Economic Conditions and General Dynamics of the Term Paper

  • Length: 7 pages
  • Subject: Economics
  • Type: Term Paper
  • Paper: #47969686

Excerpt from Term Paper :

economic conditions and general dynamics of the Chinese economy in lieu of the changing social and political paradigm.

The further opening up of the Chinese economy will better the condition of the people of China and will improve the lot of the worker. The relaxation of 1979 has lead to an improvement of the overall economy and if China adopts a truly open economy the overall economic situation of the citizens will improve.

Testing Procedure:

This hypothesis is going to be tested with the help of the previous data that has been collected and in the light of the previous events that have brought about a change in the economy of China.

The importance of trade for any country is very strong, since trade with other countries brings in foreign exchange and strengthens the economy. East Asia has been the among the fastest growing regions in the world over the past two decades, in spite of the East Asian currency crisis of 1997-1998. In the region, China is the fastest growing country with a growth rate of 10% per annum since beginning of economic reform in 1979.

China has managed to survive the East Asian currency crisis fairly safe and sound. China is one of the very few socialist countries that have managed to make a flourishing economic change over from a centrally planned economy to a market economy, with the rate of interest, which is the price of money, and the exchange rate are the only prices that are still decided upon by the government. The private, non-state sector accounts for 60% of the Gross Development Product in 1999. China is no longer a shortage economy; aggregate demand in short supply is a real prospect

The Chinese people have benefited greatly and have been helped by trade in recent years. For example, Chinese contractors have been hired to provide a more developed road and rail network to the underdeveloped areas, offering the residents of such areas better access to the technology and markets of the cities. Chinese workers lay the foundation for the new highway system using only shovels and other hand held tools.

It would be much better for everyone that is involved in the project if modern construction tools such as bulldozers, backhoes, etc. were used by the road-builders. The West can trade with ease in such products with China and in the process improve the working conditions of Chinese workers. However, this is only possible if the Chinese people are allowed to continue on the path to prosperity.

Even though China has not yet opened itself up to the West to fully participate in this mutually beneficial exchange, the initial opening up in 1979 has shown that it has benefited greatly from what little trade it has participated in. A major reason for China's not being able to trade openly on an international level is that most foreign companies call for guarantees that the U.S. will not stop trade with China in the future.

With the establishment of Permanent Normal Trading Relations (PNTR), businesses will no longer consider investment in China as a risk due to political disagreements. The establishment of Permanent Normal Trading Relations (PNTR) would mean that China would start receiving, along with such products like construction equipment and cellular phones, the influence of economic and personal freedoms that its American trading partners benefit from. Permanent Normal Trading Relations (PNTR) will not only provide more consumer options for American and Chinese citizens but will also encourage the growth of more highly skilled labor in both countries.

People and countries that are opposed to expanded Western trade with China and the country's admittance into the World Trade Organization (WTO) normally refer to the Communist regime's concentrated effort to wipe out human freedoms as reason to isolate China. What such groups have to be aware of is that trade and contact with Western ideas is essential to expanding the very freedoms that are under restriction right now.

China is increasing its efforts to privatize state owned industries and to authorize greater autonomy in labor mobility and choice of occupation, and is even encouraging the private accrual of wealth. All this is in spite of the fact that with economic liberalization and private wealth comes a shift of power away from the government and toward the private sector. This means that now the ruling class that opens up the economy ends up surrendering power out of necessity if not by intent, not just in one area but every area of business.

Economic Overview:

China's real GDP per worker fluctuated around the figures of 850 to 1233 in the 1960's.

In the seventies these figures continued to fluctuate around the range of 1300-1600. It is only after 1979 that the real GDP per worker has risen steadily, rising on an annual basis. These figures rise and fall in tandem with the degree of openness of the Chinese economy to foreign trade. This fluctuation can be seen from the attached data sheets.

Economic Analysis:

The Chinese economy continues to make its progress towards a more market-oriented structure, even though it is still under the control of the communist government and the deep-rooted political power base. The total GDP is $4.42 trillion even though the per capita GDP is far below average at $3,600 in purchasing power parity. Some 50% of the labor force is employed in agriculture, which only accounts for one fifth of the total GDP.

The Chinese economy profits from a large labor force and low wage rates that support a strong export sector. The state continues to use the system of taxes for reallocating wealth. This serves to move capital from the fast-growing East Coast regions to the poorer interior country.

Openness and Economic Growth:

In 1958, Mao Zedong promised that China would overtake the UK and the U.S. In growth and development within 15 years. Even after tens of millions of farmers died in the Great Leap Forward, Mao still believed the false crop harvest reports. Now the falsification has broadened to include economic growth figures. Thomas Rawski, a professor of economics at the University of Pittsburgh, has presented statistical evidence from the China Statistical Yearbook implying that China's GDP grew by 24% between 1997 and 2000. Energy consumption declined by 12.8% over the same period. The job opportunities that were created during this time period, as well as rises in commodity prices, were either negative or normal.

The unemployment rate in China's farming villages is now as high as 160 million, with another likely 20 million to lose their jobs in the event of China's entry into the WTO. China is expected to give out about 290 billion Yuan over the next four years to help write off bad loans that are owed by bankrupt companies.

In the mean time, the pulling out of some state-owned enterprises from the market will raise the problem of resettling more than 5.7 million workers. Corruption has also been an obstacle to free and open trade. Chinese courts handled 21,800 cases of corruption and bribery last year. The economic losses due to corruption made up almost 15% of China's GDP between 1999 and 2001, and economic loss is only the tip of the iceberg of problems caused by corruption.

The Communist Party's work is to rule the people. Terms like democracy and freedom are repugnant to it. But democratic systems and guarantees of private property rights are very important factors in the economic stability of a country. Chinese officials were give free reign to drive farmers off the farm or suppress labor unions in order to attract foreign investment. Such methods may be favorable to short-term economic development but in the long run do not bring any one any concrete benefit. China's communist government, however, has not provided concrete guarantees for the property rights and freedom of its citizens and this has led to the slowing down of its growth.

Gender Equality

Gender relations have improved over the last fifty years as women got rid of many of the shackles of an old patriarchal system with the help of the Constitution and legislation. Women have entered almost all walks of life and created one of the highest female employment rates in the world. Women accounted for 8% of the total workforce in 1949, which rose to 31% in 1978, and had reached 46% in 1995.

It was from the start of the economic reforms in 1978, that women began to come across increasing discrimination as the opposition to gender equality, as granted by law, and the discrepancy in practice became more widespread. Women in China have low political participation at all levels, at the village and township level in particular, this is a result of gender-based discrimination and early retirement. Women are obliged to retire at the age of 55, which is five years earlier than men. The unemployment rate of women was higher than for men, by 0.3% in 1999

Sex ratios at birth in…

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