Lecture-5_sp15.pptx - THE CHINESE ECONOMY TRANSITIONS AND CHANGE Econ 422-Spring 2015 Economic Reform and Market Transition First Phase 1978-1992 \u4e2d\u56fd

Lecture-5_sp15.pptx - THE CHINESE ECONOMY TRANSITIONS AND...

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THE CHINESE ECONOMY: TRANSITIONS AND CHANGE Econ 422-Spring 2015 Economic Reform and Market Transition, First Phase: 1978-1992 March 26, 2015 中国 经 济
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Background Reasons for Reform China’s Approach to Reforms Implementation of Reforms First Phase of Reforms (1978-1992) Initiating the reforms: Rural sector and agriculture Gradual or Dual-track approach to reform State-owned enterprises Macro stabilization Conclusion of first phase of reforms Tiananmen and setback to reforms (1989-91) Outline 06/08/2020 2 Shenzen SEZ
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Mao’s death in 1976 and three factions fighting for power in the Communist Party of China Far left—Mao’s wife Jiang Qing and the Gang of Four; preserve the Cultural Revolution (CR) Right-wing coalition of reformers led by Deng Xiaoping Centrists or restorationists led by Hua Guofeng—aim at restoring the pre-GLF and CR economic and political institutions Initially Hua gained power and launched a new initiative called Great Leap Outward with a new 10-Year Plan for 1975-1985: modernization in science, industry, technology and defence, to be financed by foreign loans Background 06/08/2020 3
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However Hua was soon replaced by Deng Xiaoping as the paramount leader of the Party (although Hua remained in office 1976-1981) Deng Xiaoping never held an office as the head of state or the General Secretary of the CCP 3rd Plenary Meeting of the 11th Central Committee of the CCP in December 1978 Economic modernization by way of pragmatic reforms and an open door policy Background 06/08/2020 4 Deng Xiaoping
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1. The CR was very unpopular, the Party and the leaders wanted to distance themselves from the old regime and get support of the people 2. Shortcomings of economic planning and the need for change 3. Successful economic development in other parts of Asia—the Four Tigers (Taiwan, Hong Kong, Singapore and South Korea), thus the belief that the market economy works better than a planned economy 4. For these reasons, Chinese people were ready for and would support economic reforms Reasons for Reform 06/08/2020 5
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China’s approach to economic transition was much different from that of most other socialist countries A system of transformation simultaneous with economic development Individual reform policies were judged on the basis of their contribution to economic growth In the Former Soviet Union and Eastern European countries, the transition was through political reforms and drastic economic changes The objective was to move as rapidly as feasible to a full market economy: «big bang» strategy or shock therapy to let the price system work as soon as possible China’s Approach to Reform 06/08/2020 6
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First of all, China postponed political reforms and introduced economic reforms softly A strategy of gradual transformation The first phase of reforms followed a dual-track, gradualist decentralizing strategy Reforms were first introduced in the rural sector— which needed restructuring and rehabilitation in any case Urban reforms (in industry) started with autonomy in
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