Chinas economic rise - Essay Example

?China’s economic rise The rise of the economy of a country means a stable increase in the economic growth of the country for a considerable period of time. By economic growth, we mean the increase in the gross domestic product of the country that in turn means increase in the production of overall sectors of the economy with some sectors contributing more to the growth than the others. Economic growth of a country can even occur with the increase in the key inputs of production mainly labor and capital, which helps in boosting up the productivity that result in the increase in the total production of the country. Increase in the income level of country can also boost up sector wise economic growth. A continuous increase in the real per capita income or output of a country can also be termed as economic growth as it increases the standard of living of the individuals of the country. When a country experiences significant economic growth, the international credit rating of that particular nation increases and it is generally said that there occurs an economic rise in the country. Thus in ultimate words it can be concluded that rise in the economy of a country imply a positive breakthrough in the flow of the economy. (Economic growth, 2008: Rise, 2011: Adelman, 1961, p1) The economy of China is experiencing an accelerating growth over the decade and soon from a mere underdeveloped country, it will reach the economic growth rate similar to the developed economies of the world if not more. The economy of the country since its liberalization and open up of the market economy is experiencing a growth rate of 10% per year approximately which increases with the advent of the twenty first century and expected to double itself in the next few years. According to Albert Keidel (2007) by the year 2040, the rapid economic growth of the country will soon overcome that of the United States in terms of the overall gross domestic product of the country. The rise of the economy of the country to a major economic power within a period of about twenty-eight years from a stagnant and poor economy can be termed as one of the greatest economic success of the modern time. The economic rise of the country has made it the second largest economy of the world and it could reach the highest position within a decade. According to many economists, the economic growths of the country have been mainly due to the significant increase in the productivity of the country that again resulted from the market reforms undertaken by the government of the country. The market reform of the eighties emphasizes on reduction in the role of the state control or the public sector of the economy and the increase in the ownership and the control by the private enterprises of the economy. Moreover, the country’s policy of opening up the market to international trade also significantly contributed to the gain or increase in the productivity of the country that further resulted in the growth of the economy. Thus, liberalization and privatization are the main cause behind the economic rise of the country in the recent decade. (Elwell, Labonte, Morrison, 2007: Keidel 2007) Three historical rise of the country The economy of the country had also experience modest growth before the year 1937 and according to some economist the country before the modern period thrice in the future have the experience of being the most powerful and prosperous country among the neighboring regions. The country gains prosperity during the first bureaucratic rule of Qin-Han unification. The country had the experience of the second period of prosperity at the time of reunification of Sui-tang. Before the modern period the third and the perhaps the most powerful rise of the country was at the period of reconstruction and the reinforcement of the Confucian tradition as the new orthodoxy in the country. It was the time of the Ming and the Qing dynasties. The rise of the country in these historical periods differs significantly from the rise of the country in the modern period. Despite of the difference according to some economists there may be some marks left in the mind of the present leaders of the country by those historical rising of the country. The political influence of the Qin-Han rule was so extensive that the name of the country China was probably adopted from the name of the ruler because of the success achieved by him in bringing such a large empire in a unified manner. For more than two thousand years later the people of the country involved in creating the core of the culture borne the name of the dynasty. The neighboring countries of Korea and Vietnam preserve the elements of the country’s culture under the dynasty for a considerable period of time and the impact mainly prevail on the agricultural land of those countries. The long lasting impact of the direct cultural transfusion remains among the elite class of the neighboring countries. The diffuse and the more extensive impact fall on the export of the country that includes silk products, printing technology, and paper, technologies used for military and marine purposes and ceramic wares. However, the dynasty failed in the spread of the cultural values as the rituals and the practices of the indigenous rituals did not spread beyond borders. The written language was too hard and education was esoteric even within the country. The second rise of the country under the tang empire spread from the southern region of the country to western china. It spread overseas to Japan and parts of the coastal region of Manchuria but most of the penetrating regions shook off the culture with the fall of the dynasty and were not preserved. The culture of this dynasty was the mixture of the spirituality of Buddhism and the military conquest of the tribal that differ considerably from the previous dynasty. It also consisted of the responses from some local religious groups and restoration of some elitist Confucian. The cosmopolitan culture was shaped by the powerful amalgam of the dynasty but the appeal was limited outside China. The tang dynasty was always associated with the openness in trade, industrial base of the country and the development of the overall economy. Thus due to the openness of the economy during the period the lives of the country people were enriched by the visits of many foreign merchants and travelers. The new cultural ingredients brought in the country by them strengthened the culture of the country. Apart from the impact of religion the Chinese classical, the education and literature base of the country and the creative arts during the rule of the tang dynasty had the impact that was the greatest between the official and the aristocrat class of the country. The dynasty also had features of export and import of cultural artifacts and this trade enhanced the cultural richness of the country during the period. The third rise of the country under the Ming and Qing dynasty was less spectacular than the previous two but not a slight less powerful with a different cultural impact. After the invasion of the Mongol in between the period of the third rise of the country and the demolition of the established culture of the Song dynasty, the political culture of the country became conservative and opted for more inward looking strategy. Physical defense of the country borders from foreign invasion and the restoration of the great institutions of the country of the period of the Han and the tang dynasty was the area of concentration of the founders of the Ming dynasty. The projections of the culture of the country became limited to the networks of trade that was officially approved and the maritime expeditions in the Indian Ocean carried out by Zheng He and also naval expeditions to the western oceans. Prohibiting private trade the idea of the dynasty was to develop tributary relationships. A well-established navy was maintaining by the country during the rule of the Ming dynasty. Patrol vessel and combat ships amounted to 2700, with 400 large ships for war purposes and 400 freighters for transportation of grains. The maritime technology of the country during the period was better than that of the European nations. For expeditions in the western oceans, there were 300 very large ships for carrying the treasures that were gain through the expeditions. However, foreign commerce was restricted for a considerable period of time and an inward looking followed. The inward looking strategy became weak in it and failed to resist the culture brought by the aggressive Europeans within the country. Trade relations with the foreign countries were tightly controlled. Private Chinese trades in abroad countries were banned for the reinforcement of the control and that gave rise to a culture with more extensive form of entrepreneurship. The banned private trade resulted in the emergence of illegal private trade relations and also piracy with the Chinese, Japanese and the Portuguese pirates being the beneficiaries. Despite of the discouragement of international trade the development of the port cities of the south East Asian countries were greatly affected by the trading and economic culture of the country. The country experienced a downfall after the demolition of the Ming and the Qing dynasty and most of the groups of the literati fled to the neighboring countries of Japan, Korea and Vietnam where some replicas of the Chinese arts, temples, educational institutes etc were established by those settled down Chinese families in order to preserve the culture of the country. (Gungwu, 2004: Maddison, 2006) Transformation of the culture and the economy of the country The third rise of the country under the rule of the Ming and the Qing dynasty cannot be compared with the rise of the first two as long as the regional impacts of the rise are taken into account. The surroundings and the environment of the country have changed considerably during the period of the third rise as considerable development took place with the institutional ideas that were imported from the outside world. The world of earlier china had least influence in the period of the third rise. The period was characterized by the influence of the western culture brought in the country by the people of the west. The western people were technologically more advanced than the native Chinese was. The cultural values offered by these people were much more dynamic compared to the stagnant culture of the Chinese of the then period. It was because of the stagnant but not decedent Chinese culture that the influence of the past Chinese culture on the period of the third rise was limited. However, the total environment had influenced the rise of the country and not the culture only. The rise might not even have slight influence of the cultural implication of the country. This gave rise to the fourth rise of the country as the regional power that had little or no influence of the cultural background of the country. However in turn the culture of the region might be influenced by the rise of the country as the economic power for the fourth time. The Chinese rise of the contemporary period had been shaped and directed by the earlier eras of the economic rise of the country. The first rise of the country can be defined as the period of unification and the people’s republic of china was redefined. The second period opened the economy of the country to the exposure of the outside world and the flow of new ideas, modern technologies, and interaction with the new world markets. The introduction of the country to the sovereignty of the country borders, the challenge to the country in moulding the nation and the ethnicity marked the third rise of the country. All these significant features of the rise of the country in different periods of time tied those with the fourth rise of the country in the recent period. For understanding the features of the recent rise of the country as the economic power, it is important to place all these features of the previous rise in the perspective of the twenty first century. (Gungwu, 2004) The changing global environment and impact on the country The international environment experienced huge changes from period of the third rise of the country to the present era. The colonialism and the imperialist policies of the west contributed significantly to the change as for about two hundred years the European powers enjoyed the dominance over the world. Moreover, the American continent started gaining superiority in positions of wealth and economic power that contributed to a changed environment to the rise of china for the fourth time as the economical power. The economy of the world experienced huge progress as the total product increased eightfold. There occurs a 2.6 times increase in the per capita income of the world. The per capita income of United States and that of the European nations rose by eight folds and fourfold respectively. Until the middle of the twentieth century, the country failed to adopt the changing culture and technology of the western countries. This was because the culture of the country was indifferent to the changes of the outside world and the mindset of the people of the country, their ideology and the education system of the country promoted the inward looking outlook of the society. This resulted in a fall from third to twentieth in the country’s share of the world GDP as the per capita income of the country and also the real per capita income experience a significant fall. The features of the country that remained similar to the past rise of the country were the vastness of the country in terms of the geographical area and also in terms of the country’s population. Secondly, the political weight and the historical power that the country enjoyed in the past within the country and among the neighboring regions remained unchanged also in the recent years. However, the country needed to face challenges in dealing with the changing culture of modernity of the international world. The western culture that prevails the period before the recent rise of the country was characterized by the Darwinian war between the native states fought for their survival that led to the liberation from the endless tension cycles and the experience of the countries of Western Europe that resulted in a new creed. The major political shift occurs in the economy of the country when China took the decision in the favor of the revolutionary creed of the west in the early periods of the twentieth century. The new emerged nation state of China needed to cope up with the resulted ‘legacy of aggressive nationhood’. The socialism thought of the country that evolved through the revolutionary thought failed in raising the instincts of the country and thus opened the way for the attainment of success through rival secularism and faith in the materialistic world of capitalism. The country intended to accept capitalism without the force of liberalism associated with it and hence needed to struggle for a considerable period of time for the formation of a new cultural amalgam. Thus in the period of the changing features of the global politics China might be left alone in the difficult time of this readjustment. The country expected to be keenly sensitive to the threats of the changing environment in the mid of digesting and internalizing the political changes of the new amalgam within itself. Being united and stable from within the economy was the ultimate need of the country to save itself from the economically powerful country like the United States of America that could bring a threat to the country forming alliance with other nations against the rise of China. Thus in order to survive the challenges brought in by the new globalised market economy the country needed a new culture that would be able to hold the economy of the country much more strongly. The country was in need of meeting the expectations of the vast population of the country and producing enough resources for preventing and protecting the country from any foreign invasion like that of the past. Moreover the country needed to maintain the economic growth so far achieved and provide a distribution of the wealth that were newly created in an equitable manner so as to reach each and every sections of the society. For all these to achieve the country required the economic culture that would succeed in bringing peace and stability within the country border. The culture of the country that was deeply rooted from the period immemorial in the country resisted its replacement by the western culture and the values prevailing in the countries of the west. They opted for the attainment of the secular alternative of the prevailing ideas and the institutions of the country from the past and the enlighten project with its scientific and philosophical premises were embrace by the revolutionary leaders of the country. (Gungwu, 2004: Maddison, 2006) With the transition of the economy and assuming totally new and different ideas in order to build a new society and a new state, the traditional values of the culture of the country remained confining to the rural class of the countryside and the urban societies changed considerably with the growing industrialization in the economy. Moreover, with the increased need of the rural workers to migrate in the urban industrial areas for the betterment of their living the traditional ideas of the society were considerably being abandoned of left behind. The new values that flowed with the culture of the west or from the neighboring countries of Japan, Korea, and Hong Kong, Singapore etc promised the people of the country to be freed from drudgery and poverty. The transition of the economy from the traditional values that were worshiped by the people of the country for over hundreds of years to the modern value that promise them betterment of their living standards were both long and bitter. The political and the economic impact of the transformation of the society could be a threat to the development of the country and it also could be the inspiration of the cultural values of the future. All these devastating and painful changes brought dynamism and a fresh energy among the people of the country to rise again as the economic power that went missing among the people in the between years. (Gungwu, 2004) The transformation of the economy towards the forward leap The period that started approximately from the year 1949 with the establishment of the People’s Republic of China and ending with the initiative taken by the government of the country in undertaking economic reform in the country was marked with political changes and movements in the country. For over this period of time there was little contact of the country with the western world. The political changes in the country with its huge cost brought down the developmental efforts from the part of the government. The political and the economic system of the country came on the verge of being collapsed. The education system of the country was also totally shaken. The growth of the economy of China became slower than the average rate of the world economy because of the extremely inefficient allocation of resources that made production suboptimal. From the later half of the period with the stability in the political and the cultural situation of the country the economy of the country started improving. The real per capita income of the country experienced about 80% increase and there occurred a 60% increase in the labor productivity of the country. The industrial sector of the country that had one sixth of the agricultural sector share in the total gross domestic product of the country also experienced significant increase from 1952 to the year of the reformation of the country. The relaxation of the political control of the centre and the shift towards reformation brought about significant modification in the economic system of the country. These changes resulted in the acceleration of the economic growth of the country and brought the country into a path of development that is stable. The economy of the country thus lacked the need of looking back from the year of 1978. (Maddison, 2006) The fourth rise of the nation The economy of China that was once preceded by many Asian economies took the second ranking among the Asian countries after South Korea in the economic achievements and growth. The gross domestic product of the country experienced a growth rate of about 7.1% per year. With the deceleration of the growth of the population of the country, the real per capita income of the country also experienced a rise of about 5.8% a year. The main reason behind the increase in the production and hence the gross domestic production of the country was the increase in the efficiency of the country. The main characteristic feature of the economy of the country was that it was publicly owned. A system of collective agriculture prevailed the period before the liberalization of the economy. The industrial sector, the small-scale industries were all under the direct control of the government. With the reformation of the economy during 1978, privatization was the policy that the economists of the country focused on. In the agriculture sector of the country the decision of the production was given in the hands of the individual peasants and there occurred abolition of the system of collective agriculture. The farmers of the country were being able to enjoy the return of the efforts they were giving in the production and they were no longer dependent on the little share received from the system of collective bargaining. Because of the better incentives the work effort on the part of the labors also increased and hence there occurred expansion in the production and hence the output of the country. Increased purchase price of the food grains on the part of the officials contributed to the increase in the return of the work effort of the producers. The performance of the industrial sector and the small-scale industries improved and their production increased much more in comparison to the state run enterprises as they were freed from the direct control and ownership of the government. The production decisions and the marketing decisions of the products like the determination of the price of a particular product were previously concentrated in the hands of the government. The planned system of the economy had certain shortcomings as the prices of the products remained fixed despite changes in the economic conditions and the production conditions of the country and there occurred neglect in the innovative technologies of production. There was a change in this feature of the market structure as the market forces of demand and the supply of the product gained importance and the determination of the price and other economic decisions were reflected in the shifts of the demand curve and the supply curve. The second policy that the economist or the reformers of the economy emphasized was on the opening up of the economy to the international market that increased the exposure of the economy to the international trade and also enhanced the flow of the foreign investments in the country. The market forces of the country were strengthened because of the exposure and resulted in the increase of the variability of the products available to the domestic consumers of the country. With the liberalization of the economy, the markets of the factors of production like labor, capital, and raw materials also become much more competitive and hence developed well. However, the impact of the market forces continued to be deepening slowly in the sectors of investments, the capital market of the country and the transfer of the ownership rights as the decisions bear the official imprints. According to the OECD, report the private sectors of the economy that hardly existed before the reform of the economy contributed to 59.2% in the gross domestic product of the country in the year 2003. However, some important sectors of the economy like finance, telecommunication, petroleum, tobacco, steel, and other sensitive industries were under the ownership of the government of the country. The policies followed by the economy during the period of the reformation was different from the transition followed the other communist country of USSR and was generated indigenously. Through the process of the economic reforms, the country became the second largest economy of the world overtaking the economies of the countries that was once the processors of the country in terms of the economic growth. Before the year 1978, the country aimed in achieving self-sufficiency in the production and meeting the domestic demands of the country and hence the country adopted a policy of self-reliance with no trade or autarky form of system. This system of rigid monopoly in the sector of international trade was abandoned with the economic reform and the decisions regarding the trade relations were decentralized. The competitiveness of the country was increased with the devaluation of the home currency in order to facilitate international trade. The trade ratio generally measured by the combined values of the export of the country and its import as a proportion of the total gross domestic product of the country increased to 22.9% in the year 1985 from 10% before the years of the economic reform. The ratio further increased from 38.7% to 63.9% in the period from 1995 to 2005.Greater role in controlling the economic forces were given to the market forces that increased the competition among the producers and hence increased their efficiency of production. The resources of the economy were optimally and more efficiently allocated. All these resulted in increasing the satisfaction of the domestic consumers. With the increased interaction with the world economy, the opportunities of the students of the country to study abroad also increased and this resulted in a considerable number of Chinese students migrating abroad. The visit of the foreigners and foreign students in the country also increased with the integration of the country’s economy with the global world. The inflow of the direct investment in the economy of the country also increases with the opening of the country’s economy and the total stock of the direct investment in the country for the year 1998 was just less than that United States of America and United Kingdom. The country also succeeded in gaining control over the capital movements of the international economy that were more volatile. The economic growth rate that the country achieved after the period of the reformation of the economy had always been more than the rate that was actually expected by the economists of the country. There had been considerable fall in the proportion of the rural Chinese living in absolute poverty. An approach towards a rapid transformation of the economy might often results in several economic problems in the first few years of the transformation. The approach adopted by the country was a slow and gradual and hence the country had not been affected by extreme shocks in the growth path. The policies adopted were sensible and hence the economy of the country benefited hugely from it. Another feature of the development of the economy was the decreasing importance of the agriculture sector of the country in the total GDP of the country and the increase in the share of the industry. The share of the agriculture sector in the total GDP of the country reduced to half with the employment in that particular sector also decreasing from 69% in the year 1978 to 32% in the year 2004. Thus, the fourth economic rise of the country is characterized by the shift from a planned economy to a market form of economy, from public ownership of the different sectors of the economy to private ownership. The isolation of the economy from the rest of the world was transformed into increased engagements and interactions with the world economy. The evidence of increasing prosperity of the country was increasing as the country experienced a reduction in the poverty level of the country. (Maddison, 2006: Brandt, Rawski, 2008) The reformers of the country from the history of the instability of the country realized the need of economic and institutional revolution rather than simple institutional reform. Working accordingly the country achieved the enormous economic growth to become the second largest and prosperous economy of the world. Besides the economic growth, the country also experienced a development with respect to the indicators of human well being. The mortality rate of the country among the infants and the population of the new mothers declined considerably. The educational attainment among the country’s population also increased as the attendance percentage in the educational institutes increased. The percentage of enrolments in schools also increased at all levels among students of different age groups. The life expectancy of the country also increased from 42.2 years to 66.4 years in case of males and from 45.6 years to 69.4 years fro females during the period of 1950 to 1982. Moreover, the government of the country provided the urban citizens with pensions and housing schemes. They were accompanied with education and health care facilities that were funded by the government of the country. Moreover, Special economic Zone was formed by the reformers mainly in the southern provinces of the country that became the centre of regional and hence national growth. The country after the liberalization of the economy played an important role in the process of the shaping of the world events through the world market integration. The most recent incident of the economy of China with respect to liberalization was the joining of the country as the member of the World Trade Organization that further initiated the prospects of more international trade. (Brandt, Rawski, 2008: Chow, 2007: Huang, 2011) Thus studying the rise of the economy of China in different periods of time from the historical period to the recent economic leap of the country it can ultimately be concluded that the economic prosperity that the country achieved in the recent period through the policies of liberalization, modernization and privatization had never been achieved in the future periods of the rise of the country. The historical rises of the past were more sort of rise in the cultural economy of the country, but the present was the development of the overall country’s economy, also its well-being. Thus, with the recent economic rise the country stands in the position of being the economically most powerful nation in the near future and dominates the global economy. 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CRS report for Congress, available at http://www.fas.org/sgp/crs/row/RL33604.pdf, (accessed on 25 March 2011) Keidel, A (July 2007), Accessing china’s economic rise, Foreign policy research institute, available at http://www.fpri.org/enotes/200707.keidel.assessingchina.html, (accessed on 25 March 2011) Gungwu, W, (Sept, 2004), the fourth rise of China, An International Journal, Vol-2, no-2, pp 311-322 Maddison, A, (2006), Asia in the world economy 1500-2030AD, Crawford School of Economics and Government, the Australian national university and Blackwell publishing Asia pvt ltd Brandt, L & T, G, Rawski, (2008), China’s great economic transformation, Cambridge University Press Chow, G, C, (2007), China’s economic transformation, Wiley-Blackwell Huang, X, (2011), the institutional dynamics of china’s great transformation, Taylor & Francis Read More