Compare china main land economic and Taiwan - Research Paper Example

China and Taiwan Mainland and Taiwan are two distinct regions of China that have became different political entities since the Communist revolution of 1949.Thus during the first three decades ,the 2 governments adopted various kinds of socioeconomic systems and practiced divergent strategies of socioeconomic development. For instance in the year 1952, during the eve of the 1st 5-year-plan at the Mainland and the 1st 4-year plan in Taiwan, the capita incomes of both economies were quite close, Taiwan had $50 and Mainland had $46.

However by 1980s, Taiwan’s per capita revenue had risen to $2278 while that of Mainland had remained a paltry $256.This broadening gap between the two economies had started attracting global attention. Taiwan mostly is considered to have embraced market capitalism whereas China is considered to be a predominantly socialistic country. However both nations have shown that they do not pursue a purely socialistic system or capitalistic system. They in actuality pursue a mixture of both kinds to various levels.

Despite the fact that Taiwan pursues a system that is capitalistic ,the government still controls the finance and banking system and makes decisions on which industries it should support and protect. Conversely, China began out under firm socialism but over the years but has started to change so as to widen both domestic and foreign markets. One of the key bases for the disparities in growth between China and Taiwan was the distinctions in international trade. Thus industries that are high-exporting seem to lead to productivity that is faster than industries that are low-exporting.

Firms that are owned by the state without any foreign assistance tend to be less productive than the ones that are privatized or joint-ventures having foreign direct investment (FDI). It wasn’t just a coincidence therefore that China for the earliest time ever matched Taiwan’s 8% GDP growth rate that it has had for years after opening up of its foreign markets, allowing the entry of FDI. One of the key stated merits of communism/socialism over capitalism is stability in growth over lengthy periods of time.

Taiwan has however under capitalism displayed a more stabilized GDP growth of around 8% over the past 5 decades while China has exhibited unstable and negative GDP growth rate to a point where the government of China refused to expose statistics officially anymore (Lijun, 2002). It wasn’t until recently when the Chinese government embraced advantages of capitalism that their economy eventually started to grow again. Apart from Taiwan portraying a stabilized growth rate, it also had much less rate of inflation than China’s, a much lower rate of unemployment and also a much better equality of revenue distribution.

At no point has Taiwan’s unemployment rate ever reached above 4%, however China’s unemployment rate has tipped 4% in urbanized areas and over 10% in underdeveloped regions of rural “China”. Taiwan’s per capita income has ever once reached $16,500 as compared to China’s $3,600 per capita income. This clearly indicates how capitalism is actually a very efficient system than socialism when doing comparison of Taiwan and China. Although Mao Zedong embraced the Marxist-Leninist idea of socialism to greatly fit China, the government was unable to generate pro-longed phases of economic growth.

State’s decisions were not successful in generating better economic parity and socialization. Thus China’s government planning was not able to attain the Pareto efficient equilibriums that markets have demonstrated to generate whereby the supply meets up the demand to establish equilibrium values (Lijun, 2002).The other key things to note are the fact that China’s population is five times that of Taiwan even though their total national revenue is ten times greater than that of Taiwan. Taiwan has got a GDP per capita which is five times greater than that of China.

Taiwan is ranked 39 globally in terms of PPP whereas China’s ranking is 133rd (Gabe, 2006).Work CitedGabe, Wang T. China and the Taiwan Issue:Impending War at Taiwan Strait. New York: University Press of America Inc, 2006.Lijun, Sheng. China and Taiwan:Cross-strait Relations Under Chen Shui-bian. New York: St Martins Press, 2002.