The Economic Successes of the Reform Period Are Outweighed by the Social Costs - Essay Example

Name Course Institution Task: The economic successes of the reform period are outweighed by the social costs. Discuss. Instructor Date Historians have argued that study of country’s past will help in understanding the current state of its affairs. The study of China’s past economic reforms after the death of Mao Zedong has helped in the understanding of today’s China state. Currently, China is still a single party state and her political system structure has remained the same (Tisdell, 2009: 271). China’s economic development has remained outstanding for the last two decades mainly because of two reasons. One of the reasons is the robust shift in its economy especially for a country with a fifth of world’s population. Secondly is its consecutive success which began way back in 1978 and it has never dropped since then. Mao Zedong liberated China from past oppressive rule but failed in spurring economic development. Reformers such as Deng Xiaoping of Mao Zedong’s party of Chinese Communist Party who took over the throne after his death in 1976 were able to implement various policy reforms that enabled China to spur in terms of economic development. Deng Xiapong was a true reformer and he highlights the fact that reforms were crucial in the development of socialism having Chinese attributes (Deng, 1984: 2). The current success of China state in terms of economic development can be attributed to this period. Country’s development can be understood by putting into account changes in its political, social and economic settings (Tisdell, 2009: 271). Many scholars have always argued that economic reforms began in 1978. Since 1978, China has seen unprecedented growth of about 10% (Han & Basu, 2011) and has always stood out in its status internationally (Tisdell, 2009: 271). Prior to reform period, a greater percentage of China’s population were peasants. Agriculture was the main source of income for many and also country’s economic development. Prior to reform era, agriculture was not doing so well. It was after an undertaking by the reformers to introduce reforms in the agricultural sector and make the peasants dictate its success when productivity in agriculture began to increase (Zheng, 2004). Despite this unprecedented economic success of reform period, there were many setbacks in terms of social costs. In fact, the economic successes of reform period are outweighed by social costs. This essay will present arguments in support of this proposition. Arguments will be supported by various scholarly works. Indeed, these social costs of reform period continue to haunt China’s state up to date. It is interesting that China’s social problems are currently increasing despite economic transformation and they are manifested in realms of overall distribution of income, provision of social services such as education and healthcare, and income security (Lindbeck, 2006: 4). Reforms were united by the doctrine of equality to all people and therefore had a slogan called “fight egalitarianism” (Khan, 2005). Reforms were evident in various sectors of the economy such as agriculture, law, education and culture. Initially, a larger percentage of population lived in rural areas and most of them engaged in peasantry. Reforms in the agricultural sector saw the rural peasant population increasing their control of agricultural sector in terms of production and marketing (Chung, 2004: 2). Indeed, these reforms were an extension of Maoist era when Mao Zedong had began destroying the landlord system of land ownership and introducing community ownership. However, community land ownership system had not succeeded in liberating China from economic problems. Agricultural reforms under Deng’s rule Under Deng’s rule shifted the land ownership and control from community to household (Kau & Marsh, 1993: 10). The main aim of this reform was to increase agricultural production without increasing land under cultivation. The economic relations of China and other countries of the world were also altered dramatically (Kau & Marsh, 1993: XViii). Reforms opened the country to other countries of the world for foreign direct investment. By opening its boundaries for other nations, China could reap from benefits of globalization. In spite of impressive economic development as a result of reforms, there were some social costs that accompanied these reforms. In fact, it is quite interesting to note various social problems which have accompanied its transformation. Social problems have manifested in realms of income distribution, income security and provision of social services such as health care and education (Lindbeck, 2006: 4). Reformers did not strike a balance between economic and social development. Kumssa & Jones (1999: 201) highlights the fact that balance needs to be struck between economic and social development to avert instances of one aspect eliminating the other. Social development in a country is an important aspect that requires more attention because it can destroy existing practices of the society and other institutions if it gets degraded. As a matter of fact, social degradation leads to poverty. As earlier stated, despite his failure, Mao succeeded in enhancing gender equity through socialism. His leadership skills were in accordance with Marxist thought. Women participated fully in providing labor force and economic development. Regional inequality was also a major consequence of the reform era. During the pre-reform period, central government controlled all sectors of economy. The government ensured equity in all sectors of development including the provision of social services. Reform period saw the removal of commune system which was replaced by household responsibility system (Risso & Carrera, 2010: 4). Peasants were given more power to decide on their agricultural activities. Since this country depended solely on agriculture during that period, many people who were peasants saw their incomes increase. As a consequence, the country experienced an immense economic growth. Research studies have shown that there is a direct correlation between economic growth and economic growth. Risso & Carrera (2010) highlight the fact that during pre-reform period, the average economic growth rate was 2.33% which corresponded with low income inequality level of 0.27 Gini coefficients. Since the reform period in 1978, the country has experienced an increased annual economic growth of above 7.07%. In the same way, the average Gini coefficient which is a measure of inequality rose to about 0.33 (Risso & Carrera, 2010: 11). In fact according to the research study done by Risso & Carrera indicated that this level of inequality has been maintained since the reform period of 1978 and 1979. Needles to say, this level of inequality did not only stagnated in 1978 and 1979, but it also extended to subsequent years. Studies done by World Bank indicated that the Gini Coefficient increased from 0.28 in 1981 to 0.32 in 1990 (Lindbeck, 2006: 40). The positive correlation between economic development and income inequality depicts the downside of reform period basically because it was the point of origin. OECD (2005) underscores the idea of in spite of the fact that poverty reduced to a great extent during reform era, the income difference had widened. This was due to the fact that there were differences in labor productivity with rural areas relying heavily on agriculture while urban regions relied on industries. In fact, the per capita income in urban regions was 1.85 times that in rural areas in the mid 1980’s (OECD, 2005). Scholars have argued that the increased income differences across provinces and also between urban and rural regions have had their contribution to the overall development during that period. Inequality effects progressed to the later periods. By 2003-2004, it had risen to 3.2. There are many factors deemed to have contributed to this income gaps increment. One of the major factors is the issue of policies introduced during the reform period. As earlier stated, the major characteristic of reform period is policy reform. A number of policies were enacted during this period. A good example is the income gap in the provinces and it was accelerated by the open door policy in the mid of 1980’s (Lindbeck, 2006: 41). This policy provided a good ground for other provinces especially those near the coast region. These regions were favored in terms of infrastructure and development and they became hubs for foreign direct investment. Importantly, during the reform period corruption was a common thing. Perhaps, it can be argued that corruption may have had some detrimental effects on economic growth during the reform period but it is also true that it may not have brought any serious effects on economic development during this period. However, it contributed major social problems. Zhang (2006) mentions the fact that transactions in some cases took place at the expense of minority groups of citizens. A good example of corruption in high place during that period is when local administrators and politicians deliberated contracts on land-lease to private developers for housing and industry (Lindbeck, 2006: 22). This resulted to a large gap between wealthy and other citizens. Notably, legal institutions had not developed so much during this period. This problem is still evident in China up to date where there is a large gap between the rich and average citizens. In spite of the stern measures taken by the China government to eradicate, corruption continue to pose a major concern. Kumssa & Jones (1999) argue that transition from centrally planned economy to borderless economy carry some social costs. The social costs range from overall social welfare loss to general unemployment. Countries which have undergone this transition have experienced degradation in the social dimension. Open door policy was introduced in place of the previous state controlled communal system. Despite being fruitful in the economic dimension, this transition came along with some social costs. Initially, China was a socialist country. Kumssa & Jones, (1999: 202) posit that a greater percentage of former socialist nations are currently facing social problems such as rise in crime rates, unemployment and rising income inequality. It is important to note that the withdrawal of the government from active participation and privatization of many enterprises can lead to increased unemployment. It was also during this period when the government encouraged transition from agricultural economy to industrial economy. China was moving towards an industrialized state and as a result, many people moved from rural agricultural places to urban industrial places. Urbanization in China can be traced back to the reform period. Despite the state’s government to industrialize rural regions, people began moving away from agricultural related activities towards industrial activities. Urbanization comes along with some social consequences. Population explosion being a major effect of rural to urban migration was a major consequence of during the reform period. Cao (2005) argues that one of the structural characteristics affiliated with China’s reforms is the high rate of rural to urban migration. People started moving away from the primary industrial sector to secondary and tertiary industrial sectors. At the same time, increase in number of industries resulted pollution. Tisdell (2008) argues that pollution and environmental issues had increased in China by 1989 and this was as a result its economic advancement. In conclusion, China’s growth has been outstanding compared to all world nations. This growth began during the time of economic reforms. Despite an immense economic development, there has been much failure in the side of social development. Similar to what Kumssa & Jones (1999: 201) have highlighted there needs to be a balance between economic and social development to avert instances of one aspect eliminating the other. Reformers of that period focused only on economic development without looking into social development as well. The social consequences of the reform period still haunt China up to date. A good example is the issue of income inequality. China being the most populated country in the world is likely to experience more social problems. Reform era was an important period for China. In spite of it having many economic successes the social costs outweighs them. Works Cited Cao, Y. Rural-urban labour mobility and income inequality in China against the background of globalization. Pp. 352-372 in C. Tisdell (ed.), Globalization and World Economic Policies. New Delhi: Serials Publications. 2005. Print. Chung H. China's rural market development in the reform era. Ashgate Publishing, Ltd. (2004). Print. Deng, X. Build Socialism with Chinese Characteristics, in: (ed.) The Research Department of Party Literature, Central Committee of the Communist Party of China (1991), Major Documents of the People’s Republic of China – Selected Important Documents since the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China (December 1978 and November 1989). (1984). Beijing: Foreign Languages Press: 1-5. Dollar, D. Poverty, Inequality and Social Disparities during China’s Economic Reform. World Bank. 2007. Han, X. & Basu, K. Male and Female Earnings Convergence in Urban China: The Role of Education. Chengdu: Research Institute of Economics and Management. (2011). Print. Kau, M. Y. & Marsh, S. H. China in the Era of Deng Xiaoping: A Decade of Reform. M.E. Sharpe. (1993). Print. Khan, A. R. Inequality and Poverty in China in the Post-Reform Period: An Overview. (2005). Print. Kumssa, A. & Jones, J. F. The Social Consequences of Reform in Transitional Economies. International Journal of Social Economics, 26.1/2/3, (1999): 194-210. Lindbeck, A. An Essay on economic Reforms and Social Change in China. IFN Working Paper No. 681. Stockholm: Research Institute of Industrial Economics. (2006). Print. Organization for Economic Co-operation and Development (OECD).Agricultural Policy Reform in China: Policy Brief. OECD. 2005. Risso, W. A. & Carrera, E. S. J. Inequality and Economic Growth in China: Pre and Psot- Reform Periods. Siena: University of Siena. 2010. Print. Tisdell, C. Economic Reform and openness in China: China’s Development Policies in the Last 30 Years. Economic Analysis & Policy, 2009, 2 (2009): 271-294. Tisdell, C. Economic Theory Applications and Issues. Thirty Years of Economic Reform and Openness in China: Retrospect and Prospect Working Paper No. 51. University of Queensland. 2008. Zhang, X. Asymmetric Property Rights in China’s Economic Growth, Discussion Paper No. 28. Washington, DC: International Food Policy Research Institute. 2006. Zheng, Y. Globalization and State Transformation in China. Cambridge: Cambridge University Press, 2004. Read More