Economic history of the People's Republic of China
The economic policy of the newly founded People's Republic of China under Mao Zedong was based on a planned economy with the highest possible economic growth . At that time, China was an agricultural state . The gross domestic product grew by more than 5 percent annually from 1952 to 1975, albeit with extreme preference for the capital goods sector and neglecting the needs of the population. The consequence of the failed great leap forward was massive famines with millions of deaths. Under Deng Xiaoping , collectivized agriculture was gradually re-privatized in the lease way. There have been special economic zones since 1979 . With the development of the private sector , cadre capitalism emerged, favoring the families of important Communist Party (CCP) officials. The poverty of the village population and the resulting rural exodus to the megacities is shared by China with other emerging countries , but hunger in China has been overcome nationwide and medical care is at least at a low level across the country. This results in a life expectancy of over 76 years in China (as of 2017). A rapid expansion of the infrastructure is necessary in order to counteract the smog in many cities that has arisen from coal-fired power plants . Waters and soils are also affected. Big traffic jams in metropolitan areas due to the switch from bicycles to cars are another challenge. Today, China has a significant trade surplus and high foreign exchange reserves.
Beginnings
The economic growth of the People's Republic is today with 6.7 percent (2016) significantly higher than in the EU with only 1.9 percent in the same year. The reasons for these different levels of development are quickly clear: While the industrial revolution in Europe began in the late 18th century and spread throughout the continent in the following century, this has only happened to a limited extent in China to this day.
One of the most developed cultures in the world lived there centuries ago, but there were numerous reasons that prevented China from early industrialization . Since the collapse of the Mongol Empire, China has always been a united country, which has no serious threat and therefore no special need for technical innovations. Due to the strict hierarchical order, it has always been difficult to implement new, revolutionary ideas, and even in the era of socialism this was not made easier by the equality of citizens.
After the People's Republic of China was proclaimed in 1949, foreign countries were particularly interested in the question of how the country would ever feed its huge population. More than 50 years later, the world is facing a country that not only feeds its population, which has more than doubled since then, but has also become the world's largest exporting nation. Economic policy under Mao Zedong was shaped by the introduction of a planned economy based on the Soviet model. A plan should replace the market in the distribution of resources and investments. The goal was something similar to the one in the young Soviet Union in 1922 - to industrialize an agricultural country characterized by feudalism by means of a central plan as quickly as possible and to achieve the highest possible economic growth. For example, a Chinese motor vehicle industry was built up from 1953 , which initially served the production of trucks . The planned economy was decisively adapted to the Chinese conditions in some areas. For one thing, China was unable to muster enough planning and administrative resources to introduce a planned economy based on the strictly Soviet model. Instead, measures for decentralization were taken in the 1950s and those responsible at provincial and company level were given more freedom to implement the requirements. On the other hand, Mao attached great importance to self-sufficient development. Not only China, but also individual provinces or regions should be able to provide for themselves. China's striving for self-sufficiency hindered economic development on the one hand, but also prevented a one-sided economic orientation for the world market and dependency on the developed industrial powers. In addition, from 1950 to 1971 there was an economic embargo on the United States against the People's Republic.
The third difference to the Soviet economic model was that Mao relied on mass campaigns in economic development, such as the Great Leap Forward or the Cultural Revolution . However, these two primarily politically motivated movements set the country back by many years. Historians today estimate that the Great Leap Forward (1959–61) cost the lives of up to 30 million people: most of them starved to death because Mao's policies were too powerful Failed harvests. The Cultural Revolution (1966–1976) practically paralyzed education and science in China for a whole decade: A well-known saying of the Cultural Revolution is “Better red than an expert”: So it was better to be on the politically “right” side than above having certain skills. In contrast to the Great Leap, however, during the Cultural Revolution great importance was attached to ensuring that production and the construction of the infrastructure continued as unimpaired as possible. The workers and peasants were excluded from the cultural revolution.
The change under Deng Xiaoping
Mao's economic legacy was ambivalent: on the one hand, gross domestic product grew by an average of 6.7 percent annually between 1952 and 1975, and opportunities for education (especially for women), medical care and social security reached a level that had previously been in the history of the country never existed and the share of industry in economic power increased from around 20 percent (1952) to 45 percent (1975). However, these successes were largely based on the mobilization of additional resources, investments became increasingly inefficient and only a very small proportion of the relatively high economic growth could be translated into higher consumption by the population. On March 5, 1973, after Zhou Enlai was diagnosed with cancer , Mao brought the economically pragmatic politician Deng Xiaoping back to power, although he had previously fallen from grace. In May 1976, Deng was overthrown by Mao again. Mao accused Deng of preferring economic success to class struggle. Deng lost all positions and was placed under house arrest. Mao named Hua Guofeng as his successor.
The death of Mao in September 1976 opened up the possibility of reform. It is unlikely that the economic policy adopted under Mao could have continued for much longer. In September 1977 Deng got back all the posts he had been deprived of in 1976 due to the influence of pragmatic functionaries and he succeeded in gradually ousting the new party leader Hua Guofeng. From 1979 Deng was de facto the new party leader. Deng did not subject China to economic shock therapy, as happened in Eastern Europe after 1990, but proceeded cautiously, groping and experimenting. Advertising campaigns stimulated hope for a modern consumer society among the population of the country.
Deng Xiaoping gradually withdrew the collectivization of agriculture as the most pressing problem . From then on the farmers had property rights to their products, but land ownership was still not possible. However, the farmers were allowed to sell the part of the harvest that they were able to bring in via the state planning requirements on free markets and at free prices.
From 1979, under the slogan “One country - two systems” , special economic zones with special economic rights and their own legislative competence were created in the provinces of Guangdong , Fujian and Hainan . Independently of the rest of China, the zones should experiment with new forms of economy, more liberal economic policies, and attract foreign capital and expertise. For the first special economic zones, particularly backward and insignificant areas were deliberately chosen. If the experiments were successful, they could be extended to all of China, but if something went wrong, the damage would be limited and far from Beijing. With the success of the special economic zones, economic concepts of the special economic zones were extended to other areas. As early as 1984, 14 coastal cities, including Shanghai , received similar but less far-reaching privileges as “open cities”. After the addition of further economic zones, an economic strip opened to foreign countries was created on the coast in 1985. In the period that followed, a large number of “special economic zones” with various forms of regulation emerged, initially primarily on the coast, later also inland.
From 1984 onwards, the agricultural practice of releasing products that were produced beyond the planned specifications for the free market was transferred to industry. The authorities signed contracts with the state-owned companies and reduced their interference in their day-to-day business. In this way there was strong growth, but there was also a two-pronged price system in which plan and market prices existed in parallel, which led to abuse: goods that should have been sold at the low planned prices appeared in the free markets.
In October 1987, the "3-Step" Strategy for China's Development was adopted at the 13th CCP Congress. The concrete goals were: As a first step, the gross domestic product should double from 1981 to 1990 and the food and clothing problem of the population should be eliminated by and large. As a second step, GDP should double again from 1991 to 2000, and the population should be able to lead a life of modest prosperity. As a third step, China should reach the level of the emerging countries by 2050.
In order to get rid of the problem with the two-pronged price system between plan and market prices, starting in 1987 was to completely unblock prices. However, this led to massive price increases, including for staple foods. Uncertainty about the further development led to hamster purchases, which further drove inflation. According to official figures, consumer prices rose by 20 percent in 1987, and some foods were almost half more expensive. The unrest and popular resistance due to the price increases led to the Tiananmen massacre in Beijing in 1989 and slowed down economic reforms for years. Stabilization took precedence over liberalization. It was not until 1992 that the economic reforms were resumed on a larger scale and Deng Xiaoping began his famous journey through southern China, on which he propagated his theses of the “combination of economic planning and market economy” and of the “socialist market economy”. The waiting, reform-oriented class registered exactly Deng's demand for “more courage to experiment, with daredevil and adventurous courage” and his demand to take hold of the opportunity now presented. Deng also assured, after years of command economy, that politics allow attempts and that this is much better than any coercion. At the XIV Party Congress in autumn 1992, the intention to build a socialist market economy was set as an economic policy goal. Since then, a private economy has developed in the cities that barely existed until 1992.
A focus on redirecting the economy towards the market economy was set in the financial sector. Banks should only grant loans based on creditworthiness and no longer according to political guidelines. In this way, interventions by the state administration in the companies, which would then be controlled by the lending banks, should be made superfluous.
The losses from the state enterprises increased in the 1990s and so it was decided that the state should withdraw from the majority of the state enterprises. Companies of no strategic importance could be privatized or closed. As a result of these new political guidelines, the state-owned companies, which were always overstaffed, released around 20 million employees in the 1990s. This presented the state with completely new problems, because up until now the companies were responsible for their employees and unemployment was not provided for in the previous Chinese planned economy. Some of these unemployed people have found jobs again through a government re-employment program.
Developments in the New Century
In 2001, the year China joined the World Trade Organization (WTO), around half of all urban workers were employed in the private sector. The WTO accession took place by means of a roughly thousand-page long treaty, in which it was determined in which steps and in which time frame China had to open its market to foreign companies. In return, the other states pledged to further open their markets to Chinese goods. China's accession to the WTO was an economic success. Industrial production then rose by over 15 percent annually, and steel production by over 20 percent annually.
Since the beginning of the new century, but especially after the new party leader Hu Jintao took office , the economic development of the previously neglected rural central China has been given high priority. The transformation of the Chinese economy in the 1990s from a planned economy to a market economy, with all the job losses, had to be financed by the rural population through artificially low food prices. After China's economic success, the rural population of China should now be supported by the urban economy. So was z. For example, the agricultural tax for farmers was abolished in 2006, most farmers no longer pay taxes, and the rural population is starting to benefit from the development of the nationwide infrastructure, which creates new income opportunities. But despite the improvements, the situation is unsatisfactory. A member of the new urban middle class earns a multiple of what a farmer earns.
Expansion of economic development to all of China
Currently, industrial development is being expanded to all of China. The government is covering the country with new roads, railway lines , airports and other necessary infrastructure such as water and electricity supply, energy and telecommunications connections. China's megacities are currently being integrated into the Chinese economy, and thus into the world economy, in terms of traffic and equipped with the necessary infrastructure. The cities with more than 200,000 inhabitants are planned next. In the cities equipped in this way, private investors from China and abroad are invited, similar to the principle of special economic zones.
As part of this construction, between 2001 and 2005 alone, over 24,000 new kilometers of motorway were built. The Chinese motorway network grew from 7000 km in 1998 to 53,000 km in 2008. By 2020, the Chinese motorway network is expected to more than double again. The railway network is also being expanded. From 2006 to 2011, 17,000 kilometers of line will be added to the existing network. This corresponds to almost half of the entire German rail network.
China's infrastructure and economy is growing rapidly, but it also has the downside of environmental pollution, air and water pollution. Chinese cities are among the world's most polluted cities. Meanwhile, the Chinese government's thinking has changed, and it has identified environmental degradation and pollution as a major problem in China. Therefore, China invested nearly 40 percent of its 2009 and 2010 financial crisis stimulus package in supporting a greener economy.
In spite of all the economic successes of the last decades, feeding the population remains a major challenge; due to the small amount of agriculturally usable area compared to the large population, it is not considered to be secure. Liu Dongzhu, an employee of the Chinese State Bureau for Grain Reserves, explains that it is almost a miracle to be able to feed 22 percent of the world's population with just seven percent of the world's agricultural area: “The Chinese government is striving to ensure that the population is supplied with grain independently can. In the past few years, the annual yield could essentially cover the grain consumption. In the meantime, around 95 percent of the required grain is produced in China itself. "
Although the time under Mao is now considered a past in China that has since been overcome and is also viewed critically, a new series of banknotes appeared in the People's Republic in 1999: where previously only the 100 yuan note showed his likeness, it can now be found on all new bills .
Foreign companies in China
Foreign companies are allowed to invest in China and foreign trade has been liberalized. Institutional reforms to government investments or the tax system in China were also necessary. Initially, however, nothing was changed in the political framework, which is why the economic system was referred to as state socialism or officially as a "socialist economy with Chinese characteristics". In 1995 the economy showed stable high growth. The previously isolated country was the seventh largest participant in international trade, and the quality of life grew rapidly, with household consumer spending initially leading to price increases of more than 7 percent annually. In the years 2000 to 2005 the rate of price increase was again in the range of 0 to 2 percent. As an example, VW recorded more than 1.9 million new cars sold within China in 2010. This is 37 percent more than in 2009.
In recent years, numerous companies have relocated their production to China. In the meantime, however, the cost advantages of Chinese locations are dwindling, so that, on the other hand, the relocation of production volumes to Europe or the United States is gaining in importance.
Cadre capitalism
Today's phase is often referred to by foreign business leaders and politicians as China's transition from a planned to a market economy , given the increasing weight of the private sector in China. China experts such as the German political scientist Sebastian Heilmann point out, however, that China is by no means governed by the free market economy, rather they speak of an authoritarian " cadre capitalism": Most economically successful are entrepreneurs with good relationships with the powerful, from whose ranks they are It often emerges: “Of the 3,220 Chinese with personal wealth of at least 100 million yuan, 2932 are children of the higher party cadre. In the five economic sectors of finance, foreign trade, land development, large-scale construction and securities, children in the senior management hold 85 percent to 90 percent of key positions. "
Foreign trade
Foreign trade is developing rapidly, and China's trade surplus is a constant issue in international trade. In the second quarter of 2009, China's foreign exchange reserves exceeded $ 2 trillion for the first time, making China the largest reserves ahead of Japan ($ 971 billion), Russia ($ 305.6 billion) and Taiwan ($ 268.0 billion) World owns. For comparison: the entire euro zone has only $ 191.6 billion.
On January 1, 2010, a free trade area between the People's Republic of China and ASEAN was established. It is the third largest in the world after the EU and NAFTA .
With regard to trade with Europe, there are projects that are to be viewed in the context of the "New Silk Road" ( One Belt, One Road ), but also the China-Central-East-Europe summits , which are specifically geared towards trade with Eastern Europe (since 2012).
In recent years work has been carried out to reduce the dependency of the People's Republic's economy on foreign trade. The Chinese economy's dependency on foreign trade decreased by 3.1 percentage points to 48 percent in 2012. In 2006, the dependency on exports was at a record level of 67 percent. Since then the numbers have been falling. Foreign trade still plays an important role, but GDP growth is increasingly driven by domestic demand.
China's foreign trade development
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Communism as a state goal
Despite the state-sponsored market economy system, the CCP has not given up its goal of building communism. The current market economy system is viewed according to the party statutes as a preliminary stage to communism. Today's Chinese idea of communism differs fundamentally from the idea of Karl Marx 150 years ago. According to official Chinese information, today's Chinese Communist Party is guided by the ideas of Mao-Zedong and the theories of Deng-Xiaoping, and Deng's economic goal was to build a “socialist market economy”. On June 30, 1984, Deng described the situation as follows: “What is socialism and what is Marxism? In the past we weren't really aware of that. Marxism particularly requires the development of the productive forces. We said that socialism is the first step towards communism and that at an advanced stage the transition that everyone can no longer live according to their abilities but according to their needs will be made. However, this requires highly developed productive forces and an overwhelming abundance of material wealth. Therefore on the socialist level it is the fundamental task to increase the productive forces. The superiority of the socialist system must be shown by the fact that under it the productive forces develop faster and better than under capitalism. If they develop, the material as well as the cultural life of the population will steadily improve. One of our mistakes after the founding of the People's Republic was that we paid too little attention to the development of the productive forces. Socialism means the elimination of poverty. Mass poverty is not socialism and much less communism. "
Parallels to Lenin's NEP
The Swiss lawyer and sinologist Harro von Senger documented in 1988 that ten years earlier statements by Vladimir Ilyich Lenin about his early Soviet economic concept NEP (New Economic Policy) had been quoted in the Chinese press . This was done to justify the turn from “class struggle” to (today's) “socialist modernization structure”. In 2010, two newspaper articles by the German agricultural scientist Theodor Bergmann drew attention to parallels between NEP and current Chinese economic policy .
Lenin's NEP allowed private corporations, profit-making, foreign capital and market economy elements. The German political scientist Georg Fülberth points out that NEP could even go hand in hand with “capitalist conditions of exploitation”. But all of this was only intended as a transitional phase in the construction of socialism. Land, the central economic control and all important parts of industry - the "command heights of the economy" - should be in state hands. A clear difference between the Chinese development and the NEP lies in the duration. The NEP lasted from 1921 to 1927, i.e. six years, the Chinese policy of opening up has lasted from 1979 until today and there is no end in sight.
literature
- Laura Bloodgood: The Effects of Increasing Chinese Demand on Global Commodity Markets ( Memento from February 11, 2011 in the Internet Archive ) (PDF; 934 kB) (= Publication 3864, Staff Research Study 28). US International Trade Commission, Washington DC June 2006, 108 pp.
- Arthur Kroeber: China's Economy. What Everyone Needs to Know . Oxford University Press, New York City 2016, ISBN 978-0-19-023903-9 .
Web links
- Short summary of Chinese economic history on the World Bank website
Individual evidence
- ↑ China - Life Expectancy Through 2017. Retrieved November 17, 2019 .
- ↑ GDP growth (annual%). The World Bank, 2016, accessed March 3, 2018 (American English).
- ↑ Dieter Griesshaber: The Industrial Revolution in England and Germany (1780-1914). Geschichts- und Kulturverein Köngen eV, July 14, 2016, accessed on March 3, 2018 .
- ^ Ana Swanson: Why the Industrial Revolution didn't happen in China . In: Washington Post . October 28, 2016 ( washingtonpost.com [accessed March 3, 2018]).
- ↑ The automotive industry in the People's Republic of China . In: Motor vehicle technology 11/1959, p. 444
- ↑ Alexander Eckstein: China's Trade Policy and Sino-American Relations October 1975
- ↑ Uwe Böwer: The Foreign Trade Policy of the PR China Project Group Model United Nations, Munich 2000 ( Memento from January 30, 2012 in the Internet Archive )
- ↑ Andreas Tank: Special Economic Zones in China University of Kassel, February 18, 2002 ( Memento from January 30, 2012 in the Internet Archive )
- ^ Doris Fischer: China in the world economy Federal Agency for Political Education
- ↑ Special economic zones . ( Memento from January 3, 2012 in the Internet Archive ) China Radio International (CRI)
- ^ Hans Gebhardt: China - from the special economic zones to the integrated development of the country's megacities . (PDF; 7.8 MB) Geographical Institute of Heidelberg University
- ↑ Doris Fischer: China's socialist market economy . Federal Agency for Civic Education
- ↑ Development strategy . ( Memento from January 3, 2012 in the Internet Archive ) China Radio International (CRI)
- ↑ Robert Leicht: Deng Xiaoping - The dreams of a realist . In: Die Zeit , No. 43/1988
- ↑ Georg Blume: "Some have to get rich first" . In: Die Zeit , No. 35/2004
- ↑ Chen Guidi, Wu Chuntao: On the situation of the Chinese farmers . ISBN 978-3-86150-798-7 , p. 354
- ↑ Social security. ( Memento from January 4, 2012 in the Internet Archive ) China Radio International (CRI)
- ^ Andreas Lorenz: Entering a new era . Spiegel Online , November 9, 2001
- ↑ Theodor Bergmann: China's long way to abolish the agricultural tax . In: Junge Welt , January 17, 2006
- ↑ Georg Blume: Mao's recipe for success . In: Die Zeit , No. 21/2009
- ↑ Dyrk Scherff: 5000 kilometers of motorway a year . In: FAZ , June 12, 2008
- ↑ Daniela Schröder: China is planning the green revolution . Spiegel Online , November 16, 2009
- ↑ The successes of agricultural development since the founding of the PR China CRI online, May 29, 2009
- ↑ The first companies to withdraw from China. In: manager-magazin.de. January 10, 2012, accessed March 31, 2012 .
- ↑ Thomas Jahn: When China is no longer worthwhile. In: handelsblatt.com. March 31, 2012, accessed March 31, 2012 .
- ↑ Carsten A. Holz : Have China Scholars All Been Bought? ( Memento from April 8, 2007 in the Internet Archive ) Far Eastern Economic Review , April 2007 (In this context, Holz points out that the large proportion of cadre children in leading economic positions also refutes the assumption "local government bad, central government good", which is popular in the "foreign research community".)
- ↑ Bloomberg.com , FAZ July 16, 2009, "China's Reserves Over $ 2 Trillion for the First Time"
- ↑ Good money, bad money . In: Der Spiegel . No. 27 , 2007, p. 85 ( online ). (Source ibid: IMF , National Statistics Taiwan)
- ^ Neidhart Christoph: A free trade agreement for 1.9 billion people. In: tagesanzeiger.ch . December 31, 2009.
- ↑ The Chinese economy is less dependent on foreign trade ( Memento from January 15, 2014 in the Internet Archive ) CRI Online, February 8, 2013
- ↑ Development of China's foreign trade: BFAI, 2006
- ↑ China's foreign trade growth slowed. CRI, January 11, 2013.
- ↑ China's Exports & Imports, 1952–2009. ( Memento from December 22, 2012 in the Internet Archive ) In: Chinability (English).
- ↑ China overtakes USA. Largest trading nation in the world. In: Stuttgarter Nachrichten . January 10, 2014.
- ↑ Deng Xiaoping on "Socialism in China" on June 30, 1984 ( Memento from February 10, 2010 in the Internet Archive )
- ↑ Harro von Senger: Stratagems - life and survival lists from three millennia (Volume 1), 1988. 12th edition 2003, Scherz-Verlag, ISBN 3-502-15653-0 , p. 200.
- ^ Theodor Bergmann: People's Republic in Transition and Step-by-Step Construction . In: Junge Welt , November 22nd and 23rd, 2010.
- ^ Georg Fülberth: Socialism . Papyrossa-Verlag, Cologne 2010, ISBN 978-3-89438-430-2 , p. 51.