Chinese economic reform

The Chinese economic reform (simplified Chinese: 改革开放; traditional Chinese: 改革開放; pinyin: Gǎigé kāifàng; literally: 'reform and opening-up'; known in the West as the Opening of China) refers to the program of economic reforms termed "Socialism with Chinese characteristics" and "socialist market economy" in the People's Republic of China (PRC) which reformists within the Communist Party of China - led by Deng Xiaoping - started in December 1978.

Prior to the nineteenth century, China had one of the world's largest and most advanced economies.[1] In the 18th century, Adam Smith claimed China had long been one of the richest, that is, one of the most fertile, best cultivated, most industrious, most prosperous and most urbanized countries in the world.[2] The Chinese economy stagnated, beginning in the 16th century[3] and even declined in absolute terms in the nineteenth and much of the twentieth century, with a brief recovery in the 1930s.[4]

The Communist Party authorities began economic reforms introducing market principles in 1978 and carried them out in two stages. The first stage, in the late 1970s and early 1980s, involved the de-collectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start businesses. However, most industry remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China's gross domestic product by 2005.[5] From 1978 until 2013, unprecedented growth occurred, with the economy increasing by 9.5% a year. The conservative Hu–Wen Administration (of Hu Jintao and Wen Jiabao) regulated and controlled the economy more heavily after 2005, reversing some reforms.[6]

The success of China's economic policies and the manner of their implementation resulted in immense changes in Chinese society. Large-scale government planning programs alongside market characteristics have greatly decreased poverty, while incomes and income inequality have increased, leading to a backlash led by the New Left. In the academic scene, scholars have debated the reason for the success of the Chinese "dual-track" economy, and have compared it to attempts to reform socialism in the Eastern Bloc and the Soviet Union; as well as to the growth of other developing economies. Additionally, these series of reforms have led to China's rise as a world power and a shift of international geopolitical interests in favour of it over Taiwan.

Since the presidency of Xi Jinping, who generally opposes the reforms, some of the Deng-era reforms have been rolled back[7] as the Communist Party reasserts control over different aspects of Chinese society, including the economy.[8][9] This de-liberalization is seen by international and Hong Kong commentators as part of the subject of the present US–China trade war,[9] in which the United States alleges the Chinese government is giving unfair and discriminatory competitive advantages to Chinese state-owned and private companies.

Chinese economy prior to reform

During the 1930s, China developed a modern industrial sector, which stimulated modest but significant economic growth. Before the collapse of international trade that followed the onset of the Great Depression, China's share of world trade and its ratio of foreign trade to GDP achieved levels that were not regained for over sixty years.[4]

The economy was severely disrupted by the Second Sino-Japanese War and its continuation as the Second world war and the Chinese Civil War from 1937 to 1949, after which the victorious communists installed a planned economy.[4]

The economic performance of the People's Republic of China was poor in comparison with other East Asian countries, such as Japan, South Korea and rival Chiang Kai-shek's Republic of China.[10] The economy was riddled with huge inefficiencies and malinvestments, and with Mao's death, the Communist Party of China (CPC) leadership turned to market-oriented reforms to salvage the failing economy.[11]

Course of reforms

Economic reforms began after Deng Xiaoping and his reformist allies ousted the Gang of Four Maoist faction. By the time Deng took power, there was widespread support among the elite for economic reforms. As the de facto leader, Deng's policies faced opposition from party conservatives but were extremely successful in increasing the country's wealth.

1978–84

Deng's first reforms began in agriculture, a sector long mismanaged by the Communist Party. By the late 1970s, food supplies and production had become so deficient that government officials were warning that China was about to repeat the "disaster of 1959", the famines which killed tens of millions during the Great Leap Forward.[10] Deng responded by decollectivizing agriculture and emphasizing the household-responsibility system, which divided the land of the People's communes into private plots. Under the new policy, peasants were able to exercise formal control of their land as long as they sold a contracted portion of their crops to the government.[12] This move increased agricultural production by 25 percent between 1975 and 1985, setting a precedent for privatizing other parts of the economy.[13] The bottom-up approach of the reforms promoted by Deng, in contrast to the top-down approach of the Perestroika in the Soviet Union, is considered an important factor contributing to the success of China's economic transition.[14]

Reforms were also implemented in urban industry to increase productivity. A dual-price system was introduced, in which (State-owned enterprise reform 1979) state-owned industries were allowed to sell any production above the plan quota, and commodities were sold at both plan and market prices, allowing citizens to avoid the shortages of the Maoist era. Moreover, the adoption of Industrial Responsibility System 1980s further promote the development of state-owned enterprise by allowing individuals or groups to manage the enterprise by contract. Private businesses were allowed to operate for the first time since the Communist takeover, and they gradually began to make up a greater percentage of industrial output.[15] Price flexibility was also increased, expanding the service sector.[16]

The country was opened to foreign investment for the first time since the Kuomintang era. Deng created a series of special economic zones for foreign investment that were relatively free of the bureaucratic regulations and interventions that hampered economic growth. These regions became engines of growth for the national economy.[16]

1984–93

During this period, Deng Xiaoping's policies continued beyond the initial reforms. Controls on private businesses and government intervention continued to decrease, and there was small-scale privatization of state enterprises which had become unviable. A notable development was the decentralization of state control, leaving local provincial leaders to experiment with ways to increase economic growth and privatize the state sector.[17] Township and village enterprises, firms nominally owned by local governments but effectively private, began to gain market share at the expense of the state sector.[18] Conservative elder opposition, led by Chen Yun, prevented many major reforms which would have damaged the interests of special interest groups in the government bureaucracy.[19] Corruption and increased inflation increased discontent, contributing to the Tiananmen Square protests of 1989 and a conservative backlash after that event which ousted several key reformers and threatened to reverse many of Deng's reforms.[20] However, Deng stood by his reforms and in 1992, he affirmed the need to continue reforms in his southern tour.[19] He also reopened the Shanghai Stock Exchange closed by Mao 40 years earlier.

Although the economy grew quickly during this period, economic troubles in the inefficient state sector increased. Heavy losses had to be made up by state revenues and acted as a drain upon the economy.[21] Inflation became problematic in 1985, 1988 and 1992.[20] Privatizations began to accelerate after 1992, and the private sector grew as a percentage of GDP. China's government slowly expanded recognition of the private economy, first as a "complement" to the state sector (1988) and then as an "important component" (1999) of the socialist market economy.[22]

1993–2005

Shanghai Skyline, Dec2014
The Lujiazui financial district of Pudong, Shanghai, the financial and commercial hub of modern China

In the 1990s, Deng forced many of the conservative elders such as Chen Yun into retirement, allowing radical reforms to be carried out.[19] Despite Deng's death in 1997, reforms continued under his handpicked successors, Jiang Zemin and Zhu Rongji, who were ardent reformers. In 1997 and 1998, large-scale privatization occurred, in which all state enterprises, except a few large monopolies, were liquidated and their assets sold to private investors. Between 2001 and 2004, the number of state-owned enterprises decreased by 48 percent.[18] During the same period, Jiang and Zhu also reduced tariffs, trade barriers, and regulations; reformed the banking system; dismantled much of the Mao-era social welfare system; forced the Chinese army (PLA) to divest itself of military-run businesses;[23] reduced inflation; and joined the World Trade Organization. These moves invoked discontent among some groups, especially laid-off workers of state enterprises that had been privatized.[24]

The domestic private sector first exceeded 50% of GDP in 2005 and has further expanded since. Also in 2005, China was able to surpass Japan as the largest economy in Asia.[25] However, some state monopolies still remained, such as in petroleum and banking.[26]

2005–2012

Hu Jintao and his conservative administration began to reverse some of Deng Xiaoping's reforms in 2005. Observers note that the government adopted more egalitarian and populist policies.[27] It increased subsidies and control over the health care sector,[28] halted privatization,[6] and adopted a loose monetary policy, which led to the formation of a U.S.-style property bubble in which property prices tripled.[29] The privileged state sector was the primary recipient of government investment, which under the new administration, promoted the rise of large "national champions" which could compete with large foreign corporations.[6]

2012–present

Under Xi Jinping and his administration, the Communist Party of China has sought to increase its control over state-owned and private enterprises. At least 288 firms have revised their corporate charters to allow the Communist Party greater influence in corporate management, and to reflect the party line.[7] This trend also includes Hong Kong listed firms, who have traditionally downplayed their party links, but are now "redrafting bylaws to formally establish party committees that previously existed only at the group level."[8]

Economic performance since reform

Prc1952-2005gdp
China's nominal GDP trend from 1952 to 2015. Note the rapid increase since reform in the late 1970s.

China's economic growth since the reform has been very rapid, exceeding the East Asian Tigers. Economists estimate China's GDP growth from 1978 to 2013 at between 9.5% to around 11.5% a year. Since the beginning of Deng Xiaoping's reforms, China's GDP has risen tenfold.[30] The increase in total factor productivity (TFP) was the most important factor, with productivity accounting for 40.1% of the GDP increase, compared with a decline of 13.2% for the period 1957 to 1978—the height of Maoist policies. For the period 1978–2005, Chinese GDP per capita increased from 2.7% to 15.7% of U.S. GDP per capita, and from 53.7% to 188.5% of Indian GDP per capita. Per capita incomes grew at 6.6% a year.[31] Average wages rose sixfold between 1978 and 2005,[32] while absolute poverty declined from 41% of the population to 5% from 1978 to 2001.[33] Some scholars believed that China's economic growth has been understated, due to large sectors of the economy not being counted.[34]

Impact on world growth

China is widely seen as an engine of world and regional growth.[35] Surges in Chinese demand account for 50, 44 and 66 percent of export growth of the Hong Kong SAR of China, Japan and Taiwan respectively, and China's trade deficit with the rest of East Asia helped to revive the economies of Japan and Southeast Asia.[35] Asian leaders view China's economic growth as an "engine of growth for all Asia".[36]

Reforms in specific sectors

After three decades of reform, China's economy experienced one of the world's biggest booms. Agriculture and light industry have largely been privatized, while the state still retains control over some heavy industries. Despite the dominance of state ownership in finance, telecommunications, petroleum and other important sectors of the economy, private entrepreneurs continue to expand into sectors formerly reserved for public enterprise. Prices have also been liberalized.[37]

Agriculture

China-wheat-prod
Production of wheat from 1961 to 2004. Data from FAO, year 2005. Y-axis: Production in metric ton.

During the pre-reform period, Chinese agricultural performance was extremely poor and food shortages were common.[38] After Deng Xiaoping implemented the household responsibility system, agricultural output increased by 8.2% a year, compared with 2.7% in the pre-reform period, despite a decrease in the area of land used.[38] Food prices fell nearly 50%, while agricultural incomes rose.[39]

A more fundamental transformation was the economy's growing adoption of cash crops instead of just growing rice and grain.[39] Vegetable and meat production increased to the point that Chinese agricultural production was adding the equivalent of California's vegetable industry every two years. Growth in the sector slowed after 1984, with agriculture falling from 40% of GDP to 16%; however, increases in agricultural productivity allowed workers to be released for work in industry and services, while simultaneously increasing agricultural production.[40] Trade in agriculture was also liberalized and China became an exporter of food, a great contrast to its previous famines and shortages.[41]

Industry

In the pre-reform period, industry was largely stagnant and the socialist system presented few incentives for improvements in quality and productivity. With the introduction of the dual-price system and greater autonomy for enterprise managers, productivity increased greatly in the early 1980s.[42] Foreign enterprises and newly formed Township and Village Enterprises, owned by local government and often de facto private firms, competed successfully with state-owned enterprises. By the 1990s, large-scale privatizations reduced the market share of both the Township and Village Enterprises and state-owned enterprises and increased the private sector's market share. The state sector's share of industrial output dropped from 81% in 1980 to 15% in 2005.[43] Foreign capital controls much of Chinese industry and plays an important role.[18]

From virtually an industrial backwater in 1978, China is now the world's biggest producer of concrete, steel, ships and textiles, and has the world's largest automobile market. Chinese steel output quadrupled between 1980 and 2000, and from 2000 to 2006 rose from 128.5 million tons to 418.8 million tons, one-third of global production.[44] Labor productivity at some Chinese steel firms exceeds Western productivity.[44] From 1975 to 1992, China's automobile production rose from 139,800 to 1.1 million, rising to 9.35 million in 2008.[45] Light industries such as textiles saw an even greater increase, due to reduced government interference. Chinese textile exports increased from 4.6% of world exports in 1980 to 24.1% in 2005. Textile output increased 18-fold over the same period.[46]

This increase in production is largely the result of the removal of barriers to entry and increased competition; the number of industrial firms rose from 377,300 in 1980 to nearly 8 million in 1990 and 1996; the 2004 economic census, which excluded enterprises with annual sales below RMB 5 million, counted 1.33 million manufacturing firms, with Jiangsu and Zhejiang reporting more firms than the nationwide total for 1980.[47] Compared to other East Asian industrial growth spurts, China's industrial performance exceeded Japan's but remained behind South Korea and Taiwan's economies.[48]

Trade and foreign investment

2006Chinese exports
Global distribution of Chinese exports in 2006 as a percentage of the top market

Scholars find that China has attained a degree of openness that is unprecedented among large and populous nations, with competition from foreign goods in almost every sector of the economy. Foreign investment helped to greatly increase quality, knowledge and standards, especially in heavy industry. China's experience supports the assertion that globalization greatly increases wealth for poor countries.[47] Throughout the reform period, the government reduced tariffs and other trade barriers, with the overall tariff rate falling from 56% to 15%. By 2001, less than 40% of imports were subject to tariffs and only 9 percent of import were subject to licensing and import quotas. Even during the early reform era, protectionist policies were often circumvented by smuggling.[49] When China joined the WTO, it agreed to considerably harsher conditions than other developing countries.[50] Trade has increased from under 10% of GDP to 64% of GDP over the same period.[51] China is considered the most open large country; by 2005, China's average statutory tariff on industrial products was 8.9%. The average was 30.9% for Argentina, 27.0% for Brazil, 32.4% for India, and 36.9$ for Indonesia.[52]

China's trade surplus is considered by some in the United States as threatening American jobs. In the 2000s, the Bush administration pursued protectionist policies such as tariffs and quotas to limit the import of Chinese goods. Some scholars argue that China's growing trade surplus is the result of industries in more developed Asian countries moving to China, and not a new phenomenon.[36] China's trade policy, which allows producers to avoid paying the Value Added Tax (VAT) for exports and undervaluation of the currency since 2002, has resulted in an overdeveloped export sector and distortion of the economy overall, a result that could hamper future growth.[53]

Foreign investment was also liberalized upon Deng's ascension. Special Economic Zones (SEZs) were created in the early 1980s to attract foreign capital by exempting them from taxes and regulations. This experiment was successful and SEZs were expanded to cover the whole Chinese coast. Although FDI fell briefly after the 1989 student protests, it increased again to 160 billion by 2004.[54]

Services

In the 1990s, the financial sector was liberalized.[55] After China joined the World Trade Organization (WTO), the service sector was considerably liberalized and foreign investment was allowed; restrictions on retail, wholesale and distribution ended.[56] Banking, financial services, insurance and telecommunications were also opened up to foreign investment.[57]

China's banking sector is dominated by four large state-owned banks, which are largely inefficient and monopolistic.[58] China's largest bank, ICBC, is the largest bank in the world. The financial sector is widely seen as a drag on the economy due to the inefficient state management.[59] Non-performing loans, mostly made to local governments and unprofitable state-owned enterprises for political purposes,[60] especially the political goal of keeping unemployment low, are a big drain on the financial system and economy, reaching over 22% of GDP by 2000, with a drop to 6.3% by 2006 due to government recapitalization of these banks. In 2006, the total amount of non-performing loans was estimated at $160 billion.[61] Observers recommend privatization of the banking system to solve this problem, a move that was partially carried out when the four banks were floated on the stock market.[62] China's financial markets, the Shanghai Stock Exchange and Shenzhen Stock Exchange, are relatively ineffective at raising capital, as they comprise only 11% of GDP.[63]

Due to the weakness of the banks, firms raise most of their capital through an informal, nonstandard financial sector developed during the 1980s and 1990s, consisting largely of underground businesses and private banks.[64] Internal finance is the most important method successful firms use to fund their activities.[64]

By the 1980s much emphasis was placed on the role of advertising in meeting the modernization goals being promoted by Deng. Lip service was still paid to old Maoist ideals of egalitarianism, but it did not inhibit the growth of consumerism.[65]

Government finances

In the pre-reform era, government was funded by profits from state-owned enterprises, much like the Soviet Union.[66] As the state sector fell in importance and profitability, government revenues, especially that of the central government in Beijing, fell substantially and the government relied on a confused system of inventory taxes. Government revenues fell from 35% of GDP to 11% of GDP in the mid-1990s, excluding revenue from state-owned enterprises, with the central government's budget at just 3% of GDP.[67] The tax system was reformed in 1994 when inventory taxes were unified into a single VAT of 17% on all manufacturing, repair, and assembly activities and an excise tax on 11 items, with the VAT becoming the main income source, accounting for half of government revenue. The 1994 reform also increased the central government's share of revenues, increasing it to 9% of GDP.[68]

Reasons for success

Scholars have proposed a number of theories to explain the success of China's economic reforms in its move from a planned economy to a socialist market economy despite unfavorable factors such as the troublesome legacies of socialism, considerable erosion of the work ethic, decades of anti-market propaganda, and the "lost generation" whose education disintegrated amid the disruption of the Cultural Revolution.[69]

One notable theory is that decentralization of state authority allowed local leaders to experiment with various ways to privatize the state sector and energize the economy.[17] Although Deng was not the originator of many of the reforms, he gave approval to them. Another theory focuses on internal incentives within the Chinese government, in which officials presiding over areas of high economic growth were more likely to be promoted. Scholars have noted that local and provincial governments in China were "hungry for investment" and competed to reduce regulations and barriers to investment to boost economic growth and the officials' own careers. A third explanation believes that the success of the reformists are attributable to Deng's cultivation of his own followers in the government.[70] Herman Kahn explained the rise of Asian economic power saying the Confucian ethic was playing a "similar but more spectacular role in the modernization of East Asia than the Protestant ethic played in Europe".[71]

China's success is also due to the export-led growth strategy used successfully by the Four Asian Tigers beginning with Japan in the 1960s–1970s and other Newly industrialized countries.[72]

The collapse of the Soviet Bloc and centrally planned economies in 1989 provided renewed impetus for China to further reform its economy through different policies in order to avoid a similar fate.[73] China also wanted to avoid the Russian ad-hoc experiments with market capitalism under Boris Yeltsin resulting in the rise of powerful oligarchs, corruption, and the loss of state revenue which exacerbated economic disparity.[74]

Effect on inequality

Gini Coefficient World CIA Report 2009
Gini-coefficient of national income distribution around the world (dark green: <0.25, red: >0.60)

The economic reforms have increased inequality dramatically within China. Despite rapid economic growth which has virtually eliminated poverty in urban China and reduced it greatly in rural regions and the fact that living standards for everyone in China have drastically increased in comparison to the pre-reform era, the Gini coefficient of China is estimated to be above 0.45, comparable to some Latin American countries and the United States.[75]

Increased inequality is attributed to the disappearance of the welfare state and differences between coastal and interior provinces, the latter being burdened by a larger state sector.[76] Some Western scholars have suggested that reviving the welfare state and instituting a re-distributive income tax system is needed to relieve inequality,[77] while some Chinese economists have suggested that privatizing state monopolies and distributing the proceeds to the population can reduce inequality.[78]

Comparison to other developing economies

GDP per capita of China and India
Development trends of Chinese and Indian GDP (1950–2010)

China's transition from a planned economy to a socialist market economy has often been compared with economies in Eastern Europe that are undergoing a similar transition. China's performance has been praised for avoiding the major shocks and inflation that plagued the Eastern Bloc.[79] The Eastern bloc economies saw declines of 13% to 65% in GDP at the beginning of reforms, while Chinese growth has been very strong since the beginning of reform.[80] China also managed to avoid the hyperinflation of 200 to 1,000% that Eastern Europe experienced.[81] This success is attributed to the gradualist and decentralized approach of the Chinese government, which allowed market institutions to develop to the point where they could replace state planning. This contrasts with the "big bang" approach of Eastern Europe, where the state-owned sector was rapidly privatized with employee buyouts, but retained much of the earlier, inefficient management.[82] Other factors thought to account for the differences are the greater urbanization of the CIS economies and differences in social welfare and other institutions.[83] Another argument is that, in the Eastern European economies, political change is sometimes seen to have made gradualist reforms impossible, so the shocks and inflation were unavoidable.[84]

China's economic growth has been compared with other developing countries, such as Brazil, Mexico, and India. GDP growth in China outstrips all other developing countries, with only India after 1990 coming close to China's experience.[85] Scholars believe that high rates of investments, especially increases in capital invested per worker, have contributed to China's superior economic performance.[85] China's relatively free economy, with less government intervention and regulation, is cited by scholars as an important factor in China's superior performance compared to other developing countries.[86]

Legacy and criticism

The government retains monopolies in several sectors, such as petroleum and banking. The recent reversal of some reforms have left some observers dubbing 2008 the "third anniversary of the end of reforms".[6] Nevertheless, observers believe that China's economy can continue growing at rates of 6–8 percent until 2025,[87] though a reduction in state intervention is considered by some to be necessary for sustained growth.[88]

Despite reducing poverty and increasing China's wealth, Deng's reforms have been criticized by the Chinese New Left for increasing inequality and allowing private entrepreneurs to purchase state assets at reduced prices. These accusations were especially intense during the Lang-Gu dispute, in which New Left academic Larry Lang accused entrepreneur Gu Sujung of usurping state assets, after which Gu was imprisoned.[89] The Hu-Wen Administration adopted some New Left policies, such as halting privatizations and increasing the state sector's importance in the economy, and Keynesian policies that have been criticized by some Chinese economists who advocate a policy of deregulation, tax cuts and privatization.[78]

Other criticisms focus on the effects of rapid industrialization on public health and the environment. However, scholars believe that public health issues are unlikely to become major obstacles to the growth of China's economy during the coming decades, and studies have shown that air quality and other environmental measures in China are better than those in developed countries, such as the United States and Japan, at the same level of development.[90]

See also

References

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  • Cai, Fang; et al. (2008), "The Chinese labor market in the reform era", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Haggard, Stevens; et al. (2008), "The political economy of private-sector development in China", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Herston, Alan; et al. (2008), "China and Development economics", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Huang, Jikun; et al. (2008), "Agriculture in China's Development: Past Disappointments, Recent Successes, and Future Challenges", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Naughton, Barry; et al. (2008), "A Political Economy of China's Economic Transitionin China's Great Transformation", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
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  • Rawski, G. Thomas; et al. (2008), "China's Industrial Development", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Svejnar, Jan; et al. (2008), "China in light of other transition economies", in Brandt, Loren and Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university pressCS1 maint: Uses editors parameter (link)
  • Wong, P.W. Christine; et al. (2008), "China's Fiscal system: a work in progress", in Brandt, Loren; Rawski, G. Thomas, China's Great Transformation, Cambridge: Cambridge university press
  • Zhao, Xin, and Russell W. Belk. (2008) "Politicizing Consumer Culture: Advertising's Appropriation of Political Ideology in China's Social Transition," Journal of Consumer Research 35#2 pp 231–244

External links

1979 economic reform

1979 economic reform may refer to:

The Chinese economic reform that started in 1979

1979 Soviet economic reform

Barry Naughton

Barry J. Naughton is the So Kwanlok Chair of Chinese International Affairs at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego. He specializes in the Chinese economy and is a recognized expert in the field. His 1995 book "Growing Out of the Plan: Chinese Economic Reform, 1978–1993" won the Masayoshi Ohira Memorial Prize. He stated that the Chinese economic reform was accomplished without a grand vision. Rather, it was the result of a mix between laissez-faire and experimentation with business incentives by the government.

Brothers (Yu novel)

Brothers (兄弟, Xiōngdì) is a novel by the Chinese author Yu Hua which was originally published in August 2005 by Shanghai Literature and Art Publishing House. The book was translated into English by Eileen Cheng-yin Chow and Carlos Rojas, Spanish in 2009, and into Brazilian Portuguese and Hungarian (by János SZÉKY) in 2010.

Brothers is considered to be one of Yu Hua's masterpieces.The novel intertwines tragedy and comedy, and Yu Hua himself admits that the novel is personally his favourite literary work. Divided into two parts (Part 1 and Part 2), the novel is about two brothers, Baldy Li (李光头) and Song Gang (宋钢), and the collapse of their family during the Cultural Revolution.

Labelled as a social novel of late 20th century by The New York Times, Brothers deals with the Cultural Revolution and the emergence of Chinese economic reform, which are prevalent within the story plot. Brothers has experienced great success, shortlisted for the Man Asian Literary Prize and awarded France's Prix Courrier International in 2008 and has sold nearly one million copies in China. It is the longest novel written by Yu Hua. It has over 180 thousand characters in Chinese, well over the 100 thousand characters originally planned for the book. The novel was then split into two volumes with a total of 51 chapters in Chinese. In July 2010, Brothers was combined into one single book and published by the Writers Publishing House.

East China Normal University Press

East China Normal University Press (Chinese: 华东师范大学出版社; pinyin: Huádōng Shīfàn Dàxué Chūbǎnshè; also referred to as ECNU Press or ECNUP) is the publishing division of East China Normal University. Its headquarters are in Shanghai, and has a Beijing branch.

The ECNU Press is founded in 1957 in Shanghai. Before the Chinese economic reform in the 1980s, it was one of the only two university presses existed in China (the other being the China Renmin University Press).

As of 2008, its total income reached 588 million RMB. This total ranked ECNUP the 14th among the 573 publishers in China.

Hainan

Hainan (海南) is the smallest and southernmost province of the People's Republic of China (PRC), consisting of various islands in the South China Sea. Hainan Island, separated from Guangdong's Leizhou Peninsula by the Qiongzhou Strait, is the largest and most populous island under PRC control (Taiwan, which is slightly larger, is also claimed but not controlled by the PRC) and makes up the majority of the province.

The province has an area of 33,920 square kilometers (13,100 sq mi), with Hainan Island making up 32,900 square kilometers (12,700 sq mi) (97%) and the rest divided among 200 islands scattered across three archipelagos. It was administered as part of Guangdong until 1988, when it became a separate province; around the same time, it was made the largest Special Economic Zone established by Deng Xiaoping as part of the Chinese economic reform.

There are a total of ten major cities and ten counties in Hainan Province. Haikou on the northern coast of Hainan Island is the capital while Sanya is a well-known tourist destination on the southern coast. The other major cities are Wenchang, Qionghai, Wanning, Wuzhishan, Dongfang, and Danzhou.

According to China's territorial claims several territories in the South China Sea, including the Spratly Islands (Nansha) and Paracel Islands (Xisha), are notionally administered as part of the province.

Huangpu-class gunboat

The Huangpu class gunboat were gunboats of the People's Republic of China's People's Liberation Army Navy, with production first begun at Jiangnan Shipyard on January 20, 1953, after request was submitted in October 1952.. These boats were designated as Type 53A (53 Jia Xing, 53甲型), and a slightly modified version was designated as Type 54A (54 Jia Xing, 54甲型). They entered service in the 1950s and had been completely taken out of active service by the early 2000s and were transferred to law enforcement agencies. However, just like the Shantou, Beihai and Yulin classes that were transferred for law enforcement adaptation, these obsolete and aging boats are not satisfactory in their new roles due to their low maximum speed, sometime as low as 10 knots, which was not fast enough to catch the smugglers’ high speed motorboats. As a result, these boats were subsequently transferred again, this time to reserves, subordinated to naval militia in various Military Maritime Districts in China as training boats and port security / patrol boats within the confines of the harbors.The new design incorporated a low superstructure fore and aft, providing additional accommodations for police or troops. A lightly armed version with 25 mm main guns received NATO reporting name Beihai class. This advantage combined with their later completion time in comparison to Shantou, Beihai and Yulin classes have made this class more active in the reserve than the others in the naval militia, However, like the Shantou, Beihai and Yulin classes, as the new class of port security patrol boats entering service, the Huangpu class is increasingly being converted, mothballed and eventually scrapped.

Just like the Shantou, Beihai and Yulin classes, many of the surviving units are being converted to naval range support boats and target drones and thus reactivated into active service as minor support auxiliaries. It can be either used as a target control boat to remotely control the converted drones, or as a drone itself. When the drone is in operation, the crew departs the boat.

Most of the range support boats in the PLAN also shoulder the responsibility of inshore surveying and these converted boats are no exceptions, despite the little scientific instruments they carried. The reason is that originally, majority of the hydrographic surveys were conducted by civilian fishing vessels with the additional scientific equipment, naval and governmental crews on board. However, since the Chinese economic reform and the depletion of the fishery resources, the civilian fishing vessels must venture much further out into open ocean and staying longer at the sea, thus could no longer afford to stay in home waters and performing the heavy inshore surveying duties previously assigned under the planned economy era in China prior to the Chinese economic reform. Consequently, the PLAN must come up with their own means to meet such huge demand, and converting former gunboats was one of the answers: although these boats can no longer venture out into open ocean and cruise at their maximum speed like they used to do, they are still quite capable of low speed inshore surveying tasks within the confines of river mouths and bays of Chinese coastlines.

Contrary to the commonly held but erroneous belief that the PLAN is following the tradition of having weaponry on most of its auxiliaries (though there is certainly some degree of this), the retention of weaponry on these converted boats were mainly to save money: in order to reduce the conversion cost, the original weaponry was retained unless it was absolutely necessary to remove the weapons, thus most of the converted range support and surveying boats still maintained most of their original fighting capability.

KJ-1 AEWC

The KJ-1 is a first generation Chinese AEW (Airborne Early Warning) radar fitted to a Tupolev Tu-4 bomber. The project was started in 1969 under the code name "Project 926". (KJ is from the first characters of the Pinyin spelling of 空警, (Kōng Jǐng), short for 空中预警 (Kōng Zhōng Yù Jǐng), which means Airborne Early Warning).

Li Peng

Li Peng (Chinese: 李鹏; pinyin: Lǐ Péng; born 20 October 1928) is a retired Chinese politician. Li served as the fourth Premier of the People's Republic of China from 1987 to 1998 and the Chairman of the Standing Committee of the National People's Congress, China's top legislative body, from 1998 to 2003. For much of the 1990s Li was ranked second in the Communist Party of China (CPC) hierarchy behind then Party General Secretary Jiang Zemin. He retained his seat on the CPC Politburo Standing Committee until 2002.

Li was the son of an early Communist revolutionary, but was orphaned as a child when his father was executed by the Kuomintang. After meeting Zhou Enlai in Sichuan Li was raised by Zhou and his wife, Deng Yingchao. Li trained to be an engineer in the USSR and worked at an important national power company after returning to China. He escaped the political turmoil of the 1950s, '60s, and '70s due to his political connections and his employment in the company. After Deng Xiaoping became China's leader in the late 1970s, Li took a number of increasingly important and powerful political positions, eventually becoming premier in 1987.

As Premier, Li was the most visible representative of China's government who backed the use of force to quell the Tiananmen Square protests of 1989. During the protests Li used his authority as premier to declare martial law and, in cooperation with Deng Xiaoping, who was the Chairman of the Central Military Commission, ordered the June 1989 military crackdown against student pro-democracy demonstrators in Tiananmen Square. Li advocated a largely conservative approach to Chinese economic reform, which placed him at odds with General Secretary Zhao Ziyang, who fell out of favour in 1989. After Zhao was removed from office Li promoted a conservative socialist economic agenda, but lost influence to incoming vice-premier Zhu Rongji and was unable to prevent the increasing free-market liberalization of the Chinese economy. During his time in office he helmed the controversial Three Gorges Dam project. He and his family managed a large Chinese power monopoly, which the Chinese government broke up after his term as premier expired.

List of countries by public sector

This is a list of countries by public sector or the share of public sector employees of total employment. Information is based mainly on data from OECD and ILO. If a source has figures for more than one year, only the most recent figure is used (with notes for exceptional circumstances).

In the former Eastern Bloc countries, the public sector in 1989 accounted for between 70% to over 90% of total employment. In China a full 100% of employees were employed in the public sector by 1978, the year the Chinese economic reform was launched, after which the rates dropped to 56.4% in 1995, and to 32.8% in 2003.In the OECD-countries, the average public sector employment rate was 21.3% in 2013.

Microeconomic reform

Microeconomic reform (or often just economic reform) comprises policies directed to achieve improvements in economic efficiency, either by eliminating or reducing distortions in individual sectors of the economy or by reforming economy-wide policies such as tax policy and competition policy with an emphasis on economic efficiency, rather than other goals such as equity or employment growth.

"Economic reform" usually refers to deregulation, or at times to reduction in the size of government, to remove distortions caused by regulations or the presence of government, rather than new or increased regulations or government programs to reduce distortions caused by market failure. As such, these reform policies are in the tradition of laissez faire, emphasizing the distortions caused by government, rather than in ordoliberalism, which emphasizes the need for state regulation to maximize efficiency.

New Economic Mechanism

The New Economic Mechanism (NEM) was a major economic reform launched in the People's Republic of Hungary in 1968. Between 1972 and 1978, it was curtailed by the prevailing winds of Eastern Bloc politics. During the subsequent decade, until the revolutions of 1989 ended the era, the NEM's principles continued to affect the Hungarian economy, even in cases where the "NEM" name was not emphasized. Because of the NEM, Hungary in the 1980s had a higher ratio of market mechanisms to central planning than any other Eastern Bloc economy. The ratio was different to an extent that was politically challenging to bring about in the Soviet sphere because of the ideological mixture it required. The name Goulash Communism was jokingly (but tellingly) applied to this mixture. The Hungarian economy under the influence of NEM principles was widely viewed as outperforming other Soviet Bloc economies, making Hungary "the happiest barrack" in barracks communism. Many Soviet and Eastern European people enjoyed going to Hungary (for example, on work assignments or on vacations) because of the economic and cultural environment there.

The tensions and harmonies between market mechanisms and central planning, with neither having sole control, are a perennial challenge in all societies that temper capitalism with socialism or vice versa. In some ways Hungary's economic reform channels comparisons with the Chinese economic reform, in the sense that both were qualitative challenges to a Stalinist type of system—and thus that such reforms were not politically feasible in most of the Soviet Bloc.

Northwest University (China)

Northwest University (Chinese: 西北大学; pinyin: Xīběi Dàxué), located in Xi'an city, Shaanxi Province, is one of the nation's leading comprehensive universities. Founded in 1902, it is one of the oldest institutions of learning in Northwest China.

Presently, the university has 11 colleges, 33 departments, 63 Bachelor's and Associate's programs. Its student population amounts to 18,000, including about 2000 Ph.D. and master students, and about 100 international students.

The university stresses international academic and personnel exchanges. Since the start of the Chinese economic reform in 1978, it has established cooperation and exchange relations with nearly 30 institutions of higher education of scientific research in the United States, Japan, United Kingdom, France, Germany, Italy, Russia, Canada, Australia, Switzerland, Hong Kong, Taiwan, and The Philippines.

Perestroika

Perestroika (; Russian: Перестро́йка, IPA: [pʲɪrʲɪˈstrojkə] (listen)) was a political movement for reformation within the Communist Party of the Soviet Union during the 1980s and 1990s and is widely associated with Soviet leader Mikhail Gorbachev and his glasnost (meaning "openness") policy reform. The literal meaning of perestroika is "restructuring", referring to the restructuring of the Soviet political and economic system.

Perestroika is sometimes argued to be a significant cause of the dissolution of the Soviet Union, the revolutions of 1989 in Eastern Europe, and the end of the Cold War.

Policy experimentation

Policy experimentation points to political-administrative procedures and initiatives that allow to discover or test novel instruments of problem-solving and thereby propel broader-based policy innovation or institutional adaptation in a given polity, economy or society.As compared to centralized legislation or national regulation, one of the major advantages of decentralized policy experimentation is seen in allowing spatially, sectorally or temporally limited policy trials that reduce the risks and costs of introducing major reform schemes to the national polity, economy and society. A major deficit of policy experimentation is seen in promoting policy heterogeneity, legal fragmentation and jurisdictional disparities.

The term has come to renewed prominence in the discussion about the political processes behind China's economic rise since the beginning of Chinese economic reform policies in 1978.

Post-communism

Post-communism is the period of political and economic transformation or "transition" in former communist states located in parts of Europe and Asia in which new governments aimed to create free market-oriented capitalist economies.

Sichuan opera

Sichuan opera (Chinese: 川劇; Sichuanese Pinyin: Cuan1ju4; pinyin: Chuānjù) is a type of Chinese opera originating in China's Sichuan province around 1700. Today's Sichuan opera is a relatively recent synthesis of 5 historic melodic styles. Regionally Chengdu remains to be the main home of Sichuan opera, while other influential locales include Chongqing, Guizhou, Yunnan, Hubei and Taiwan.

United States of China

United States of China (Traditional Chinese: 中華合眾國; Simplified Chinese: 中华合众国; Hanyu Pinyin: Zhōnghuá Hézhòngguó) is a political concept first devised in the early 1920s by Chen Jiongming of a federalized China modeled closely after the United States of America. Given the political, social and linguistic realities of China in the warlord period, Chen Jiongming believed that a federalist approach was the only feasible way to eventually establish a united, democratic republic. Beginning with Guangdong as a model state, he wanted to organize a "United States of China in the manner of the American experience" through negotiation with federalists from all parts of the country (New York Times June 27, 1922).

The introduction of Special Economic Zones since the 1980s have led to the development of several distinct regional economies within the People's Republic of China, such as the Pearl River Delta, Yangtze River Delta, and the Bohai Circle. Several of these regions have economies the size of small developed nations. Some scholars who use the term United States of China argue that during the process of Chinese economic reform the People's Republic has evolved into a de facto federal state in which these economic regions have wide discretion to implement policy goals which are set by the PRC central government and in which provinces and localities actively compete with each other in order to advance economically.

Wenbi Tower

Wenbi Tower (Chinese: 文笔塔) is a tower in Changzhou, China, located near Hongmei Park. It was built during the Southern Dynasties, Qi Gaozu, Xiao Daocheng (萧道成), Jianyuan (479-482), and first named Jianyuan Temple. Later, it was changed to Peace Tower. Because the tower looks like a pen, people changed the name into Wenbi Tower. As time went on, the temple had been deteriorated because of wars, natural disasters and the Cultural Revolution. Not until the Chinese economic reform did Liu Biru, a Chinese-American,subsidized restoration of the temple in 1982.

Yang Shangkun

Yang Shangkun (3 August 1907 – 14 September 1998) was President of the People's Republic of China from 1988 to 1993, and was a powerful Vice Chairman and Secretary-General of the Central Military Commission under Deng Xiaoping. He married Li Bozhao in 1929, one of the few women to participate in the Long March, as did Yang.

Yang attended university in Shanghai before studying Marxist theory in Moscow, making him one of the best educated leaders of the early Communist Party of China. Yang returned to China as one of the 28 Bolsheviks and originally supported the early communist leader Zhang Guotao, but switched allegiance to Mao's faction during the Long March. He served as a political commissar during the Chinese Civil War and the Second Sino-Japanese War.

After the founding of the People's Republic in 1949, Yang held a number of political positions, eventually becoming a member of the powerful Central Committee of the Communist Party of China. He was purged when the Cultural Revolution broke out in 1966, and was not recalled until 1978, after Deng Xiaoping rose to power. After his return to power, Yang became one of China's Eight Elders. Yang promoted economic reform but opposed political liberalization, a position which Deng eventually came to identify with. Yang reached the height of his political career after the Tiananmen Square protests of 1989, but his organized opposition to Jiang Zemin's leadership led Deng to force Yang to retire.

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