China's Economhy - The Successful Transition to a Market Economy
9 important questions on China's Economhy - The Successful Transition to a Market Economy
Why has China's transition to a market economy been more successful than the transition of Eastern European countries to the market system?
- China adopted a gradual and incremental strategy (first economy, then politics). Eastern Europe initiated major political and economic reforms side by side.
- The initial conditions of China were more favorable; it was less industrialized, had a less tightly planned economy and its people had a long history of individual entrepreneurship.
- The Eastern European countries had a largely bureaucratic reform process, China's transition had an entrepreneurial style and the reform strategies were carried out with flexibility and pragmatism.
China started with an agricultural reform; the household responsibility system. What did this reform entail?
What was the effect of the household responsibility system?
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What were the contributions of the non-state TVEs (township and village enterprises) to the economy?
- Created new jobs
- Provided cheap consumer products to meet rising demand
- Contributed to regional development
After the initial reform period in which reforms were incremental, the fifty-article "decision" was adopted to reform China's economic structure. This is considered a "Big Bang" reform (i.e. not incremental). Why was this necessary?
China put economic reforms before political reforms and was successful. Describe why Russia was less succesful in transforming into a market economy because of putting political reforms before economic reforms.
The author says that China's economy increasingly looks like a convential mixed economy. What does this mean?
(In the latr 1970s when the reforms started, state-owned industry accounted for over 70% of China's GDP, by 2000 this was already down to only 24%).
How can you tell that central planning has become far less important for the Chinese economy?
- The share of government expenditure declined from 32% of GDP in 1978 to 18% in 2006.
- The propotion of industrial output from the state sector declined from 77% in 1978 to 33% in 1996.
Why has the term Five Year Plan changed into Five Year Program?
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