The Process of Economic Development in China in the 1950s - Research Proposal Example

Research Proposal of the Research: “The Process of Economic Development & its Effects in China in 1950s- Study of Three major Phases During 1949-1960” 2. Background of the Study: Officially Chinese history began from 1949 but at that time China was in great economic trouble. The reason was the aftermath of Second World War, which was ended in 1945. China was in war with Japan. In 1945, after the war, the Soviet troops brought most of the industrial tools such as machineries to the Eurasia, which is also referred to as Soviet Union. All the communication systems, energy and transportations were damaged, which eventually lead the Chinese economy in a situation from where it was extremely difficult to survive. All the farm lands were considerable damaged after the war, which became the reason that the food production reduced to approximately 30% lower than the peak level, which was achieved before the war. All these factors lead the Chinese economy in crises and the country had to face the hyperinflationary environment. The Chinese Govt aimed to restore the economy to its normal level within the time span of 3 years. In order to achieve the goal of economic recovery, the Govt started working with full devotion to recover all the losses. The recovery phase began with the reconstruction of the transportation system along with the recovery of other losses such as loss of communication system and invests on farming to recover the natural resources. The central bank of China, which is named as Peoples bank of China, was established in the year 1948 with the responsibility of maintaining the monetary control along with the regulation of all the financial institutions within the jurisdiction of China. During the establishment of Peoples Bank of China, the banking system was neither nationalized nor centralized. During the economic recovery phase of China, all the financial institutions were nationalized and centralized. The regulating authority of the banking system remained the Peoples Bank of China. In order to control the high inflation, which was generated due to the effects of the World War II, the Govt of China decided to synchronize the economic structure of China by centralizing the financial market of China (Mark 2013). The purpose of centralizing the banking system was that the monetary system could be unified. The Govt initiated the decisions to control the economy which includes monetary policy and extremely restricted credit facility. Another reason behind such restricted economic policies during the period of 1949 to 1952 was that the Govt had very restricted budget to recover the economy. In addition to this, during the same period Govt was compelled to also manage the currency of China so the international trade could trigger up. The interesting point, which could be observed, at that time is that the state owned commerce was established to compete with those who trade privately. The purpose of such competition with the private trader was that the prices of the products could be maintained within the affordable range for the consumers of china. Moreover, the Govt tried to save the Chinese people from the monopolistic environment, which could have deteriorate the economy further. At that time approximately 33 % of the business ownership in China was state owned. The Govt, which was in power at that time, was known as Chinese National Party, Kuomintang of China. The phase of Kuomintang of China was 1927 to 1949. Therefore, Chinese National Party was proved to be the major contributor of Chinese economic recovery (Mark 2013). 2.1 Five Year Plan 1953-1957: Even after the recovery of Chinese economy, the economic development phase was continued. The economic base was formed because the economy was considerably restored. The economic policies, for the purpose of industrial growth, were inculcated. The five year economic development plan introduced the economic model, which was considerably based on state ownership. The economic model also referred to as the Soviet economic model. The Govt was under the control of Mao Zedong and Zuho Enlai. They were considered as the revolutionist. The obvious reason behind the implementation of Soviet economic model was to achieve the rapid economic growth in terms of higher GDP. The economic model had the main focus on the industrial development. The model encouraged the capital intensive industries. The main flaw, which could be observed during the implementation of the economic development policy or Five Year Economic Plan in China, was that the policy gave less importance to the agricultural development. The budget allocation to the improvement of farm land was lower than that of capital intensive industries & technologies. Most of the companies, established joint venture with state. The joint venture was not the will of the owners of private companies rather they were compelled by the state (Mark 2013). 2.2 Three Major Transformations for Socialism in China In 1956, the socialist transformation was carried out by China. The Three major transformation that lead the socialist that symbolised the foundation of socialism in China which include the realization of Socialist Industrialization along with socialist transformation of agriculture along with the socialist transformation of the capitalise industry (Sweetman and Zhang 2009). 2.3 Great Leap Forward 1958-1960: The Great Leap forward refers to the phase of the Chinese Economy when the Govt realized that the implementation of Soviet economic model was not able to achieve the goal of rapid economic growth of the Chinese economy. Considering the reality of the Soviet economic model, the Govt., decided to delegate the decision making authority to the provincial level. The delegation of decision making authority also gave rights to local administration to take important decisions. The reason behind this strategy was that the centralized economy failed to realize the targeted growth. The decision leads to the abandonment of the second five year plan of 1958-1962. Instead the sudden decision was taken to reorganize the agricultural sector. The capital generated from the agricultural sector was then utilized to overcome the problem of capital shortfall to industries. Therefore, the lacking, which was found in the first five year plan, of depriving the agricultural sector with minimum possible capital was overcome by the Great Leap Forward (King 2010). 3. Goal of the research: The Goal of the research is “To evaluate the economic models, which were adopted during 1950s for the purpose of rapid economic growth of China and identify the impacts of these models and transition phases on the Chinese Economy?” The Goal of the research is not to only study the history of Chinese economy since 1949 but to also to critically evaluate the process of development while analyzing the impacts of development on China’s economic growth. Moreover, the study is aimed at formulating the generalized economic model which will prove to be most suitable to achieve rapid economic growth. No doubt, the economic model cannot be generalized because the dynamics of each economy is considerably different. Therefore, the research work will be precisely focused on the dynamics of the economy that matches with the Chinese economy. 4. Thesis Statement: The implementation of Socialist economic system, which is referred to as the social ownership of all means of production i.e. autonomous body or direct public ownership and implemented after the period of first five year plan in China (1958 & onwards), was proved to be more fruitful than the Soviet economic model, which is referred to as state ownership and implemented during the recovery phase and first five year plan (1949-1957). The research work is based on identifying the factors that were the reasons of failure of impacts of economic development process over the period 1949-1960 and its impact on China’s growth, which is bifurcated into four major economic developments such as Recovery phase after World War II from 1949-1952, First five year plan of 1952-1957, three major transformations in 1956 and Great leap forward 1958-1960. It was observed from the economic development process that the state based or soviet economic model was not proved to be fruitful but the socialist approach gave considerable economic growth to China. Therefore, studying the key differences in the economic development processes may help in identifying the key factors that could have been used to improve the state based economy in China. 5. Research Questions The research study has the following main research questions that needs to be answered while conducting the research work 1. How the process of economic development took place? 2. Identify whether the economic development and Chinese Economic growth were related to each other or not? 3. If the relationship exists then identify whether the relationship between the Chinese Economic Growth and Economic Development Process is significant or not? 6. Outline of the Research The Research report will comprise of the following Sections 6.1 Introduction Section: The Section of the research report discusses the background, purpose of research, Research questions and limitations 6.2 Literature Review: The second section of the research report will be based on the review of the literature the discussions of tentative sources that will be used in the research work are as follows Thomas P Bernstein (2011) in his book on “China Learns from the Soviet Union 1949-present” identified the impacts of Sino-Soviet relationship on the economy of China. Focuses on the economic development process and the writer has found the traces of those process in the current Chinese economy. The book named as “ East Wind China & the British left 1925-1976” (Buchnan 2012) shows the historical data relating to the China and British left that begins from the modern Chinese nationalism to the death of the Mao Tse Tung. The book elaborated the secrets behind the World War II and the impacts of the war in the Chinese economy and how the recovery took place through the economic development process in China. Wang Xiaoqi (2012) in his book on “China’s Civil Service reforms” presents the challenges to the china’s economic structure which is considered to be outdated. The civil service reforms have higher significance level because of its ability to get the Chinese economy away from the outdated structure which was formed during 1950s. Lawrence R. Sullivan (2012) in his book on “Leadership & Authority in China” provides the details of the controversies in China. The author of the book covers the period of 1895 to 1976. The book discusses the economic Models, which were used throughout the periods along with the impacts of those models on the Chinese economy. The book also discusses the transformation of Leadership & Authority over a period of around 90 years. In order to deeply evaluate the economic transition of Chinese Economy, another book, which will be tentatively used for the purpose of this research work, is the “Economic Transition with Chinese Characteristics” (Sweetman and Zhang 2009). The book discusses about the social changes of the thirty year period. The change brought significant issues in terms of economic structure of the Country. The book also discusses the period of 1950s in terms of source of most of the economic problems. In order to solve all those problems the reform process took place that began in 1978. China’s economic relationship with the international market will also be discussed in the literature review section of the report by reviewing the book on “China & the World Since 1945” (Mark 2013). The book also discusses the different periods of economic development of China but the additional factor which is discussed in the book is the analysis of international relationship of China with major economies of the world. The China’s economic recovery could be significantly seen during the period of Great Leap Forward. In order to understand the strategy behind Great Leap Forward and identifying Heroes of the strategy the book on “Heroes of China’s Great Leap Forwards” (King 2010).The main purpose of Great Leap Forward was to bring China into the category of strong industry and military structure. 6.3 Research Methodology: In order to answer the research questions, the most appropriate research methodology, which will be adopted, is the quantitative analysis using the economic indicators of the 1950s in China and their impacts on GDP growth, which will be used as the proxy for economic growth. The multiple regression analysis along with correlation analysis between the economic growth and other economic indicators that will define the economic policies of the Govt during the period of 1950s will be used. The data will be collected from the database of World Bank and Peoples republic of China. 6.4 Data Analysis: The section of the report will use the data, which will be retrieved from the database of World Bank and Peoples republic of China. The section shows the regression and correlation results. 6.5 Conclusion & Recommendation The last section of the report focuses on the discussion of results, which will be presented in the data analysis section of the report along with deriving conclusions. In addition to this, the section will also present the recommendation of the implementation of the relevant and most suitable economic models for the Chinese economy. Bibliography 1. Bernstein, Thomas P. China Learns from the Soviet Union 1949- Present. Lexington Books, 2011. Thomas P Bernstein (2011) in his book on “China Learns from the Soviet Union 1949-present” identified the impacts of Sino-Soviet relationship on the economy of China. Focuses on the economic development process and the writer has found the traces of those process in the current Chinese economy. 2. Buchnan, Tom. East Wind: China & the British Left 1925-1976. Oxford University Press, 2012. The book named as “ East Wind China & the British left 1925-1976” CITATION Buc12 \l 4105 (Buchnan 2012) shows the historical data relating to the China and British left that begins from the modern Chinese nationalism to the death of the Mao Tse Tung. 3. King, Richard. Heroes of China Great Leap Forward. University of Hawaii Press, 2010. The China’s economic recovery could be significantly seen during the period of Great Leap Forward. In order to understand the strategy behind Great Leap Forward and identifying Heroes of the strategy the book on “Heroes of China’s Great Leap Forwards 4. Mark, Chi-Kwan. China & the World Since 1945. Routledge, 2013. The book discusses the different periods of economic development of China but the additional factor which is discussed in the book is the analysis of international relationship of China with major economies of the world. 5. Sullivan, Lawrence R. Leadership & Authority in China, 1895-1976. Maryland: Lexington Books, 2012. Lawrence R. Sullivan (2012) in his book on “Leadership & Authority in China” provides the details of the controversies in China. The author of the book covers the period of 1895 to 1976. The book discusses the economic Models, which were used throughout the periods along with the impacts of those models on the Chinese economy 6. Sweetman, Arthur, and Jun Zhang. Economic Transition with Chinese Characteristics. School of Policy Study: Queens Unitversity, 2009. In order to deeply evaluate the economic transition of Chinese Economy, another book, which will be tentatively used for the purpose of this research work, is the “Economic Transition with Chinese Characteristics”The book discusses about the social changes of the thirty year period 7. Xiaoqi, Wang. China Civil Service Reforms. Routledge, 2012. Wang Xiaoqi (2012) in his book on “China’s Civil Service reforms” presents the challenges to the china’s economic structure which is considered to be outdated Read More