CHINESE ECONOMYCHINESE ECONOMY

Presented by:

Hitesh Patel

Jayant Behra

Nisarg Shah

Piyush Jain

Sudhir Patel

CHINA BACKGROUNDCHINA BACKGROUND

1949 China transformed into a Socialist Economy by Marxist.

After war with Japan in 1945 many mines and factories were

destroyed.

The Soviet troops has dismantled half the industrial area &

shipped to Soviet Union.

In 1949 the Communist Government has acquired majority

of the sectors and remaining 17% in 1952.

The Communist Government has started implementing

policies for the development of powerful Communist Country.2

CHINA 1952-1957CHINA 1952-1957

The First Five year plan implemented(1953-57).

Plan was implemented by adopting the Soviet Model.

Rigid policies and framework implemented for the

Growth.

By 1956 67.5% enterprises were state owned and

remaining 32.5% jointly public-private owned.

Heavy industries i.e. Iron, Steel, Coal, Mine etc were

pressurized for the inception of Development.

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1970-781970-78

In early 70’s the radical group Gang of Four Gang of Four attempted to

dominate the power of the center.

After the fall of Gang of Four in 1975, new policies were framed

and encouragement to increase Foreign trade was given.

Also the exchanges of students and foreign experts with the

developed countries were to be encourage.

The economy quickly recovered from the Stagnation period

between 1976 and 1978 from Cultural revolution.

Industrial output jumped to 14% in 1977 and increased by 13%

in 1978.

An Era of Development was laid down by the Communists.

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ECONOMIC REFORMS ECONOMIC REFORMS

In late 1970 and early 1980 Trade with other

countries were allowed.

Economic zones created for attracting the

Foreign Direct Investment (FDI).

Privilege to farmers for selling out their surplus

crop in the open market was allowed.

Township Village Enterprises (TVE) were

established.

Creation of Special Economic Zones5

LATE 1980 AND 1990LATE 1980 AND 1990

Creating a pricing system and decreasing the role of

state in resource allocations

Administratively driven command economy transformed

to a price driven market economy

Closing of unprofitable enterprises

Dealing with insolvency in the banking system.

Constraints on foreign trade were relaxed, and joint

ventures with foreign firms were officially encouraged as

sources of modern technology and scarce foreign

exchange

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ECONOMIC REFORMS’ ECONOMIC REFORMS’ ACHIEVEMENTACHIEVEMENT

The real GDP on average grows to 9% a year.

People below poverty line (BPL) has reduced to

a large extent.

Increase in foreign exchange reserves.

China has became second largest economy

after USA.

Between 1996-2000 China cumulatively

approved 104,621 foreign invested enterprises,

with a commitments of US 279.984 billion.

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GLOBAL OUTLOOKGLOBAL OUTLOOK

DEMAND GROWTH CONCENTRATED IN ASIA FOR

NEXT TEN YEARS – ESPECIALLY CHEMICAL GRADES

CHINA WILL CONTINUE TO GROW AND DOMINATE

SUPPLY DESPITE HIGHER COSTS

CHINA INTERNAL DEMAND WILL GROW AT 40 -

50% RATE

ASIA PRICES WILL BE $300 – 500/MT LOWER THAN

US AND EU8

COMMUNIST TO CAPITALISTCOMMUNIST TO CAPITALIST

China transformed its economy into Capitalist economy by

opening the doors for the foreign trade.

Challenges for the Communist to Capitalist!!

Growth in inequality of Income

Corruption and Crime

Inflation

Unfavorable demographics

Domestic and international imbalances.

Financially distressed state-owned and

state-influenced enterprises.

A dysfunctional financial system

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RISE IN GDPRISE IN GDP

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OUTCOMES OF OUTCOMES OF TRANSFORMATION TRANSFORMATION

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SLEEPING DRAGON AWAKESSLEEPING DRAGON AWAKES

China has been called as People Bomb due to increase

in population.

Growth rate of population estimated at 14mn per year.

Unemployment is about 20 percent.

HIV/AIDS is spreading .

Corruption

Fear of global pandemic Bird Flu because of worlds

biggest poultry population.

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