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INTB 3351 Week 14 ChinaStGd

INTB 3351 Week 14 ChinaStGd - INTB 3351 History of...

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INTB 3351 History of Globalization Reading and Web Site Study Guide Reading: HBS Case, “China: Building ‘Capitalism with Socialist Characteristics” https://docs.google.com/ Doc?docid=0AVQmzqSzoZF5ZGd4eHA5ampfMTIwMno2czJwZ2Y&hl=en 1. What does the phrase “capitalism with socialist characteristics” mean? How can China been seen as both a capitalist and socialist nation? (HBS Case, p. 1) China was the fastest-growing country in the It was the third-largest economy in the world and was frequently described as likely, within a decade, to surpass both the European Union and the United States in total GDP. Unlike these other countries, however, China was distinctly and explicitly a communist state. Under the leadership of President Hu Jintao, the Chinese Communist Party retained full control of the country’s affairs and remained firmly committed to many of socialism’s key tenets. All of the country’s major banks, for example, remained tightly linked to the state, as did key sectors such as oil, petrochemicals, and steel. State agencies provided most of the country’s still-limited financial services, and state-owned enterprises produced more than one-third of total output. Indeed, the state—and the Party—were central players in nearly all aspects of China’s economy, guiding a development trajectory often labeled as “capitalism with socialist characteristics.” 2. What were the objectives of the “Phase One” (1978-1983) and “Phase Two” (1983- 1988) reforms of Deng Xiaoping? (HBS, pp. 6-8; China at 60 slideshow) What were the objectives of reform in the 1990s? (HBS, 9-10; China at 60 slideshow) How did they differ from reform in Russia and Eastern Europe? (HBS, p. 10) Phase One: Reform in the Countryside He allowed farmers to produce on their own and sanctioned the sale of surplus production and other cash crops in newly freed markets Deng and his officials broke up the communes established by Mao and replaced them with a complicated system of leases that eventually brought effective land tenure back to the household level (even though ownership of land remained collective). The Household Responsibility System allowed peasants to lease land for a fixed period from the collective, provided they delivered to the collective a minimum quota of produce, usually basic grain; they could then sell any surplus they produced, either to the state at governmentset procurement prices or on the newly free market. They were also free to retain any profits they might earn. Within a decade, grain production had grown by roughly 30%, and production of cotton, sugarcane, tobacco, and fruit had doubled.10 Adopt 1 child policy In 1979, China created four “Special Economic Zones” (SEZs) along its coast—three in Guangdong province next to Hong Kong and one in Fujian province across the straits from Taiwan. The SEZs explicitly welcomed investment and sought to attract potential investors with tax incentives, foreign exchange provisions, and a decided lack of regulation. Initially, investment in
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