China Political Model

China is a topic that was brought up a lot during the 2012 election campaign. So I decided this was a good topic to do my research on. We will visit what capitalism is, privatization, and Chinas current state. Research shows the China has the potential to continue to be one of the worlds most successful economies.

China has a population of 1.3 billion. China is the world’s second largest country, which includes 22 provinces. China also has the world’s largest Army.There are 18 dialects of the Chinese language, 70% of the population speak Mandarin. The major religion in China is Buddhism, other forms include Taoism, and Chinese folk.The Government structure in China is communist. (The World Bank)

In communism the government owns all major factors of production. In China, “The current constitution was created in 1982 and been continually revised since. The constitution includes many civil rights: free speech, press, worship, the right to trial, and the right to own private property. However, in practice this constitution has widely not been followed. There has been very little done to ensure that new laws instituted follow the constitution. The judicial system does not provide any particular method for review of new laws.” ( )

China is slowly becoming more capitalistic. Capitalism is an economic system that is based on the privatization of the means of production and the production of goods or services for profit.Means of production and distribution are mostly privately owned.

Capitalism encourages entrepreneurship and allows the possibility of private profits. Privatization is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operates for a profit or to a non-profit organization. The term can also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management. (The World Bank)

“Entrepreneurship is taking off in China and with little input from the government, reports a new Cornell study. It is the capitalism of the private sector — not government — that is powering China’s huge economy.” (Lang). Although China remains a communist state, capitalism is on the rise and making China a rapidly developing country with many possibilities. China has been growing at an average of 10% a year for the last 30 years.

China has become the most reliable source of growth globally. “The surprising finding is how little government actually is needed to enable entrepreneurial activities,” “Where markets rule, profit opportunities naturally draw in new entrepreneurs, no matter how adverse the institutional environment may be initially. Once a critical mass of private firms operates in specific niches, social norms and networks fulfill many of the functions that textbook economics assigns to government and legal institutions.” (Lang)

In China, state managed enterprises control the Chinese economy. State dominates the Nation’s natural resources, the nations energy, the telecommunications industry, and infrastructure industry. There are some changes in China that need to take place. There needs to be restriction of the roles of state-owned enterprises. China also needs to break up monopolies. They need to diversify ownership and lower entry barriers to private firms. China also needs to be more original. They rely heavily on copying foreign technology. They need to produce its own breakthrough to avoid an economic slowdown. Of course there are many oppositions to change.

China’s state-owned companies account for about 45% of the country’s economy and have an immense influence. The Chinese communist party isn’t interested in free market enterprise, and wants to control strategic industries such as finance, energy, and power.

The World Bank provides a Development Strategy by 2030.They Include:Structural reforms for a market-based economy with sound foundations. Encourage an open innovation system.Seize the opportunity of green development.Increase equality of opportunity and provide basic social protection. Strengthen the fiscal system.Seek mutually beneficial relations with the world.(World Bank 1-468)

China needs structural reforms for a market-based economy with sound foundations. They need to redefine the role of government by reforming and restructuring state enterprises and banks. They need to develop the private sector.China should also promote competition. China also needs to deepen reforms in the land, labor, and financial markets.

China needs to encourage Chinese firms to engage in product and process innovation through research and development. By 2030, China needs to participate in global research and development networks. China also needs to build stronger legal institutions that effectively enforce intellectual property rights.

Chinas green development is almost none existent. They need to Seize the opportunity of green development by introducing a mix of market incentives. They need to put regulations in place. Public investments for green technology are needed. An industrial policy needs to be put in place.

China needs to increase equality of opportunity and provide basic social protection. China can do this by facilitating equal access to jobs, finance, quality social services, and portable social security. China can also do this by mobilizing all sections of society to share responsibility for financing, delivering, and monitoring social services.

In order to strengthen the fiscal system, China needs to mobilize additional revenues and ensure local governments have adequate financing to meet heavy and rising expenditure responsibilities. They need to reallocate spending tomeet social and environmental challenges. The government financial management also needs improvement.

China needs to build relations that are beneficial to both parties. By doing this they can become a pro-active stakeholder in the global economy. They can also shape the global governance agenda. This will allow them to integrate with the global financial system to support an open global trading system.

There are many benefits of implementing Development Strategy in China. According to the report China 2030 produce by The World Bank, if China seizes its opportunities, meets its challenges, and manages its risks, by 2030 it will become: A high income economy with harmonious social, environmental, and global relations. They will aslo become an innovative society driven by creativity and the power of ideas.

Works Cited

Davis, Bob. “New Push for Reform in China.” Wall Street Journal [New York] 23 02 2012, A1,A12. Print. World Bank, The. “China 2030: Building a Modern, Harmonious, and Creative High-Income Society.” China 2030. (2012): 1-468. Print. Lang, Susan. “China’s free enterprise economy succeeds via bottom-up development.” N.p., 16 2012. Web. .