How Has Chinas Economy Changed since It Introduced Capitalism - Essay Example

? Research Question: China and capitalism; how has China's economy changed since it introduced capitalism? This paper seeks to explore the economic developments in the Chinese economy with the advent of the so-called post Maoist Socialism. Beginning 1978, China began to drift its economic ideology from a communist state to a capitalist state. With such a drift, diverse economic implications are bound to accrue, in both the public and private sectors. This paper will compare the two eras in terms of policy and politics, Inequality and Poverty levels, Class, and Economic Security and Social Services among the Chinese people. Introduction Before 1976, China’s economic ideology was purely communism. The death of Mao Zedong in 1976 precipitated leadership decisions, which were significant. No one would foretell that the end of Maoist Socialism in China would result into what modern scholars refer to as China’s great transformation (Wang & Coase 1). China became capitalist and mostly productive (Shaw 1). It became one of the most democratic income distributors to the rest of the world. Despite the rise of the Chinese economy, existing statistics reveal that most Chinese are still poor; in fact, most Chinese still face challenges in exercising their freedom and protecting their rights. Tony 1 postulates that one of the most overlooked astounding narratives about China is that, since the economic resurgence of china in 1978, the country has become an unequal society to the extent that it rates high in the Asian continent. Since 1978, the Cina's Gini coefficient of general family income distribution surpasses both Indonesia and India, and it is now approaching Malaysia and the Philippines, which are unequal in Asia. This paper seeks to document a hallmark feature of china’s capitalism, with close review as to how the economy has reformed. i. Politics and Policy Deng’s skeptical slogan of ‘Letting some Chinese get rich first’ marked the outset of inequality in China. This became a source of concern for his predecessors, who prompted political moves to distance themselves from their predecessor. Between 1995 and 2002, a development strategy, popularly known as ‘Great western Strategy’, which gave greater emphasis on investing in poor provinces, was adopted (Jane 1). The program also included alleviation of rural poverty through support to farm production, rural educational and training, and emigration into ecologically sustainable areas. The implementation of these policy initiatives has yet faced numerous challenges. For example, tax rebates for local governments tend to be biased towards urban areas, this leaves rural areas depressed out in the cold thus, not doing anything on the urban-rural gap. The complexity behind Chinese politics is worth noting. A debate as to whether the Chinese Government should worry about political destabilization to compact inequality is intriguing. The political elites, the protagonist’s side of Jiang, argue that it is not a pressing problem while Hu and Wen argue it is. With Hu and Wen ruminating openly that inequality is a threat to political stability, their opponents take comfort because they understand that the relationship between poverty and inequality, and protests against social movements are often attenuated (Tony 12). ii. Inequality and Poverty According to Shujie, Yao and associates, China’s largest component of inequality is best illustrated by the rural-urban gap. In 2002, for example, the average urban: rural per capita was expressed in the ratio 3: 1 (Blecher & College 3), which economic analysts described as staggering, and almost unheard in developing nations. However, China’s extremely egalitarian distribution of land has reduced rural inequality, coupled with its policy on land reform and collectivization, the approach that those molded the collective land distribution to households in the 1980s, and the ongoing restrictions on the growth of a farmland market. Today, rural inequality in China is not as profound as in China. This is in contrary to the Maoist period, when interprovincial inequality fell due to his redistributive approach to investment. Inequality was every time measured since the start of the Dengist operational reforms up until 1995, when it rose steadily. iii. Class The third quarter of the 20th century witnessed a considerable change in class structure, in China. With the Chinese revolution, the ruling classes were replaced with a relatively flat class structure, an attribute of state socialist systems topped by very small elite government officials. During the last quarter, the class again changed, and the new class comprised of middle and top level public bureaucrats and officials and prominent officials from governments at middle-level (Blecher, Marc, and Vivienne Shue 5). In 2001, China had 325,000,000 people employed in farming who are left behind in the country’s dashing urban growth. Those occupying or staying in areas with decent natural environments can make a worthy living from the land, although income from the farm is so low that farmers with a good standard tend to, always do so using significant off-farm service. In 2001, China had 325,000,000 people employed in farming (Jane 1) who is still behind in the country’s fast moving urban growth. iv. Economic Security and Social Services During the Maoist period, living standards for Chinese people were slow but secure. In the rural areas, farmers belonged to their collectives, which assured them the opportunity of gaining an income. A combination of state-run and collective paramedical services supplied health care to grassroots clinics together with a hierarchy of hospitals, which were nearly free. Schools were also practically free. Farmers had the opportunity to own their individual homes. Those with work-point earnings demonstrated insufficiency in meeting the expenses pertaining to their collective food supplies, waivers for the minor school and health care fees, shelter, and burial. Presently, both rural and urban areas, health care and education are available after payment of user fees, which is increasingly high from both public and private providers. A study of villages from four countries comprising a range of economic and geographic conditions, and education expenses for families with schooling children ranged between 12% and 35% of outlays (Blecher, Marc, and Vivienne Shue 5). Households took loans between 29% and 175% of per-capita income, in meeting those expenses. Health care expenses ranged from 5-14% of total income earned in household, therefore households borrowed from 48-320% of per-capita income, to come across them. About, 41% of households and 65-100% of poor households were to go into debt in case they encountered an emergency. Conclusions This paper has explored the implications China’s dynamism from a socialist state to a capitalist state. Since 1978, china hesitantly and unevenly undertook an earnest transition to capitalism, which actualized in the 1990s. Towards the end of the century, for instance, collectively owned companies together with state corporations only produced 37% of the country’s gross industrial output and employed 67% of its industrial workers. These companies operated purely on a marketed environment and were in total control of their profits and responsible for their losses. There was no longer any more central planning of labor, production, and prices. There was a strong precedence in state provision for welfare services. Foreign capital was flowing in plenty and executives across the borders were regarded. Inequality took off only, at the time the Chinese economy started to, seriously open in the mid-1980s to the world economy. As coastal areas were the main beneficiaries of enterprises and massive investment, they began to profit from those investments in large sums. A great deal of truth can be sourced from their argument. Four new inequalities were now promoted by the new China export-oriented industrialization. Whatsoever the modalities, the Chinese in the 1990s fostered the growth of the new bourgeoisie, which led to the stunning economic development, which in turn sustained the country from its controversial and difficult structural, reforms of labor markets and prices. The state bonded with the constituency they had created, which is a significant factor to its political achievement in maintaining power at a period when extra ruling collectivist parties have left onto the history scrapheap. Work Cited Blecher, Marc, and Vivienne Shue. 2005. Into Space: The Political Economy of Urban Land Use China: China Economic Review 15:145-163. Coase, R. & Wang N, 2013, Gato Policy Report: How China Became Capitalist. Vol. XXXV No. 1. 8 November, 2013 Karon, Tony. Why China Does Capitalism Bettet than the U.S. 8 November, 2013 Shaw, Jane. China: Yes, It's Capitalism: The most growth happened where the State had the least power. 8 November, 2013 Shujie, Yao et. al. , 2004. Growing Inequality and Poverty in in Xinji. Paper prepared for presentation at CERI (Centre d’Etudes et de Recherches Internationales), Science Po, Paris. Read More