China economy

China economy - Samuel Gong EASC 150 Fall 2008 The Economic...

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The Economic Transformation of China – the Past, Present, and Future Over the past forty years China has had the world’s fastest growing economy. Since 1978 the nation has experienced a tenfold increase in Gross Domestic Product; it currently stands as the second largest economy in the world, behind only the United States when evaluated by purchasing power parity. Per capita income has increased at a rate of nearly nine percent per year since 1978. 1 Over the past five decades China has transformed from an antiquated rural nation to a fully industrialized leader in the international economy. We will explore China’s beginnings, its eventual and momentous economic transformation, and its present condition. We will discuss the numerous effects the present economic situation brings. Finally, our extensive examination of the history and trends of China’s economy as well as consideration of China’s present direction will allow us to make predictions for the nation’s economic future. China was not always an economic superpower. In fact, when Mao and the Chinese Communist Party established the People’s Republic of China in 1949, China was a predominantly rural nation. Mao initially pursued a socialist industrialization plan aided by the Soviets which focused on heavy industrialization. The government quickly took control of farmland and all important industries. Private industry was forcibly suppressed through campaigns such as the Three and Five Anti campaigns in 1951 and 1952, respectively. While these were technically campaigns against government waste and corruption, individuals with ties to the Kuomintang or capitalists often found themselves under heavy persecution. Soon the 1 “China.” CIA – The World Factbook. 6 November 2008, 17 November 2008. <> 1 Samuel Gong EASC 150 Fall 2008
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government had complete economic control. 2 The First Five Year plan which ranged from 1953 to 1957 produced promising growth, though in retrospect much of this industrial progress came at the expense of other economic areas, such as the agricultural sector. However, Mao soon became unhappy the direction the nation was taking and, seeing that China had an abundance of human capital, decided to put China’s most abundant natural resource to work. He cut ties with the Soviets and decided on his own plan of modernization through dependence on human labor. This split proved devastating as the Soviets retracted not only their engineers, but their plans and technological knowledge as well. With the Great Leap Forward Mao set forth a radical plan which called for the formation of massive communes and the abolition of private farms. The responsibility of making steel was placed solely on the peasants. This disastrous mixture, along with the antiquated farming techniques used by the Chinese peasants, led to a devastating famine. Furthermore, all the steel made in the backcountry furnaces was useless; to make matters worse the peasants, in their futile efforts to
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China economy - Samuel Gong EASC 150 Fall 2008 The Economic...

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