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Analysis of China Unbalanced Case

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Analysis of China Unbalanced Case
To get rich is glorious
The strategy of export led growth has begun in 1978.
Town and Village enterprises (TVEs) – socialist organizations owned by local and provincial authorities sprung up everywhere, financed by farmers’ surplus earnings.
Special economic zones (SEZs) – Equipped with cheap labour, adequate power and no taxes are mainly targeted for attracting foreign direct investment. Companies in these special areas contribute 54% of total china’s exports.
Fixing State owned enterprises (SOP) – between 1997 to 2007, share of SOEs in employment in domestic companies declined from 81% to 46%.
This strategy proved to be successful. Nominal GDP growth averaged about 18% and real economy grew at the rate of 9%.

Entry into the world trade organization
China failed to gain WTO membership under Deng Xiapong and had continued to seek “most favoured nation” status from US throughout the late 1990s.China finally gained WTO membership in December 2001.
The terms china agreed to could be classified into three realms – * Reforms facilitating foreign enterprises
For foreign invest firms that sold goods in China, the most significant restrictions were those limiting distribution – whole selling, retailing, and franchising. Upon promise of china to give rights to foreign companies, Telecommunications and insurance opened first followed by banks. * Reforms promoting free trade
China lowered tariffs significantly from 31% in 1997 to 14% in 2005. Tariffs remained significant in apparel and automobiles. China promised to stop subsidizing exports and domestic industries. China committed to treat imported goods with domestic goods. But implementation of these reforms were frustratingly slow as china was loath to stop programs to aid its ‘pillar industries’ such as steel, cement, petrochemicals, automobiles and machineries. * Systematic reforms aimed at improving transparency and predictability of China’s laws.
China agreed to change country’s legal

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