Post-World War II Development Strategies of China - Essay Example

Development strategies of China after World War II China is currently regarded as one of the economic superpowers as it has not only optimally developed the economic status of its people, but is also playing a strong influencing role in the global economy. “Nowadays China is one of the worlds top exporters and is attracting record amounts of foreign investment. In turn, it is investing billions of dollars abroad” (BBC). Although, China was a reasonably developed nation from earlier times, it went into an active mode of economic expansion after the World War II, particularly from 1970s. The man who conceptualized, planned, and implemented this economic expansion with a number of developmental strategies was Deng Xiaoping. Deng did not held office as the China’s President or head of state, Premier, or even as the General Secretary or as the leader of the Communist Party, but still he is regarded as the “paramount leader” of the Peoples Republic of China mainly because of his far-reaching and successful economic reforms, which only transformed China to the current superpower status. So, when China’s developmental strategies after World War II are focused, it naturally refers to Deng’s economic reforms and the related developmental strategies. Considering this fact, the discussion will about how Deng’s reforms and developmental strategies, particularly his strategies to introduce foreign investment and technology into China’s economy, giving autonomy to state-owned enterprises, and the establishment of Special Economic Zones (SEZ) led to China’s optimum economic development. Deng came into the picture in the late 1970s when the patriarch of the Chinese Communist movement, Mao Zedong passed away in 1976 and importantly China was under a very pitiable economic condition. That is, under Mao regime, China following the footsteps of the erstwhile Soviet Union mainly developed many heavy industries, without diversification. This strategy provided little benefits for the average Chinese and even the normal consumer goods were scarcely available. So, “there was a prevailing sense among Chinas leaders that the economy was in crisis, and unless something drastic was done to improve human welfare, the survival of the regime itself was at risk” (Schuman 127). However, the leaders following Mao’s ideology wanted to continue the same economic strategy laced with Communist principles. On the other hand, Deng wanted to take the Chinese economy in an all-new direction. Instead of tinkering with the existing communist economic system, Deng wanted to launch newer reforms focusing on technology, foreign investment, developing entrepreneurial spirit, and much more, so that it incorporates not just communist principles but also optimal parts of socialism and capitalism. China, Deng believed, needed “to carry out major reforms in the various branches of the economy with respect to their structure and organization as well as to their technology” (Schuman 129). This way he hoped that Chinese peasants and industrial workers would garner more benefits that will be in accordance with their hard work. In addition, the non-communist based economic development that was happening in other Asian Nations, including Japan, Singapore, and others also influenced Deng to adopt reforms. “He implemented a wide array of reforms that reversed much of Maos program. Deng called his new system socialism with Chinese characteristics. Many would recognize it as pure-bred capitalism” (Schuman 122). As part of the reform process, the first thing Deng did was replicating a successful agriculture program followed at a local level called household responsibility system to other parts of China as well. Under the Mao’s regime, the government set the farmers a strict quota of goods to produce, for which they will be compensated, and any produce beyond that were not rewarded. However, under the household responsibility system in 1980s, farmers were given sizably reduced quotas to produce, with the key provision to sell everything that goes above the quota in the market at unregulated prices. This system was an instant success leading to increased food production and elevation in the people’s living standards. “Six months later, nearly three-fourths of the countrys rural production teams had implemented the household system. Farm production soared” (Schuman 138). Although, these reforms in the rural sector were spectacular in nature, Deng understood that it can aid China’s economic development to a certain extent only. So, his next set of developmental strategies focused on introducing foreign investment and technology into the Chinese economy and industries. Deviating from Mao’s xenophobia and restrictions in foreign investment, Deng advocated opening more of China to the outside world, so wealth and technological knowledge from the West can be tapped. “The world is advancing. If we do not develop our technology, we cannot catch up with the developed countries, let alone surpass them, and we shall be trailing behind at a snails pace,” Deng lectured local party officials in September 1978 (Schuman 139). To successfully implement this development strategy, Deng needed the support of the United States, which is not only the worlds largest economy but also the major source of advanced technologies. In that direction, Deng normalized China’s relations with the United States and importantly traveled to there, holding high-level discussions and visiting number of key American companies such as Coca-Cola. The United States for their part gave warm welcome to Deng and that was followed by the granting of most-favored-nation status to China. Because of this strategy, there was an increased foreign investment from the United States, with many well-known American companies including Boeing and Coca-Cola setting up their operations in China thereby providing employment to the Chinese and giving a push to the economic expansion. The other key developmental strategy implemented by Deng is giving maximum autonomy to the state-owned large enterprises. Deng in association with his closest collaborator Zhao Ziyang initiated the experiment of giving increased autonomy to state enterprises in certain provinces. Under the earlier Communist practice, these enterprises did not maintain clearly defined independent accounts of their revenues, with the profits going directly to the coffers of the state, with the high-ranking planners handing back the funds for the operation. However, Deng and Zhao gave these certain enterprises the full responsibility to manage or handle their finances, particularly the profits, without sending it to the state. In that direction, the enterprise management team was allowed to use the generated profits to reinvest in developing the organization and also to pay incentives to the better-performing employees. This strategy gave astounding results, with those enterprises witnessing increased production and profits. After testing these methods of management autonomy in many state enterprises, Deng came up with a key economic document titled the Decision on Reform of the Economic Structure in 1984, which set the stage for the introduction of this strategy throughout China. “Enterprise managers were given unprecedented control over production, marketing and pricing of products, the use of retained profits, as well as the hiring and firing of staff” (Schuman 149). The document and the related reforms not only restricted government’s interference in corporate management, but by increasing the production and profits, it beneficially contributed to the China’s economy. After achieving visible growth through the above strategies, Deng focused on the establishment of Special Economic Zones (SEZ) as a key developmental strategy. The SEZs are physical zones located in key parts of China where the foreign firms could establish and operate their manufacturing operations with relative ease. “They were designed to encourage trade and attract foreign investment with looser regulation and tax incentives” (Schuman 142). This same strategy was used by Singapore and Taiwan, and China successfully adopted it as these zones heralded China’s prominence in the global economy. At the same time, Deng was correctly cautious about these SEZs, so that he limited this experiment with SEZs to only certain areas. Outside these zones, China continued to function as a Communist, state-dominated, closed economy. Deng limited this strategy because although he wanted SEZs to facilitate foreign trade, entry of foreign-owned enterprises, and attract investment and technology, he wanted to protect “the vast majority of the economy from any possible destabilization the outsiders might cause” (Schuman 143). Although, these two different economic Chinas existed, it was only for a short period. This is because, as SEZ reforms progressed and started to give benefits, Deng and the Chinese economic players decided to adopt many of the above-discussed policies, which were originally or exclusively introduced in the SEZs. So, when not only the foreign players in the SEZs but also the indigenous Chinese companies were benefited by these reforms of Deng, it led to increased industrial production, employment for the Chinese people, and wholesome development in the living standards. Deng remained very firm in his belief that the SEZs were crucial for the economic development and elevation of China in the world stage. “As the base for our open policy, these zones will not only benefit our economy and train people but enhance our nations influence in the world,” (Schuman 146) From the above analysis, it is possible to state that Deng’s far-reaching reforms and developmental strategies are closely correlated or one and the same as the China’s developmental strategies after the World War II. Although, Deng was a staunch socialist, he understood that the tools of capitalism including modern technology, foreign investment, professional corporate management, and others can optimally strengthen Chinas socialist economy. So, Deng’s developmental strategies has led China to become Works Cited “China Profile.” BBC, 10 Dec. 2014. Web. 11 March 2015. Schuman, Michael. The Miracle: the Epic Story of Asias Quest for Wealth. Harper Business, 2009. Read More