Transcript Economic Development in China

Economic Development in China
Koichi Fujita
CSEAS, Kyoto University
Japan
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Brief History of Modern China (1)
• Opium War (1840-42)
British imported a lot of commodities (tea, china, silk etc.) from China
(Qin Dynasty), but had no major export items, resulting in a large trade
deficit. In order to reduce the outflow of silver from British to China,
British produced opium in India and tried to export it to China, although
China prohibited the import of opium in 1796. A lot of smuggled opium
flowed into China, which damaged the health of people, and finally silver
also flowed out. In 1839, Qin Dynasty strongly prohibited the import of
opium and after that the war between British and Qin Dynasty occurred. In
1842, the war finished with the victory of British, which got a lo of money
and Hong Kong.
• Sinhai Revolution (Fall of Qing Dynasty)
The revolution in 1911 was motivated by anger at corruption in the
Qing government, frustration with the government's inability to restrain the
interventions of foreign powers.
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Brief History of Modern China (2)
• Republic of China
In 1913, China announced the first parliamentary elections according to
the Provisional constitution. The Kuomintang had the most seats, and Song
Jiaoren was designated as the prime minister . But Song was assassinated in
Shanghai on 20 March 1913. Yuan Shikai was believed to be behind the
assassination. Sun Yat-sen launched a Second Revolution in July 1913,
attacking Yuan with armed forces; but Sun Yat-sen was defeated by Yuan.
Yuan Shikai later attempted to restore the monarchy, but failed. After
Yuan's death, China entered the Warlord Era until 1928.
• Invasion of Japan to Manchuria and Sino-Japanese War
Japan invaded Manchuria of China in 1931 and occupied it.
The Second Sino-Japanese War (1937-1945) was a military conflict
fought between the China and the Empire of Japan. China fought Japan
with some economic help from Germany, the Soviet Union and the US.
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Brief History of Modern China (3)
• After the Japan’s defeat in the World War II in 1945
Civil war between Kuomintang vs. China Communist Party (CCP)
(Chiang Kai-shek) (Mao Zedong)
CCP was established in 1921
Kuomintang was defeated and fled to Taiwan
• Establishment of People’s Republic of China in October 1949
Moderate reform period (but with land reform until 1952
In Sept. 1952, Mao suddenly declared radical movement to communism.
First Five-Year Plan (1953-)
Confrontation with the Soviet Union since the mid-1950s
Second Five-Year Plan (1958-): ‘Great Leap Forward’
Collectivization of agriculture (People’s Commune)
Promotion of iron production and other unscientific policies
From mass starvation
death of 20-50 million peasants
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Brief History of Modern China (4)
• Mao lost his position once during the first half of the 1960s
• Cultural Revolution (1966-76)
Believing that certain liberal bourgeois elements of society continued to
threaten the socialist framework, groups of young people known as the Red
Guards struggled against authorities at all levels of society. Chaos reigned
in many parts of the country, and millions were persecuted.
Schools were closed and the young intellectuals living in cities were
ordered to the countryside to be ‘re-educated’ by the peasants, where they
performed hard manual labor and other works.
The Revolution led to the destruction of much of China's traditional
cultural heritage and the imprisonment of a huge number of citizens, as
well as creating general economic and social chaos in the country.
• Diplomatic Relations with Western Countries such as USA and
Japan in 1972
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Brief History of Modern China (5)
• Death of Mao in 1976
• Rise of Deng Xiaopin
During the Cultural revolution Deng fell out of favor and was forced to
retire from all his offices. He was sent to a tractor factory in rural Jiangxi
province to work as a regular worker. He was purged nationally, but to a lesser
scale than Liu Shaoqi.
Deng gradually emerged as the de-facto leader of China in the few years
following Mao's death in1976. He launched the ‘Bejing Spring’ which
allowed open criticism in 1977.
• Economic Reforms since 1978
Four Modernization: agriculture, industry, science and technology, military
Towards a socialist market economy
Bottom-up approach ⇔ Top-down approach by Mikhail Gorbachev
(Perestroika)
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Brief History of Modern China (6)
• Agrarian Reforms
Dissolution of large communes and introduction of household responsibility
system (Equal distribution of farmland to peasants)
Raise of agricultural product prices
Rapid agricultural development
• Rural Industrialization (since the mid-1980s)
Local municipalities and provinces were allowed to invest in industries that
they considered most profitable, which encouraged investment in light
manufacturing.
The rural industries grew gradually to export industries.
• Rise of Private Manufacturing Sectors in Urban Areas since the
1990s
Assisted by FDI
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Brief History of Modern China (7)
• Tiananmen Square Massacre in 1989 and the after
The Tiananmen Square protests of 1989 culminating in the Tiananmen
Square Massacre (referred to in Chinese as the June Fourth Incident) were
a series of demonstrations in and near Tiananmen Square in China between
15 April and 4 June 1989. Many socialist government collapsed during the
same year.
Due to the protest, Deng's power significantly weakened and there was
a growing formalist faction opposed to Deng's reforms within the Party. To
reassert his economic agenda, in the spring of 1992, Deng made his famous
southern tour of China, and used his travels as a method of reasserting his
economic policy after his retirement from office.
On his tour, Deng made various speeches and generated large local
support for his reformist platform. He stressed the importance of economic
construction in China, and criticized those who were against further
economic and openness reforms. Deng's southern tour aided his reformist
allies' climb to the apex of national power, and permanently changed
China's direction toward economic
development.
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Characteristics of Economic Development in China
• High Agricultural Productivity Base
• High Human Capital Base
• Egalitarian Income Distribution within Rural/Urban Areas
• After the Economic Reforms since 1978
From rural (agricultural) reforms to urban reforms
In rural areas, from agricultural development to non-agricultural
development since the mid-1980s
Gradualism in urban reforms
• FDI-led Economic Development since the 1990s
Manufacturing factories of the world
Expansion of economic disparity between rural/urban and among regions
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Agricultural Development in China:
Rice Production and Yield
8.0
250.0
7.0
200.0
Indonesia
6.0
Philippines
Thailand
5.0
150.0
Vietnam
Bangladesh
4.0
India
100.0
Sri Lanka
3.0
China
Korea
2.0
Japan
50.0
India
1.0
China
0.0
0.0
1960
1970
1980
1990
2000
2007
1960
1970
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1980
1990
2000
2007
Education in China
Net Enrolment Ratio of Primary Schools
100
90
80
Promotion Rate from Primary Schools to
Junior Secondary Schools
70
60
50
Promotion Rate from Junior Secondary
Schools to Senior Secondary Schools
40
30
Promotion Rate from Senior Secondary
Schools to Higher Education
20
10
0
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
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-5
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2007
2006
2005
2004
2003
2002
15
2001
20
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
GDP Growth Rates in China
25
GDP
Primary
Secondary
Tertiary
10
5
0
GDP Share in China
60.0
50.0
40.0
30.0
20.0
Primary
10.0
Secondary
Tertiary
0.0
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FDI-led High Economic Growth in China
Table 2 Flow of FDI in Major Asian Countries
FDI（Million US$) GDP Ratio
Japan
3,214
0.07
South Korea
4,339
0.49
China
79,127
2.97
Philippines
1,132
0.97
Indonesia
5,260
1.44
Vietnam
1,954
3.21
Cambodia
379
5.27
Laos
28
0.82
Thailand
4,527
2.19
Malaysia
3,966
2.66
Bangladesh
802
1.29
Nepal
2
0.02
India
6,598
0.73
Sri Lanka
272
1.01
Pakistan
2,183
1.69
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Deepening Trade Dependency in China
Table 1 Trade Dependency Ratio of Major Asian Countries
1984
1995
2006
Japan
24.2
15.2
28.2
South Korea
71.9
57.1
71.5
China
18.1
39.8
66.0
Philippines
35.8
84.7
61.8
Indonesia
44.4
43.6
50.0
Vietnam
60.4
138.0
Cambodia
120.5
Laos
53.1
60.8
Thailand
42.7
76.2
125.7
Malaysia
104.1
177.9
195.7
Bangladesh
24.2
33.1
45.4
Nepal
23.9
40.7
35.5
India
15.1
20.1
33.4
Sri Lanka
60.8
69.6
63.4
Pakistan
30.5
32.1
36.3
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1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Ratio of Urban/Rural Household Expenditure
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
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