future generations. X. Revitalizing the northeast old industrial bases in Northeast renewed economic vitality.

2. Analyze how reformation and opening
Economic reform officially began with the decision of the Third Plenary Session of the Central Committee of the 11th Congress of the Chinese Communist Party in December 1978. For excellent surveys of China’s economic reform, the first important step was the adoption of the responsibility system in agriculture. Collective farming under the Commune system was generally recognized to be inefficient in 1978. Reform of the Commune system occurred initially in 1978 when commune leaders in some regions recognized that they could fulfill their assigned output quotas for delivery to the government procurement department by reorganizing the commune internally, following and improving upon the practices of private farming in the 1950s. In essence, under the responsibility system, each farm household was assigned a piece of land was held responsible for delivering a given quantity of output to the commune to satisfy the latter’s output quota. After fulfilling its output quota, the farm household could keep the remaining output for its own consumption or for sale at the market at market prices. The institution amounted to private farming with the farm household paying a fixed amount of rent for use of the land in the form of an output quota. Observing the success of the locally initiated experiments, the Fourth Plenary Session of the Central Committee of the Eleventh Communist Party Congress officially adopted the responsibility system as national policy in September1979. A second step was to allow private markets and small private enterprises to flourish. Rural markets used to exist in China in the 1950s. Once the farmers were allowed to dispose of their above-quota output, rural markets grew rapidly after 1978. Farmers also extended their productive activities to more profitable products such as ducks and cash crops, using privately owned trucks for transportation. In the meantime private restaurants, repair shops, peddlers, stores and street markets developed in urban areas. In two to three years one witnessed the growth of light industries in both rural and urban areas in the form of small collectives owned by several persons. Traditional handicraft manufacturing in rural areas and small clothing factories in urban areas were examples. The rural collectives later turned out to be an important part of Chinese industry. The third step consisted of reform of state enterprises which progressed in several stages. For small enterprises, the principle of the responsibility system in agriculture was quickly put into practice. The idea was to allow the manager, like the farm household, to reap all the profits after paying a fixed rent to the government. State-owned stores, restaurants, small factories and later hotels were in fact privatized by the responsibility system, where the managers were often selected by auction. The right to operate a business for profit was leased to a manager who was willing to pay the highest. A nominally state-owned enterprise was being operated for profit like a private enterprise. Gradually in the 1980s some managers became entrepreneurs who used their own and borrowed funds to purchases assets to establish their own private enterprises. The forth step in economic reform was to allow more prices to be determined by the market forces of supply and demanded. This was also accomplished in stages, sometimes by the government setting prices closer to market. An example of the former was the increase in procurement prices for agricultural products form an index of 217.4 in 1978to265.5 in 1979 and 301.2in 1981. A fifth step of reform was the decontrol of the supply of consumer goods. As the supply of agricultural products increased rapidly since 1978 and became available in free markets, rationing of food items for urban consumers and rationing of cloth became unnecessary in the mid-1980s. Supplies of durable consumer goods such as watches, bicycles, electric fans, sewing machines, refrigerators, and television sets also increased rapidly in the early 1980s, making government control of their distribution unnecessary. As the sixth step in the reform process, China expanded foreign trade and encouraged foreign investment in an open-door policy. An excellent analysis of foreign trade reform can be found in lardy (1992). Exports were decentralized as were given authority to promote exports. The seventh step of the reform process was to change the government planning process to suit the more market-oriented economy. Central planning through providing output targets and approving investments budgets of state enterprises was being shifted to the regulation of more autonomous and financially independent enterprises through taxation and the control of credits. About Open Cities, the first opened in 1984 were Shanghai, Tianjin and Dalian, 14 cities. Because these cities located close to South Korea and Japan, brings together a large number of industrial facilities in China.

III Planned development
A. The changes brought about reformation and opening up
1. Changes in China 's domestic economy
After Reform and opening up, under the Survey of Chinese Academy of Social Sciences Economic Research Institute: Gini coefficient of income of rural residents from 0.21 in 1978, rose to 0.34 in 1995; income of urban residents from 0.16 in 1978, rose to 0.28 in 1995. Property income of urban residents in 1988 accounted for 0.49% of total personal income rose 1.3% in 1995. According to statistical data, personal savings, interest income, only 600 million yuan in 1978, and in 1995 reached 300 billion yuan. Since the 90s, the rapid urban growth of financial assets, financial assets per household is the end of 7869 yuan from 1990 to the end of 1996, 6 of 14,715 yuan, an increase of 87%.

2. Changes in China 's national economy
In October 1992, some fourteen years after the official beginning of economic reform introduced by the third plenary session of the eleventh central committee of the communist party in 1978, the congress of the communist party was able to adopt a resolution moved by Deng Xiaoping to declare that china’s economy is a socialist market economy. By that time, over 65 percent of china’s national output was produced by profit-seeking economic units . In 1992, real national income increased by 12 percent by official statistics, with most observers projecting a 10 year growth rate averaging 7 to 9 percent . Private enterprises were flourishing china had already become essentially a market economy.

B. Plans concerning the policy of reformation and opening up
When reform and opening up, the chief designer said, letting some people get rich first, and then drive another after some people rich. This is the so-called "The first rich brought the after rich" policy. Rich areas and individuals through a variety of taxes and profits paid to the people stat, through the national financial activities support and help the people live in backward area. There are many rich areas and individuals through various means and measures to help the relatively backward areas and individuals. Rich areas and people can provide space development, opportunities and means for the people of backward areas. For example, the developed area can absorb a large amount of labor in backward areas, The money ,skills and management knowledge of the economic development these workers get, will play an important role of backward areas. When develop of China 's western region, the Government has encouraged businesses and individuals in Eastern China to Western investment and development. Establish a pair of provinces, richer provinces to help poor provinces. These examples can be called Plans concerning the policy of reformation and opening up.

IV Conclusions
A. National and international evaluation of the reformation and opening up
China economists believe, After Reform and opening up, Chinese people led by Communist Party of China, China 's economy has undergone a great change. By 2007, China has become the world 's fourth-largest economy, per capita GDP reached 2,400 U.S. dollars, into the middle-income country. Continue to persist in reform and opening up, we will be able in this mid-century, into the ranks of moderately developed countries. Europe 's media: "China model" the impact on the world, 1. The Chinese model for global governance has brought hope 2. The Chinese model for developing countries is a new model of development 3. The Chinese model as an important source of China 's soft power

VI Recommendations
A. Analysis of report and give my ideas
I personally think that the success of China 's economic reforms, the main reason is that adhere to market-oriented, in 1992 more clearly adhere to a socialist market economy reform. In the early years, especially in the 20th century and early 80 's and 90 's, Is it should adhere to market-oriented reform, is not it should adhere to the socialist market economy reform, the theorists have different views on the controversy. I personally think they insist on market-oriented reforms and the direction of socialist market economic reforms, and in different occasions and different views have been controversial. The article Published in the "reform" in 1990, Phase 2, "a planned commodity economy and the market-oriented reform", which are mainly demonstrated this. The another important factor of success of China 's economic reform was is to "cross the river by feeling the stones", and gradually advancing. In this issue, in 1987 Chinese Academy of Social Sciences, Liu Guoguang, Dai Yuanchen, Chen Dongqi other economists, by Chinese Academy of Social Sciences discussion group name, to the State Council put forward the reform and development should "seek progress" line of thinking, it now appears that stand after the test of history. Fact proved, Reform and opening up is the key choice that determines China 's destiny, Is the development of socialism with Chinese characteristics, the only way to achieve the great rejuvenation of Chinese nation.

References
1. James Laurenceson Joseph C.H. Chai, 2003. Financial reform and economic development in china
2.Harold K. Jacobson and Michel Oksenberg 1990 China’s Participation in the IMF, the World Bank, and GATT
3.Xiaoping Xu China’s Financial system under Transition
4. Development of a market-oriented economy in china ,Originally published in science, vol. 235, 16 January 1987, pp. 295-299.
5. On Kit Tam 1995 Financial Reform in china
6. Baizhu chen J. Kimball Dietrich YiFang 2000 Financial market reform in china
7. Gang Yi 1994 Money Banking and Financial Markets in China

References: 1. James Laurenceson Joseph C.H. Chai, 2003. Financial reform and economic development in china 2.Harold K. Jacobson and Michel Oksenberg 1990 China’s Participation in the IMF, the World Bank, and GATT 3.Xiaoping Xu China’s Financial system under Transition 4. Development of a market-oriented economy in china ,Originally published in science, vol. 235, 16 January 1987, pp. 295-299. 5. On Kit Tam 1995 Financial Reform in china 6. Baizhu chen J. Kimball Dietrich YiFang 2000 Financial market reform in china 7. Gang Yi 1994 Money Banking and Financial Markets in China