China’s Economic Development

1. Introduction

The economic development of China is very important case in a global economy and international politics scale. Global economy nowadays is highly interdependent and rise of one country and (economical) fall of other countries are also important issues for a further “development” of humanity. In the following paper I will discuss about definition of development supported by ideas of Chris Bramall from his book Chinese Economic Development, the rise of China economically stressing on the last three decades and giving a summarized view of Chinese economics before and after the start of People's Republic of China (PRC), and the influence of Chinese economic development in the world.

2. Defining Development

In his book, Chris Bramall, shows that development indicators can be divided into two approaches of measuring well being of countries, first is opulence approach and second is capability approach. The opulence approach developed and speeded up after World War II to make a “systematic international comparisons” and focused on GDP (GNI) per capita, whereas capability approach focus lies on trends such as education and morality which is developed and associated based on works of AmartyaSen, MahubulHaq and United Nations Development Programme (UNDP) (cite book).

These two approaches can be considered as philosophical where ‘opulence’ approach is concerned about materialistic data and where ‘capability’ approach is mostly based on idea that measurement of happiness of people have to be based on the measurement of health and education. Also other measuring methods were discussed in his book such as poverty and income distribution with the examples on the measuring methods like “Gini coefficient”, and the comparison method was risen up with the discussion on weaknesses and strengths of it such as; international comparison method country with country, or historical where developments is compared to the previous results, and also other one which is comparison of actual performance with potential, where his view is more towards to the third method, “comparing actual performance against economic potential”(cite). In looking more to distribution data Bramall (2009)

Emphasizes that more people tend to look at this data as a good indicator of development whereas for him this kind of data is not enough to track the development of country, and his opinion on opulence approach is that it is “far too narrow a proxy for well-being,” agreeing with Sen’s arguments, but he also criticizes capability approach that “indicator like education is more of a means to an ends than an end in itself”, and where his ideas are more towards to life expectancy measurements which he describes as “best … until OECD-type levels of life expectancy have been attained.”

There are a lot of developmental records covering a lot of various aspects of particular countries and they can be obtained from World Bank database. It is not easy to measure development of a particular country especially country as China, but to understand the route or way of a particular countries development, history of this country should be understood and applied into analysis of a current condition after which speculations on a further economic future can be made. And in this case the article of a Stephen C.

Thomas is very useful due to short and clear content from where reader can obtain a lot of useful information and also the attention of a paper which is covering the development of China starting from 1800th until present days. These three sources are main information channels which were used in this report, most of the graphs were made with the help of excel based on data obtained from World Bank database, which was mentioned before.

3. From 1800th to 1950th

According to Thomas, (2006) developmental records on China starting from 1800th were stagnated until 1860th and after this years Chinese economy “grew at less than 1 percent annually until 1949.”

Further articulating on this point he proposes that China was under partial Western colonialism at that ages, and through history it is also observable with the examples of two “Opium Wars” where first one has occurred at 1839-1842 and second was at 1856-1860, for him the main reason why this wars happened are due to unequal trade operations which were made by British people, also he points out that actually “British merchant arguments for war were legally weak”, and where after success on two wars they were using Darwinist approach claiming that “if people were militarily weak, they deserved to be dominated by a militarily more powerful Western country.”

Other example which is needed to be highlighted from that paper is that at the times of First World War Chinese economy have made an acceleration in industrialization when its sovereignty was free from Western colonizers where they were busy by war in Europe, “Chinese historian Mary Wright and others have referred to this period as a "golden age" of Chinese industrialization” (Thomas S.C., 2006). Other examples also can be given and their roles are also one of the crucial in the global scale, first can be given the Sino-Japanese War 1894-95 and Boxer Rebellion 1898-1901 where in both cases China has lost. In a global context after defeat in Sino-Japanese War china has lost its courage on the eyes of other countries but it was not as weak at that times, the Boxers Rebellion was suppressed by alliance of several nations military forces.

These examples or events are showing how Chinese people were trying to regain their sovereignty from Western peoples colonial rule, mostly because of unequal trade practices and also other factors. In times from 1860 to 1949 Thomas (2006) describes that Chinese government lost its control or ‘sovereignty’ in several aspects such as “unequal treaty stipulation that prevented China from holding foreign businesses legally accountable” and “foreigners took control of the administration of China's foreign trade tariff collections, and then China's major domestic trade tax, the "likin",” which shows that mostly Chinese people were unable to control their own growth whereas main leverages of economy was in hands of foreigners.

Historical evidences are showing that at that times China was under influence of West, “introduction to global market” and western technological know-how, based on this kind of an information speculative assumption can be made as most of the part of development which occurred after 1949 is due to this technologies of West which were left.

4. From 1950th to 1978

After “gaining” sovereignty in 1949 ‘New’ Chinese government have gained control in a lot of spheres such as “sectors of China's modern economy, including railways, shipping companies, the energy sector, the communications sector, agriculture processing, light and heavy industry, and the financial sector” also they have successfully managed to get rid of opium addiction and give a better standards of living for people. In my own opinion the stage which has occurred from 1949 until 1978 in Chinese history was the age of “experimentations” in a variety fields of this country.

Due to rule of Mao Zedong at this period and his influence on people of his country Chinese history accounts on a few important events during this times. First is of course the adoption of Soviet style of management of economics with five year plans, other events are the “Great Leap Forward” during 1958-60 which caused famine and losses around 30 million people, and “the social destruction, chaos, and persecution of intellectuals and party members during the Cultural Revolution of 1966-76” (Thomas, 2006.)

And also both sources, Thomas (2006) and Bramall (2009), are agree on that in this time frame the economic growth of China was 4 per cent per capita. And one of other main and significant events have played a crucial role in the developmental way of China, it is the occurred tensions between Soviet Union and China in the beginning of 1960th after this ‘split’ the government officials of both sides were less willing to cooperate with each other and other events like border disputes are also demonstrating the relationship of this two Communism lead countries, where they have started to look at the side of the United States with the example of Nixon’s visit to China at 1972.

5. From 1978 to 2010

1978 is considered as very important year in Chinese history due to reforms which were initiated after the death of Mao. Deng Xiaoping came after Mao and have opened Chinese markets to the world by imposing new rules and regulations in managing economy of a country, but in a few sectors they were still having unquestioned control, they are “most major Chinese industrial and economic sectors, including transportation, communication, energy, mining, manufacturing, and financial services” (Thomas, 2006). For Stephen C.

Thomas the government of China is still have most of the control as it can be understood from his work, but there is another point which is contradicting to the Thomas’ point in the book, China’s Three Decades of Economic Reforms, which is edited by Xiaohui Liu and Wei Zhang. In describing last thirty years of China’s growth they have divided it into four stages. First period/stage of reforms (1978-1984) mainly focused on agricultural sector, which mostly shows the transition from collective organized production to household responsible based production:

“At the end of 1978, facing serious drought, 18 farmers in the village signed a secret agreement, a responsibility contract, to divide communally owned farmland into individual pieces; to change the collectively organized system of production to a household-level unit of production. In less than a year, the villagers had increased output and not only met their own needs, but also had provided a surplus for sale to the market” (Liu & Zhang, 2010).

In fact this example shows that the role of government was not as active in agriculture sector, and further in discussion Liu and Zhang (2010), outline that when government have been informed about this kind of situation they supported the initiatives of farmers, same ideas were discussed in the book of Bramall. Second stage of reforms happened from 1984 to 1989 stressing on the “efforts to reform state-owned enterprise and the price system”. But transitions/reforms were having some challenges in the faces of “conservative leaders” and “bureaucrats”, but eventually new governments’ officials managed to rule out these two issues without any serious losses or damages (Liu & Zhang, 2010).

After experiencing previous reforms results Chinese government have enforced a third reforms stage which has started from 1992 until 2001 where reforms can be considered as “multidimensional, from further reforming ill-fated state owned enterprises to encouraging the development of private sectors and foreign-invested sectors; from rescuing the state owned banking system troubled by non-performing loans to constructing a modern capital-market system; from devaluating RMB and relaxing foreign exchange control to establishing a modern fiscal system that defined central-local relationship more effectively” (Liu & Zhang, 2010). And the last stage is started from 2001 after China joined World Trade Organisation (WTO).

Where Chinese government have implemented more than one hundred economic laws which are fulfilling requirements of WTO and also their main reformational concern was in that in fourth stage the “main approach changed from piecemeal reforms to more systematic reform led by the establishment and improvement of the economic legal framework and corporate governance” (Liu & Zhang, 2010).

So there is a two different views of this economic development where one scholar is sure that government haven’t ‘un-tighten any belt’ on people which is proposed by Thomas (2006), and other other scholars position which claims that the last three decades Chinese government have given more control to people which is supported by Liu and Zhang (2010), but generally overall result is shown that for this last three decades that China has experienced a growth which “has grown at an average annual rate of 8-10 percent.”

Also most of the analysts believe that China will be able to continue to grow at same speed then nearly until 2020 (Thomas, 2006), and by the predictions of Goldman Sachs, taken from the Martin Jaques speech, which claims that at year 2025 China’s economy will be same as American and at 2050 it will be twice large.

6. Graphs

7. References

http://forumonpublicpolicy.com/archive07/thomas.pdf

http://www.economist.com/blogs/dailychart/2010/11/human_development_index (?)

http://www.ted.com/talks/martin_jacques_understanding_the_rise_of_china.html