View
228
Download
0
Embed Size (px)
Citation preview
Renminbi vs USDRenminbi vs USD
Renminbi Renminbi exchange rate exchange rate was fixed until was fixed until 20052005
Accumulated Accumulated appreciation vis appreciation vis a vis USD 20%a vis USD 20%
Stages of Chinese Stages of Chinese DevelopmentDevelopment
Soviet planning (49/58)Soviet planning (49/58) Great Leap Forward (58/64)Great Leap Forward (58/64) Cultural Revolution (64/76)Cultural Revolution (64/76) Reform and Opening Policy (78/..)Reform and Opening Policy (78/..)
China in 1949China in 1949
Three sectors of Three sectors of activityactivity– State sectorState sector– Private sectorPrivate sector– Agriculture sectorAgriculture sector
1949-19581949-1958
GDP high growth rateGDP high growth rate Investment in infrastructures and Investment in infrastructures and
heavy industryheavy industry Enforcement of the central planning Enforcement of the central planning
instrumentsinstruments Chinese economy Soviet styleChinese economy Soviet style
Great Leap ForwardGreat Leap Forward «Last year we «Last year we
produced 5,3 produced 5,3 million tons of steel. million tons of steel. Can you double it Can you double it this year?» this year?»
Mao Zedong Mao Zedong questions the questions the ministry of industry ministry of industry in July 1958.in July 1958.
«I can!» the «I can!» the minister answeredminister answered
Great Leap ForwardGreat Leap Forward
Agriculture becomes collectiveAgriculture becomes collective Creation of the agriculture Creation of the agriculture
communes which encompass 98% communes which encompass 98% of the populationof the population
Steel furnaces are build to Steel furnaces are build to increase steel productionincrease steel production
Great Leap ForwardGreat Leap Forward
Peasants abandon agriculturePeasants abandon agriculture Bad agriculture yields due to floods Bad agriculture yields due to floods
and droughtsand droughts Between 14 and 43 million people Between 14 and 43 million people
starve to deathstarve to death Substandard steel productionSubstandard steel production Only in 1964 steel production Only in 1964 steel production
achieves the same level as in 1958achieves the same level as in 1958
Great Leap ForwardGreat Leap Forward
««The economic The economic disaster was disaster was 30% 30% due to natural due to natural phenomena and phenomena and 70% due to 70% due to human errorshuman errors» » – Liu Shaoqi, China Liu Shaoqi, China
PresidentPresident
Looking for a new modelLooking for a new model
Beijing wanted a different model Beijing wanted a different model from the Soviet Unionfrom the Soviet Union
There was a first incentive to There was a first incentive to increase agriculture productivity by increase agriculture productivity by allowing peasants to use 5% of the allowing peasants to use 5% of the land to grow on their ownland to grow on their own
Cultural RevolutionCultural Revolution
Struggle between Struggle between different groups different groups within the within the Communist PartyCommunist Party
Social and political Social and political upheaval causes a upheaval causes a steep decline on steep decline on the agriculture and the agriculture and industrial industrial productionproduction
Cultural RevolutionCultural Revolution
The Cultural revolution removed all The Cultural revolution removed all incentives and responsibility regarding incentives and responsibility regarding economic performance by bringing economic performance by bringing forward ideological fervour while punishing forward ideological fervour while punishing those with knowledge and skillsthose with knowledge and skills
Mass mobilization against power Mass mobilization against power structured lead to total chaosstructured lead to total chaos
Xenophobia denied the country access to Xenophobia denied the country access to investment opportunities and technology investment opportunities and technology transfertransfer
Opening and Reform Opening and Reform
Deng Xiaoping Deng Xiaoping is politically is politically rehabilitated by rehabilitated by Hua Gufeng, the Hua Gufeng, the man choosen by man choosen by Mao Zedong to Mao Zedong to lead the country lead the country and put the and put the Cultural Cultural Revolution to an Revolution to an endend
Opening and ReformOpening and Reform
Three new modelsThree new models– Hua Guofeng – Maintain the pre Cultural Hua Guofeng – Maintain the pre Cultural
Revolution economic systemRevolution economic system– Chen Yun – Maintain the central Chen Yun – Maintain the central
planning systemplanning system– Deng Xiaoping – Structural problems Deng Xiaoping – Structural problems
could only be addressed by a full reform could only be addressed by a full reform of the economic systemof the economic system
China in 1978China in 1978
Economic backwardness when compared Economic backwardness when compared with neighbouring countrieswith neighbouring countries
Annual GDP growth of 6% between 1949 Annual GDP growth of 6% between 1949 and 1979, even if the population went and 1979, even if the population went from 540 millions to 800 millionsfrom 540 millions to 800 millions
Stagnation of the labour and capital Stagnation of the labour and capital productivityproductivity
China in 1978China in 1978
Unchanged output e per capital consuptionUnchanged output e per capital consuption Huge technological gap between China and Huge technological gap between China and
the most developed nationsthe most developed nations Collective and state property where totally Collective and state property where totally
ineffective in producing weathineffective in producing weath Excessive concentration of authorityExcessive concentration of authority By 1978, 80% of the industrial production By 1978, 80% of the industrial production
was generated by state owned enterprises was generated by state owned enterprises employing 75 million workersemploying 75 million workers
China in 1978China in 1978
Total lack of know howTotal lack of know how Prices controlled by the central Prices controlled by the central
governmentgovernment Banking sector dominated by the People’s Banking sector dominated by the People’s
Bank of China which main mandate is to Bank of China which main mandate is to finance the government planfinance the government plan
No legal framework for the economic No legal framework for the economic activityactivity
Mao Zedong FailedMao Zedong Failed
To increase per capital incomeTo increase per capital income To increase the capital stock, know how To increase the capital stock, know how
or to import capitalor to import capital To motivate workers, peasants or To motivate workers, peasants or
company managerscompany managers To efficiently allocate resourcesTo efficiently allocate resources To satisfy domestic demandTo satisfy domestic demand To produce essential goods and servicesTo produce essential goods and services
A New WayA New Way
Based on this Based on this analysis the analysis the Communist Party Communist Party recognizes the recognizes the commanding need commanding need to improve the to improve the population’s living population’s living conditions by conditions by offering a bigger offering a bigger number of goods number of goods and servicesand services
Reform and Opening PolicyReform and Opening Policy Acquire technology overseas by expanding Acquire technology overseas by expanding
economic cooperationeconomic cooperation Creation of a new legal framework for foreign Creation of a new legal framework for foreign
trade and investmenttrade and investment Property rights redefinition and decolectivization, Property rights redefinition and decolectivization,
decentralization e facilitate the access to the decentralization e facilitate the access to the production factorsproduction factors
Change from a administrative regulation system Change from a administrative regulation system to a government orientated marked regulated to a government orientated marked regulated systemsystem
Improvements on the management capability and Improvements on the management capability and responsibility of company managersresponsibility of company managers
Four ModernizationsFour Modernizations
««It doesn’t It doesn’t matter the cat matter the cat colour as long as colour as long as it gets the it gets the mousemouse»»
««To be rich is To be rich is gloriousglorious»»– Deng Xiaoping, Deng Xiaoping,
Communist Party Communist Party Secretary generalSecretary general
Four ModernizationsFour Modernizations
The initial plan focus on the following The initial plan focus on the following areas outlining ambitious objectivesareas outlining ambitious objectives– IndustryIndustry– Agriculture Agriculture – Science e technology Science e technology – DefenseDefense
Tiannanmen and the Tiannanmen and the EconomyEconomy
In 1989 China’s In 1989 China’s development suffers development suffers a setback with the a setback with the Tiananmen events on Tiananmen events on the night of June 4the night of June 4
Reformist prime Reformist prime minister Zhao Zyiang minister Zhao Zyiang is replaced by Li is replaced by Li Peng, a Soviet Union Peng, a Soviet Union formed technocratformed technocrat
Tiannanmen and the Tiannanmen and the EconomyEconomy
Establishment of a new economic Establishment of a new economic management system known as Socialist management system known as Socialist Market Planed EconomyMarket Planed Economy
Planning is responsible for macroeconomic Planning is responsible for macroeconomic regulation while is up to the market to regulation while is up to the market to allocate resourcesallocate resources
The plan offers a medium to long term The plan offers a medium to long term orientation under the leadership of the orientation under the leadership of the State Commission for Planning, which State Commission for Planning, which coordenated macroeconomic forecastingcoordenated macroeconomic forecasting
ReformsReforms
1979 to 1984 – 1979 to 1984 – efforts to reform efforts to reform and modernize and modernize the rural areas the rural areas and the and the agriculture in agriculture in order to avoid order to avoid social upheaval social upheaval among peasantsamong peasants
ReformsReforms
1984 to 1989 – 1984 to 1989 – economic economic modernization of modernization of the urban areas the urban areas with the growth with the growth of cities and the of cities and the beginning of the beginning of the migration from migration from the rural to the rural to urban areasurban areas
ReformsReforms
1991 to 19951991 to 1995– State owned enterprisesState owned enterprises– Companies ownership systemCompanies ownership system– Pricing systemPricing system– Social security systemSocial security system– Foreign trade systemForeign trade system– AgricultureAgriculture– Creation of new macroeconomic Creation of new macroeconomic
management instrumentsmanagement instruments
ReformsReforms In 1998, Zhu In 1998, Zhu
Rongji replaces Li Rongji replaces Li Peng as prime Peng as prime minister and a new minister and a new reform stage reform stage begins begins
The objective was The objective was to increase the to increase the international international competitiveness of competitiveness of the Chinese the Chinese economyeconomy
ReformsReforms
By 1998, China had brought under By 1998, China had brought under control inflation without jeopardizing control inflation without jeopardizing a robust economic growtha robust economic growth
Macroeconomic management was Macroeconomic management was now done indirectly without resorting now done indirectly without resorting to the government direct to the government direct intervention on the production intervention on the production decisions, price structure or decisions, price structure or resources allocationresources allocation
WTOWTO
China accedes to China accedes to the WTO on the WTO on December 11, 2001December 11, 2001
Talks went on for Talks went on for 15 years15 years
Accession to the Accession to the WTO meant the full WTO meant the full integration of China integration of China on the global on the global marketmarket
WTOWTO Beijing compromises to:Beijing compromises to:
– Reduce tariffs and eliminate them over a pre Reduce tariffs and eliminate them over a pre defined period of timedefined period of time
– Reduce barriers to agriculture products tradeReduce barriers to agriculture products trade– Promote transparencyPromote transparency– Liberalize domestic retail networksLiberalize domestic retail networks– Dismantle all non tariff restrictions on tradeDismantle all non tariff restrictions on trade– Eliminate state monopolies on agriculture and Eliminate state monopolies on agriculture and
industrial sectorsindustrial sectors– Force state owned enterprises to operate on Force state owned enterprises to operate on
the market rulesthe market rules– Eliminate export subsidiesEliminate export subsidies
Five Years Plan 2006Five Years Plan 2006//20102010
The 11The 11th th five years five years plan was approved plan was approved by the National by the National People’s Congress People’s Congress in March 2006 and in March 2006 and is now being is now being enforced under the enforced under the leadership of leadership of president Hu Jintao president Hu Jintao and premier Wen and premier Wen JiabaoJiabao
Five Year Plan 2006Five Year Plan 2006//20102010
Key points of the five year planKey points of the five year plan– Adoption of a scientific approach to development Adoption of a scientific approach to development
aiming at building a harmonious socialist societyaiming at building a harmonious socialist society– Bigger attention given to the improvement of the Bigger attention given to the improvement of the
population quality of life and environmental population quality of life and environmental protectionprotection
– Development of new socialist policies for the rural Development of new socialist policies for the rural areasareas
– Improvement on the competitiveness of the Improvement on the competitiveness of the industryindustry
– Reinforcement of the service sectorReinforcement of the service sector– Expected average yearly GDP growth of 7.5%.Expected average yearly GDP growth of 7.5%.
China and the European China and the European UnionUnion
European European Commission Commission president president Durão Barroso Durão Barroso and nine and nine commissionercommissioners went to s went to Beijing on Beijing on April 25 to April 25 to meet the meet the Chinese Chinese leadershipleadership
China and the European China and the European UnionUnion
In 2007, bilateral trade rose to In 2007, bilateral trade rose to 365.15 billion USD365.15 billion USD
Trade deficit was 160 billion USDTrade deficit was 160 billion USD For Europe, China is an alluring For Europe, China is an alluring
market when the United States are market when the United States are undergoing a economic crisisundergoing a economic crisis
Bilateral relations are overshadowed Bilateral relations are overshadowed by political and human rights issuesby political and human rights issues
China and the International China and the International CrisisCrisis
The international financial crisis is slowing The international financial crisis is slowing the pace of the Chinese economy via the pace of the Chinese economy via foreign tradeforeign trade
Most likely effects are firms going bankrupt Most likely effects are firms going bankrupt and a rise in unemploymentand a rise in unemployment
Recent figures show already a reduction on Recent figures show already a reduction on the import of row materialsthe import of row materials
With capital flows between China and the With capital flows between China and the world still heavily controlled, Chinese banks world still heavily controlled, Chinese banks have had relatively little direct exposure to have had relatively little direct exposure to the turbulence rocking the world economythe turbulence rocking the world economy
Asian SituationAsian Situation
A has temA has tem– Three trillion USD in foreign reservesThree trillion USD in foreign reserves– High savings rateHigh savings rate– Well capitalized banksWell capitalized banks– Minimal exposure to US mortgage-Minimal exposure to US mortgage-
backed securitiesbacked securities Effects on Asian economies are Effects on Asian economies are
expected to come over the foreign expected to come over the foreign trade channeltrade channel
Asian situationAsian situation
Most of Asia emerged from the 1997 Most of Asia emerged from the 1997 crisis with more cautious banks, crisis with more cautious banks, stricter financial regulation, a tighter stricter financial regulation, a tighter rein on government spending and a rein on government spending and a strong determination to accumulatestrong determination to accumulate
These characteristics give Asian These characteristics give Asian countries a bigger capacity to fend countries a bigger capacity to fend off the crisis then Europe or the off the crisis then Europe or the United StatesUnited States
Challenges ahead for ChinaChallenges ahead for China
Demography Demography InflationInflation EnvironmentEnvironment Property rights protectionProperty rights protection Corruption and transparencyCorruption and transparency Integration on the global economyIntegration on the global economy
中國竹簾 The bamboo curtain
João Francisco PintoJoão Francisco Pinto
[email protected]@macau.ctm.net
[email protected]@tdm.com.mo