Economic history of China (1949–present)

The economic policies of the newly established People's Republic of China under Mao Zedong continued to planned economy with the highest possible economic growth. China was an agricultural country at this time. The gross domestic product grew at an annual rate from 1952 to 1975 more than 5 percent. Later they sat on decentralization. Under Deng Xiaoping's collectivized agriculture was gradually developed. Since 1979 there are special economic zones. With the development of private sector, there was a squad - capitalism, which preferred the families of important functionaries of the Communist Party ( CCP). The poverty of the rural population and the consequent rural exodus in the megacities of China shares with other emerging countries. A rapid expansion of infrastructure is needed to counteract the smog in many cities, which is caused by the coal-fired power plants. Also, water and soil are affected. Large traffic jams in urban areas due to the switch-over from the bike on the car are another challenge. Today China has a significant surplus in the trade balance and high foreign exchange reserves.

After the People's Republic of China was proclaimed in 1949, the countries were primarily interested in the question of how the country has ever wanted to feed its huge population. More than 50 years later, the world is faced with a country that not only feeds its population, which has since more than doubled, but it has also brought the largest export nation in the world. Economic policy under Mao Zedong was marked by the introduction of a planned economy on the Soviet model. A plan to replace the market in the allocation of resources and investment. The aim was to establish a quick industrialization and the highest possible economic growth. The planned economy has been significantly adapted in some areas to the Chinese condition. For one thing, China was not in a position to pay enough planning and administrative powers to implement a planned economy according to strict Soviet model. Instead, measures were taken to decentralization and, where the person in charge at the provincial and farm level has greater freedom to implement the provisions already in the 1950s. Secondly, Mao placed great emphasis on autonomous development. Not only China, but also individual provinces or regions should be able to take care of himself. China's pursuit of self-sufficiency with disabilities on the one hand the economic development, but also prevented unilateral economic orientation for the world market and dependence on the developed industrial powers. In addition, there were 1950 to 1971 an economic embargo by the U.S. against the People's Republic.

The third difference to the Soviet economic model was that Mao in economic development relied on mass campaigns, such as the Great Leap Forward or the Cultural Revolution. However, these two especially politically motivated movements threw the country back by many years, historians now estimate that the Great Leap Forward ( 1959-61 ) up to 30 million people lost their lives: Most starved because too huge Mao's policy crop failures led. The Cultural Revolution (1966-1976) laid in China Education and Science for a decade practically paralyzed: Schools and universities were closed, a well-known saying of the Cultural Revolution is " Better Red than expert": So it was better on the political " right" side stand, than to have certain skills. Unlike the Great Leap highest importance was attached to the Cultural Revolution, however, that the production and the construction of infrastructure continued to run as unimpaired as possible. The workers and peasants were excluded from the Cultural Revolution.

The change under Deng Xiaoping

The economic legacy of Mao was ambivalent: on the one hand, the gross domestic product grew 1952-1975 by an annual average of 6.7 percent, the opportunities for training (especially for women), medical care and social security reached a level that it before in the history of the country had never existed and the share of industry in the economic power was increased from about 20 percent in 1952 to 45 percent in 1975. These successes, however, were based largely on the mobilization of additional resources, the investments were increasingly inefficient and relatively high economic growth could only be achieved at a very low proportion in higher consumption of the population. In March 1973, after the diagnosis of cancer in Zhou Enlai, Mao brought the economically pragmatic politician Deng Xiaoping returned to power, even though he had previously fallen out of favor. In May 1976, Deng Mao but was overthrown again. Mao accused Deng, preferable economic success of the class struggle. Deng lost all offices and was placed under house arrest. Mao appointed Hua Guofeng as his successor.

The death of Mao in September 1976 provided the opportunity for reform. It is unlikely that a continuation of the economic policy, as it was made under Mao, would have been long possible. In September 1977, Deng was due to the influence of pragmatic officials, all withdrawn from it in 1976, back offices and succeeded, the new party chairman Hua Guofeng to disempower gradually. From 1979, Deng was in fact the new party leader. Deng subjugated China is not an economic shock therapy as happened in Eastern Europe after 1990, but he walked cautiously groping and experimenting before. Promotion campaigns can hope for a modern consumer society was stimulated in the population of the country.

Deng Xiaoping took over as most pressing problem the collectivization of agriculture gradually decline. The farmers had from then on ownership rights to their products, land ownership, however, was still not possible. However, the peasants were allowed to sell part of the harvest, they were able to bring about the state plan requirements, in free markets and free prices.

Special economic zones in the provinces of Guangdong, Fujian and Hainan created with special economic rights and its own legislative competence - From 1979, under the slogan " One Country Two Systems ". The zones should be independent from the rest of China are experimenting with new forms of economy and liberal economic policies and attract foreign capital and expertise. For the first special economic zones, particularly backward and insignificant areas were chosen deliberately. If the experiments succeed, they could be extended to the whole of China, would go wrong, then the damage would be limited and far away from Beijing. With the success of SEZs economic concepts of special economic zones were extended to other areas. In 1984 received 14 coastal cities, including Shanghai, as " open cities " similar, but less far-reaching privileges. After addition of further economic opening zones was established in 1985 to an international open economy strip on the coast. In the following years, a variety of "special economic zones " with different forms of regulation was, at first mainly on the coast, and later inland.

From 1984, the procedure of agriculture, products which have been produced over the plan specification, it has been release for the open market, transferred to industry. The authorities concluded contracts with the state-owned enterprises and reduced their interference in their daily business. In this way, there was strong growth, but it also created a two-tier price system in which parallel plan and market prices existed, which led to the abuse on those which have actually to low plan prices have to be sold, showed up for the free markets.

In October 1987, adopted the " three -step " strategy for the development of China at the 13th Congress of the CPC. The specific objectives were: As a first step, from 1981 to 1990, the gross domestic product should double and the food and clothing problem of the population should be eliminated on the whole. As a second step, the GDP in 1991 should double by the year 2000 again, and the population should be able to lead a life of modest prosperity. The third step is to reach the state of emerging markets by 2050 China.

To eliminate the problem with the two-track price system between plan and market prices, the prices was begun in 1987, to leave it entirely. However, this led to massive price increases, even when the staple foods. Uncertainty about the further development led to panic buying that drove inflation continues. According to official figures, consumer prices rose in 1987 by 20 percent, some foods were more expensive by almost half. The unrest and the resistance of the people because of the price increases resulted in Beijing 1989 Tiananmen Square Massacre and slowed down the economic reforms for years. Stabilization was given precedence over the liberalization. Only in 1992, the economic reforms were resumed on a larger scale and Deng Xiaoping took his famous trip through southern China, where he propagated his theories of the " combination of economic planning and market economy" and of the " socialist market economy". The wait-and reform-oriented class registered exactly Deng's call for " more courage to experiment with bravado and Abenteurermut " and his call for us to consider present opportunity but the forelock. Also assured Deng, after years of command economy that the policy authorizes trials, and that this was much better than any compulsion. At the Fourteenth Party Congress in the autumn of 1992 the intention to build a socialist market economy, defined as a policy goal. Since then, a private sector in the cities that barely existed until 1992 developed.

A focal point for reversing the economy towards the market economy was set in the financial sector. Banks should only lend even after creditworthiness and not according to political requirements. In this way, should intervention of the state administration in the company, then yes, the giving of the lending banks were controlled to be made redundant.

The losses from state enterprises grew in the 90s and it was decided that the state should withdraw from the majority of state-owned enterprises. Companies without strategic importance could be privatized or closed. Through these new policies about 20 million people sat the staff always overstaffed state enterprises freely in the 90s. This was the state with completely new problems, because so far the companies were responsible for their employees and unemployment was not foreseen in the previous Chinese planned economy. A part of this unemployment was again mediated by a re-employment program of the government a workplace.

In 2001, the year of China's accession to the World Trade Organization ( WTO), was about half of all workers employed in the cities in the private sector. Accession to the WTO was done through a around a thousand pages long contract in which it was established, in which steps and in what time frame China had to open its market to foreign companies. In return, committed the other states to open their markets for Chinese goods on. China's accession to the WTO was economically a success. Industrial production then the steel production increased annually by about 15 percent to about 20 percent annually.

Since the beginning of the new century, but especially after the inauguration of the new party chief Hu Jintao, the economic development of the hitherto rather neglected rural central China got high priority. The transformation of the Chinese economy in the 90s, from a planned economy to a market economy, with all the job losses, the rural population had to co-finance artificially low food prices. After the economic success of China's rural population of China now should be supported by the urban economy. For example, the agricultural tax on farmers in 2006 was abolished, most farmers currently pay no taxes, and the rural population will begin the construction of the country's infrastructure, the new earning opportunities manages to benefit. But despite the improvements, the situation is unsatisfactory. A member of the new urban middle class deserves a multiple of what deserves a farmer.

Expansion of economic structure on the whole of China

Currently, the industrial development of the whole of China is extended. The government covers the land with new roads, railways, airports and other necessary infrastructure such as water and electricity supply, energy and telecommunications connections. Currently, millions of cities in China in the Chinese economy, and thus, in a moderately integrated into the world economy and equipped with the necessary infrastructure. Next, the cities with more than 200,000 inhabitants are then scheduled. Are then finished in this way in the cities, comparable invited with the principle of special economic zones, private investors from China and from abroad.

Under this structure emerged alone between 2001 and 2005 over 24,000 new highway kilometers. For China's highway network grew from 7,000 km in 1998 to 53,000 km in 2008. 2020, the Chinese highway system is again more than double. Also, the rail network will be expanded. From 2006 to 2011 17,000 route miles are added to the existing network. This represents almost half of the entire German rail network.

China's infrastructure and economy is growing rapidly, but their downside, the pollution of the environment, air and water pollution also. The major Chinese cities are among the cities with the worst air pollution worldwide. Meanwhile, the thinking of the Chinese government has changed. Environmental degradation and pollution are classified by the government as a major problem in China. Therefore, China provides almost 40 percent of its financial crisis stimulus package of 2009 and 2010 in support of a greener economy.

Despite all the economic successes of the last few decades the diet of the population remains a continuing important role of the government. The diet of the population is considered to be not secured due to the small compared to the large population of arable land. Liu Dongzhu, staff member of the Chinese National Bureau of grain reserves, explains that it was almost a miracle to be able to feed 22 percent of the world's population with only seven percent of global agricultural land: "The Chinese government aims to ensure the grain supply of the population to independently can. In recent years, the annual income could cover the cereal consumption substantially. Meanwhile, about 95 percent of the required grain in China are self- generated. "

Although the time under Mao is now regarded as a now overcome past in China, was published in 1999 in the People's Republic, a new series of banknotes: Where previously only the 100 - yuan note was the portrait of Mao, his face now found on all new bills.

Foreign companies in China

It's allowed foreign companies to invest in China and foreign trade was liberalized. Institutional reforms to government investment or the tax system were necessary. However, was the political framework at first nothing changed, so the economic system was officially referred to as state socialism or " socialist economy with Chinese characteristics ". In 1995, the economy has a stable high growth, the previously isolated country was the seventh largest participants in international trade, and the quality of life grew rapidly, the consumption expenditure of households initially led to price increases of more than 7 percent annually. In the years 2000 to 2005, the inflation rate was back in the range of 0 to 2 percent. As an example, VW posted more than 1.9 million new cars sold in China in 2010. Thus 37 percent more than the year 2009 were sold.

In recent years, many companies have moved their production to China. Meanwhile, however, dwindle, the cost advantages of Chinese sites, so by contrast winning the shift back to manufacturing levels referred to in Europe or in the United States in importance.

Squad capitalism

The current phase is the face of increasing weight of the private sector in China by foreign business leaders and politicians often referred to as China's transition from a planned to a market economy. China experts such as the German political scientist Sebastian Heilmann point out, however, that in China no means ruled the free market economy, but rather speak of an authoritarian "cadres capitalism": The most economically successful are usually entrepreneurs with good relations with those in power, from whose ranks they also often emerge: "Of the 3220 Chinese with a personal fortune of at least 100 million yuan in 2932 are children of the higher cadres. In the five sectors finance, foreign trade, land development, large-scale constructions and hold securities children of the higher cadres 85 percent to 90 percent of key positions. "

Foreign trade

The foreign trade develops stormy, while the trade surplus of China has been a constant bone of contention in international trade. In the second quarter of 2009, the foreign exchange reserves of China were the first time over two trillion U.S. dollars, making China, followed by Japan ( 970 billion), Russia ($ 305.6 billion ) and Taiwan ( $ 268 billion ), the largest reserves of world possesses. By comparison, the entire euro zone has only $ 191.6 billion.

On January 1, 2010, a free trade area between China and ASEAN was established. It is the third largest in the world after the EU and NAFTA.

In recent years, work is under way, the dependence of the economy of the People's Republic of reducing the foreign trade. Thus, the dependence of the Chinese economy has been reduced on foreign trade in 2012 by 3.1 percentage points to 47 percent. In 2006, the dependency of exports was at a record level of 67 percent. Since then, the numbers are declining. Foreign trade while still plays a significant role, but GDP growth is increasingly driven by domestic demand.

Development of China's foreign trade

Communism as a national objective

Despite the government-sponsored market economy system, the CCP has its goal to build communism, not abandoned. The current market-based system is considered in accordance with the party statutes as a precursor to communism. Today's Chinese idea of ​​communism, however, is fundamentally different from the idea of ​​Karl Marx 150 years ago. According to official Chinese figures provided, the current Chinese Communist Party led by Mao Zedong 's ideas and the theories of Deng Xiaoping and the economic objective of Deng was the establishment of a "socialist market economy". On 30 June 1984, Deng described the situation as follows: "What is socialism and what is Marxism? In the past, that was not really clear. Marxism requires in particular impact on the development of the productive forces. We said that the first step toward socialism is to communism and that will be in an advanced stage of transition that everyone can not live according to his abilities but according to his needs, complete. However, this requires highly developed productive forces and an overwhelming abundance of material wealth. Therefore, it is to increase the productive forces of the socialist stage, the fundamental task. The superiority of the socialist system should be reflected by the fact that faster and better develop the productive forces under him than under capitalism. If they evolve, then the material as well as the cultural life of the population will steadily improve. One of our error after the founding of the People's Republic was that we put too little attention to the development of the productive forces. Socialism means the elimination of poverty. Mass poverty is not socialism, still less communism. "

Parallels to Lenin's NEP

The Swiss jurist and sinologist Harro von Senger documented in 1988 that ten years earlier statements by Vladimir Ilyich Lenin to its frühsowjetischem economic concept NEP ( New Economic Policy ) was quoted in the Chinese press. This is " socialist modernization construction " done to justify the turn of the "class struggle" for ( today ). On parallels between NEP and the current Chinese economic policy made ​​in 2010, two newspaper articles of the German agricultural scientist Theodor Bergmann attention.

Lenin's NEP was to private companies, profit, foreign capital and market elements. The German political scientist Georg Fülberth indicates that NEP could even be accompanied by " capitalist relations of exploitation ". All this, however, was only intended as a transitional phase in the construction of socialism. Land, the central control of the economy and all the important parts of the industry - the " commanding heights of the economy" - should be in government hands. A significant difference between the Chinese development and NEP is located in the time period. The NEP lasted from 1921 to 1927, six years, China's policy of opening lasts from 1979 until today and there is no end in sight.