China Economy Overview Economic Overview The Chinese economy experienced astonishing growth in the last few decades that catapulted the country to become the world's second largest economy. China weathered the global economic crisis better than most other countries. The massive stimulus program fueled economic growth mostly through massive investment projects, which triggered concerns that the country could have been building up asset bubbles, overinvestment and excess capacity in some industries. The global downturn and the subsequent slowdown in demand did, however, severely affect the external sector and the current account surplus has continuously diminished since the financial crisis.
In economic terms these objectives meant industrializationimprovement of living standardsnarrowing of income differencesand production of modern military equipment. As the years passed, the leadership continued to subscribe to these goals. But the economic policies formulated to achieve them were dramatically altered on several occasions in response to major changes in the economy, internal politics, and international political and economic developments.
An important distinction emerged between leaders who felt that the socialist goals of income equalization and heightened political consciousness should take priority over material progress and those who believed that industrialization and general economic modernization were prerequisites for the attainment of a successful socialist order.
Among the prominent leaders who considered politics the prime consideration were Mao ZedongLin Biaoand the members of the Gang of Four.
Leaders who more often stressed practical economic considerations included Liu ShaoqiZhou Enlaiand Deng Xiaoping. For the most part, important policy shifts reflected the alternating emphasis on political and economic goals and were accompanied by major changes in the positions of individuals in the political power structure.
An important characteristic in the development of economic policies and the underlying economic model was that each new policy period, while differing significantly from its predecessor, nonetheless retained most of the existing economic organization.
Thus the form of the economic model and the policies that expressed it at any given point in Chinese history reflected both the current policy emphasis and a structural foundation built up during the earlier periods. Many mines and factories had been damaged or destroyed. At the end of the war with Japan inSoviet troops had dismantled about half the machinery in the major industrial areas of the northeast and shipped it to the Soviet Union.
Transportation, communication, and power systems had been destroyed or had deteriorated because of lack of maintenance.
Agriculture was disrupted, and food production was some 30 percent below its pre-war peak level. Further, economic ills were compounded by one of the most virulent inflations in world history. The administration moved quickly to repair transportation and communication links and revive the flow of economic activity.
To bring inflation under control bythe government unified the monetary system, tightened credit, restricted government budgets at all levels and put them under central control, and guaranteed the value of the currency.
Commerce was stimulated and partially regulated by the establishment of state trading companies commercial departmentswhich competed with private traders in purchasing goods from producers and selling them to consumers or enterprises. Transformation of ownership in industry proceeded slowly.
The Communist Party of China immediately made these units state-owned enterprises upon taking power in The remaining privately owned enterprises were gradually brought under government control, but 17 percent of industrial units were still completely outside the state system in In agriculture a major change in landownership was carried out.
Under a nationwide land reform program, titles to about 45 percent of the arable land were redistributed from landlords and more prosperous farmers to the 60 to 70 percent of farm families that previously owned little or no land.
Once land reform was completed in an area, farmers were encouraged to cooperate in some phases of production through the formation of small "mutual aid teams" of six or seven households each.
Thirty-nine percent of all farm households belonged to mutual aid teams in By price stability had been established, commerce had been restored, and industry and agriculture had regained their previous peak levels of production. The period of recovery had achieved its goals. First Five-Year Plan, —57[ edit ] Having restored a viable economic base, the leadership under Mao ZedongZhou Enlaiand other revolutionary veterans was prepared to embark on an intensive program of industrial growth and socialization.
For this purpose the administration adopted the Soviet economic modelbased on state ownership in the modern sector, large collective units in agricultureand centralized economic planning.
As in the Soviet economy, the main objective was a high rate of economic growthwith primary emphasis on industrial development at the expense of agriculture and particular concentration on heavy industry and capital-intensive technology.
Soviet planners helped their Chinese counterparts formulate the plan. Large numbers of Soviet engineerstechniciansand scientists assisted in developing and installing new heavy industrial facilities, including many entire plants and pieces of equipment purchased from the Soviet Union.
Government control over industry was increased during this period by applying financial pressures and inducements to convince owners of private, modern firms to sell them to the state or convert them into joint public-private enterprises under state control.
By approximately No privately owned firms remained. During the same period, the handicraft industries were organized into cooperatives, which accounted for History of China Chinese historical records reach back into the realm of legend, 5, years ago.
It is impossible to cover even the major events of this ancient culture in . The country is a developing nation with a capitalist economy that is controlled politically by communist leadership. Chinese civilization began more than 5, years ago and the nation has played a crucial role in world history and is continuing to do so today.
All this had promoted the development of these basic industries, strengthened Chinese economy for future development and ensured a sustained, rapid and sound development of the national economy. Economic development is the basis on which foreign trade grows. At the same time, the growing foreign trade also constitutes a major element in.
China has accomplished a remarkable feat in transforming itself from one of the world’s poorest countries to its second largest economy in just 30 years.
The Chinese government has embraced slower economic growth, referring to it as the “new normal” and acknowledging the need for China to embrace a new growth model economy in history— and has lifted more than million people out of poverty.
China Economic Outlook. November 13, unveiled economic measures aimed at promoting a more balanced economic model at the expense of the once-sacred rapid economic growth. Economic History After Mao Zedong’s death in , Deng Xiaoping—who was the core of the second generation of Chinese leadership—became China’s paramount.