China Opening Up to the world

Transcription

1 1 China Opening Up to the world

2 2 Today, everyone is talking about the fruits of China s reform and opening-up policies. What was China s economy like before 1978? Upon the founding of the People s Republic of China in 1949, measures were introduced throughout the country for the establishment of a state run socialist economy. In 1950, the Vice Premier of the Government Administration Council (later named the State Council) CHEN Yun called a meeting to regularize revenue, unify financial and economy functions under the state and stabilize prices. By 1952, the mechanism of China s domestic economy was basically in place. From 1953 on, China began to implement a planned economy. The first five year plan targeted at industrial development. When it was completed in 1957, the overall economic strength of the country greatly increased. In 1958, MAO Zedong mobilized the whole country with the Great Leap Forward campaign. People s communes were set up in rural villages. The entire nation was called to get involved with a steelworks campaign. The Great Leap Forward resulted in the economy suffering from serious hardship for three years from 1959 to In 1961, the Central Committee of the Communist Party of China announced a new adjustment policy in order to strengthen, replenish and enhance national economic development. A meeting of 7,000 people in 1962 further affirmed this policy. By 1965, adjustment was basically accomplished and China s economy saw the light of day. In 1966, MAO Zedong launched the Cultural Revolution. In the 10 years that followed, the economic development of China slowed down. Translated from: 50

3 3 1. Which of the following describes the situation of China before the reform and the opening up? Please indicate with in the blanks on the right a. An economic system based on public ownership means that all means of production (land, machines, factories ) are owned by the collective ( the nation). b. Prices of goods adjust automatically in response to the market. c. In a planned economy, all decisions relating to production and allocation are made by the collective. d. Badly run enterprises will close down as a result of deficit and loss. The establishment of Special Economic Zones (SEZs) and coastal open cities At the end of 1978, the Third Plenum of the Eleventh Central Committee of the Communist Party of China was convened. It decided to adopt the reform and opening-up policy engineered by DENG Xiaoping. The mistakes of the Cultural Revolution and of the years before it were fully and seriously corrected. Emphasis shifted to modernization and economic and political reforms. From then on, a socialist market economy with Chinese characteristics 1 was gradually put in place. The road to modernization has begun. 1 A socialist market economy is a way of organizing economic life. There are many components. Public ownership is the major component and private ownership has its place too. The state retains macro economic control, but the market plays an important role in respect of the deployment of social economic resources. For example, what to produce, how to produce, where the produce go etc. are mainly decided by the market pricing mechanism. Government s role is to ensure the orderly operation of the market.

4 4 2. As described in Source 2, the Third Plenum of Eleventh Central Committee of the Communist Party of China made important decisions on China s development. List the decisions in two ways. Answers for reference: 1. correct errors of the past; 2. affirm the need for development, especially economic development. When the Chinese Government decided to implement reforms on the economic system in 1978, a step-by-step opening-up policy was introduced concurrently. From 1980 on, five SEZs in Shenzhen, Zhuhai, Shantou of Guangdong Province, Xiamen of Fujian Province and Hainan Province were commissioned. Special economic policies and management mechanisms are adopted in these zones. SEZs have acquired much experience for China s engagement in the international market in respect of foreign investments and outward trade etc. By 1999, the hi-tech industry became the best asset for Shenzhen SEZ with an output of billion yuan, representing 40.5% of the city s total industrial output, and the forefront in China. Reference:

5 5 3. Based on Source 3, explore the role of SEZs in the reform and the opening up of the Chinese economy. Answers for reference: 1. importing hi-tech and management methods; 2. acting as test points for new policies and new economic mechanisms; 3. acquiring experience of international markets in respect of foreign investments and outward trade. In 1984, China opened up an additional 14 coastal cities. They are Dalian, Qinhuangdao, Tianjin, Yantai, Qingdao, Lianyungang, Nantong, Shanghai, Ningbo, Wenzhou, Fuzhou, Guangzhou, Zhanjiang and Beihai. Then in 1985, the Changjiang delta area, the Pearl River delta area, the Minnan triangle, Shandong Peninsula, Liaodong Peninsula, Hebei and Guangxi were made open economic areas. A massive coastal economic open belt was brought into being.

6 6 In 1990, the Chinese Government decided to develop and open Pudong in Shanghai as well as a number of cities along Changjiang. They form the Changjiang open belt with Pudong as the dragon s head. In 1992, it was decided to open up a number of frontier cities and all inland provincial capitals and capitals of autonomous regions. 15 bonded areas, 32 national-level Economic and Technological Development Zones and 53 hi-tech industrial development zones were established a number of large and medium sized cities. As it is, China succeeds in opening itself up to the world in all directions, multi layered, and in a massive scale covering the coast, the rivers, and frontier and inland regions. Reference:

7 7 4. Based on Sources 3, 4 & 5, indicate on the following map of China the regions open to the world for business at the three different stages. Colour the SEZs of the first stage in blue, those of the second stage in red and those of the third stage in yellow.

8 8 5. What are the advantages and disadvantages of reforming the economy and opening up to the world by the strategy of feeling your way across the river? Answers for reference: Advantages: By opening up some areas first, one avoids making major mistakes later. Disadvantages: That some enjoy opportunities and preferential treatment results in disparity between the rich and the poor. This may spark discontent in inland areas. (Other points are acceptable as long as they make sense.)

9 9 Where should a company set up its headquarters? Let us assume you are the CEO of a foreign enterprise engaging in the production of electronic and computer spare parts and you are considering setting up your Asia Pacific headquarters in the mainland. Which city would you consider? Beijing, Shanghai or Shenzhen? Collect information on these three cities before making up your mind. Beijing is the political and cultural centre of China. It is an international metropolis. Shanghai cannot measure up in this respect. After twenty years of development, Zhongguancun in Beijing can be described today as the Silicon Valley of China. Zhongguancun is also a supplier of ready-made technology. Currently, Beijing is also the capital for transnational enterprises. Top global companies such as Motorola, Hewitt-Packard, Nokia, General Motors have their headquarters in Beijing.

10 10 Since 1999, many Chinese and transnational enterprises have moved their headquarters to Shanghai. The world s number one brand Coco-Cola has moved its China headquarters to Shanghai. Top Chinese enterprises such as Haier and Zhanghong also have their technical headquarters there. Shanghai enjoys convenient transport and excellent communication. The local government has invested heavily in basic facilities. It is a good place for enterprises. China s economic centre is now here in Shanghai in the Changjiang delta area. Shenzhen is a major industrial and business city in the Pearl River delta. It is also the earliest to benefit from the reform and opening-up policies. Many business from Hong Kong have set up production facilities here. With Shunde, Dongguan and other cities and towns in the vicinity, an important economic centre has been formed. Shenzhen s success in the past twenty years is remarkable. Located at the centre of South China, Shenzhen benefits from Chinese capital flow from Hong Kong, Macau and South East Asia. Western capital flow, on the other hand, is relatively modest.

11 11 6. In which city would you set up your company s Asia Pacific Headquarters? What factors would you consider? I would set up my Asia Pacific Headquarters in (Students are free to give any answers as long as they give reasons for their choice.) Answers for reference: Factors to consider may include foreign investment, experience in outward trade, transport, communication facilities, information network, availability of staff talents, compatibility with company image and development direction. During the process of China s reform and opening up, DENG Xiaoping played an important role and contributed greatly. DENG Xiaoping pointed out that some people were opposed and they did not have confidence in reform and opening up to the world. Whoever refuses to go for reform and opening up have to step down. We should be bolder and quicken further the pace of change. If we don t go for reform and opening up, we will be left to die. Can you describe briefly DENG Xiaoping s contribution to reform and opening up? Apart from DENG Xiaoping, which personalities played important parts in the process of reform and opening up? Can you give a brief description?