Advisor to the Prime Minister the Economists

Advisor to the Prime Minister

The economists that support the ideologies of the economic globalization are of a strong assertion that this phenomenon has the power to shape and reshape progression in the economic activities and the economic globalization is hereby regarded positive stimulus that guard and ensure the enhanced excellence of life, a rapid increase in the economic activities but unfortunately this is not the case in all the situations. The unwanted by products of economic liberalization and economic globalization are hard felt in the developed countries like China.

The speaking volumes of inequality in china is also analyzed by the ratio of relative geographies and the ethnicities, the major portion forming the poor china population are widely distinguished in sects and ethnicities and are labeled by geographies. And due to the dispersed locations of the poor and rural china it becomes difficult for the state to get hold over the entire country's poor population. And the most relevant fact that contributes to the poverty causing inequality in china is the lack of welfare institutes particularly in the western china where approximately 7% of the working population is not contributing to the well being of the masses due to disabilities and another portion of the working age lacks the basic training and facilities to commence the activities as functional individuals.

1: Introduction

1.1: The Overview of the Chinese Economy

The most primitive adjectives that bombards our minds whenever the issue of economic liberalization is raised is the minimum government intervention along with less regulation followed by more individuals entering in the trade sector and participating actively in economic well being of a country. This particular school of thought has taken its roots from the classical liberalism, as minimum or even at some points no government intervention tends to hinder the business transactions and the state gives complete privilege to the citizens so as to encourage the trade activities to boost the economy simultaneously. It is for this reason that the economists regard economic liberalization as a mean of a nation attaining efficiency that will ultimately result in the positive sum game.

The economy and the present form of the trading polices in China have been a subject of great changes ever since the inception of the state sovereignty. The role and the participation of the government in the trading policies and campaigns have long been subject of changes till the present time since 1949. Owing importance to the socialist school of thought to design the political and the economic activities the state in 1949 begun to design and architect the national economy and had the control over the regulations. The era of government involvement further enhanced in 1950s when the sate promoted monopolies so as to accomplish the task of fixing the prices or goods and commodities and even the factors of production. China faced the similar pace and involvement of state in the business and trading activities till 1978 when the economic reforms took roots in the economy of china. As per the consequences of this reform the government intervention begun to lose its control to a great degree and the nation was lifted by a bulk of private entrepreneurs entering in the economy for trade and business activities. This episode of the Chinese history instilled a spark of pure economic liberation where all the private business owners were promoted. Rather that the state's encouragement for the foreign monopolization the stare encouraged the private businesses to first flourish the national market with their products and then granted them subsidies to invade the foreign markets to increase the foreign trade and help the Chinese nation fit in the patchwork of globalization rather that assertively enacting with the state's isolation. Irrespective of a liberal economic system the government of China took into due consideration and control over a few important and rare industries that determines the strength of the government the aerospace industry is one of them along with the national banks and a few other including People's Bank of China, National Development and Reform Commission, Ministry of Finance, and the ministries of agriculture; coal industry; commerce; communications; education; light industry; metallurgical industry; petroleum industry; railways; textile industry; and water resources and electric power (Wang, 2003).

1.2: Inequities in China

The comparative analysis of the economic and social development of china presents a significant gap of development and equality. As a matter of fact the tangible success of the nation in terms of economic development is a consequence of the economic reform 1978 but the devastated lives of the poor and the basic inequalities are the unwanted by products of the high pace economic activities and reforms. On evaluating the position of the china the fact comes to ample light that the economic freedom of china is embedded by a set of reforms that were visible in the previous decade.

The social system prevailing in China has a very low relevance with the high paced economic developments and well being. The hype of China might diminish once the ground facts about the dark economic liberalization are revealed and compared to the hype China tends to create across the globe. The initial ground that can be used to test the validity of the fact that china is a poor country irrespective of earning huge amounts from the foreign market is the bifurcation of the country into a small urban remote region and a huge rural area (Facts About Poverty in China Challenge Conventional Wisdom, 2009) the fact has been established that 99% of the rural population is contributed from the rural china and as a matter of fact they lack basic necessities and contribute to 80% of the total poverty the urban regions are anyhow well established and prosper.

The speaking volumes of inequality in china is also analyzed by the ratio of relative geographies and the ethnicities, the major portion forming the poor china population are widely distinguished in sects and ethnicities and are labeled by geographies. And due to the dispersed locations of the poor and rural china it becomes difficult for the state to get hold over the entire country's poor population. And the most relevant fact that contributes to the poverty causing inequality in china is the lack of welfare institutes particularly in the western china where approximately 7% of the working population is not contributing to the well being of the masses due to disabilities and another portion of the working age lacks the basic training and facilities to commence the activities as functional individuals (Report, 2009).

The basic reason why the inequalities and the relative difference in the rural and urban region is discussed is mainly to elevate and solidify the stance that the economic reforms of the china are limited to the trade activities in the urbanized metropolitan cities, and irrespective of the agricultural reforms the government role in ensuring an equal distribution of wealth, resources and basic necessities is a far cry. Additionally in the hype of being an economic liberalized state the government of China tends to close its eyes on its intervention and emergence as a welfare state.

2: Economic Liberalization

Economic liberalization is the system of economy that encounters to support the basic proposition of least government intervention to commence trade and commerce. Economic liberalization is considered to be the desired state of economy where all the factors of production and the choice of production and productivity remains firm in the hands of the private entrepreneur. The associated terms of the economic liberalization are free markets, mixed markets and positive sum game (Lal, 2010).

The free markets implies to the freedom of the producer to produce whatever he desires to produce but maintaining the decorum of legality. Economic liberalization is therefore characterized by the provision of the free markets. But while considering the working of the liberalized economies they are often found associated with the mixed market phenomena as well. As a matter of fact in today world of immense competition and constraints of global inflation the countries that even represents themselves to be economically liberalized do not operate altogether o free markets but have constraints in the form of mixed markets. This intermediate form of command and free economy is the mixed economy that restricts the private ownership of a few firms that represents the sovereignty of the state. The central or the state banks often fall in this category apart from the other major key sectors that are likely to earn the government huge revenues and margins (Elkins, 2004).

Besides the selection of the major tools to employ in the liberalized economies it is also important to elevate the complement of the economic liberalization, which is the positive sum game. The fact refers that economic liberalization has a positive tendency to increase the overall profitability of the businesses in a way that it end up in a win-win situation. Appling the phenomenon of antecedent consequence model it can be deduced that economic liberalization is the antecedent condition that brings out and about the profitability in a way that the size of the pie increases proportionally and every economic player gets the share out of the increasing size of the pie (Oi, 1992). This is regarded as a win-win situation because the state earns taxation and the entrepreneur as a result of his investment gets an ample profit followed by no government or state's restriction.

The economic liberalization is China is the example of the presented antecedent consequence model and the economy operates as a mixed economy (Bian, 1996). Because many of the firms are under the control and ownership of the state and no private entrepreneur has so far been allowed to invade those markets that are monopolized by the state examples are People's Bank of China, National Development and Reform Commission, Ministry of Finance, and the ministries of agriculture.

3: Economic Liberalization in China

The political economic and social system of china is rendered as the "right winged totalitarianism." The phenomenon implies two important terminologies, the totalitarian government and a right winged system (Elkins, 2004). A totalitarian government implies that the a single political party or an individual is effective as a sole representative of all the acts of the government and to its best that totalitarian government subjugates all the possible means of opposition, it can rather be summed up as a positive sum game that tries to justify the presence of one political party and no opposition. Totalitarianism is the opposite of democracy.

The other terminology that makes up the political environment of china is that political system is right winged. This refers to a unique combination of liberalism and communism. Under this type of the political system the state permits the citizens to carry on trade and promotes free markets to a great extent with minimum government intervention, but restricts the activities of the people in the government affairs and proceedings. Keeping in view the government and economic systems of china it has been found it fulfills al the standards of a right winged economy marked by the totalitarian culture (Perkins, 1988).

The nature of economic liberalization in china speaks volume of the states ignorance of its basic responsibilities including the major act of state as a welfare state. The phenomenon of the economic liberalization implies to the minimal state intervention in conducting trade and enacting the business activities to boost the process of economic development and growth. The economists that support the ideologies of the economic globalization are of a strong assertion that this phenomenon has the power to shape and reshape progression in the economic activities and the economic globalization is hereby regarded positive stimulus that guard and ensure the enhanced excellence of life, a rapid increase in the economic activities and a standard and appropriate allocation of resources to safeguard the interest of the private entrepreneurs, the citizens and the government itself. The two contrasting themes are found intersecting on the point that solidifies the stance of the state as a welfare state.

The ratio of poverty mentioned in the earlier part of the paper depicts a clear picture that the government of china has although managed to create a global hype of its industrialization but yet have failed to acknowledge its role as a welfare stare. The economic liberalization in its true sense implies to the minimal intervention of the state in the private business but the other job roles of the government remains constant and the government is responsible to conduct and commence all sorts of welfare activities for the citizens. The state of china has deviated from the core features of the government resulting in a wide scale bifurcation of the country in two distinct halves, the rural and the urban.

It should have been the major intention and mission of the Chinese government to minimize the differences caused by the bifurcation of the state into rural and urban domains, but instead with every step china takes to improve its economy the distinction between the two halves of developed and undeveloped china increase.

4: Needs To Re-Evaluate the Economic Liberalization in China

A number of factors have contributed in the approach that in the need of re-evaluating the economic liberalization in China. Few of the factors are enumerated below.

4:1 Inequality

The first rather the basic factor that contributes to the reevaluation of the economic liberalization and lack on the part of the government is the clear inequality of the distribution of wealth and other necessities among the two distinct divisions of the population the rural and the urban. The urban areas are facilitated with all the luxuries and modern facilities. The basic reason why the urban areas are highly developed is nit because the government pays heed to it but it is due to the private investments and projects of prosper people living in the urban part of the country, on the other hand the western part is deprived of the basic facilities to facilitate their lives though ease in getting employment and education apart from the basic necessities. This strengthens the stance that the economic liberalization has made the government of china to turn its eyes away from the allocation of resources to deprived areas and needy people (Zhang, 2000).

4.2 Lack of Social Welfare State

The basic responsibilities of all the states weather they are function as economically liberal state or vice a versa are to be a welfare state. But under the influence of liberalization the Chinese government tends to disregard the fact that they have any form of private intervention, even thought the minimal intervention clause of the economic liberalization is limited to the trade activities of the state only (Esping-Andersen, 2002). Hence owing to this fact even this clause elevates the importance of the reevaluation of the welfare state.

4.3 Democracy vs. Totalitarianism

The totalitarian approach of the Chinese government has further elevated the need of this evaluation. As a matter of fact the constitutional name of china chants that it is "Peoples Republic of China." The fact is rather surprising that the people of china lack the basic right to oppose and condemn the wrong doings of the government (Nathan, 1993). This totalitarianism also subjugates the due right of the people to elect their representatives in the political activities that can ensure that they get at least all the basic requirements for the sustenance of life.

4.4 Basic Education and Technology Usage

The bifurcation of china is an important issue as it directly portrays the lack of state to acknowledge that all the citizens are benefitted by the equal opportunity of getting educated and increasing the standards of livings. The rural population of china form about 80% of the total population and about 7% of this population cannot become the part of the productive workforce due to the fact that they are not trained appropriately to mange work with their disability. At this point of time the sardonic act of the Chinese government that is worth mentioning is that, China has been investing and lending funds across the globe to device gadgets that can facilitate the working and ease the life of physically disable people, Pakistan is one of the centers of china's such investments (Zhu, 2004). But when it comes to maintain the productivity of its own country china tends to lean back, hence the state forgetting the famous proverb that charity begins at home. this emulate the importance of the fact the globalization and maintaining international relation is the priority of an economically liberal state over the well being of its own people.

This also implies to the lack of the state's efforts in fixing the problems of the people that are divided on the basic of ethnicities and geographies. The need of the hour is that the state of china should spread education and usage of technology among the masses.

4.5 Labor Market Situation

China is regarded as the center of technology. This implies that it works continuously to improve and upgrade technology. But as a matter of fact the labor market of the china is not trained according to the changes in technology, leaving a huge portion of the labor market unemployed, every time the technology upgrades (Fan, 2002). This further diminishes the returns and the lack of trust the people have on the government. But anyhow the labor market is capable enough to cope with the changing trends but the role of the state of china remains at the back hand in training the employees to perform the basic job roles (Bonacich, 1972).

4.6 Basic Facilities

The apportionment of the basic facilities across china is not uniform. The geographical dispersion of the people has resulted in to a great difficulty for the government to approach those individuals and ensure that they are being provided with the basic facilities. This enhances the importance of advance technology to reach the people that are dwelling in the western china and the ones that are geographically dispersed and divided on the basis of ethnicity (Zhao, 1997).

Each of the factors discussed above elevates the importance of the state role in the eradication of the social an economic injustice. The importance of the fact needs to be established that the economic liberalization should be spread over all the domains of market and political economy, but the there is a clear cut need of analyzing and understanding the importance of a state as a welfare state (Hopkins, 1998). Because the overall effectiveness and efficiency of the labor market as well as the government and leading authorities is widely depended on the cumulative efforts incurred by both the ends that is government as well as the citizens.

5: Policy Amendments Proposal to the President

Keeping in due consideration the factors that require a solid stance action by the government are proposed to the president of China, Mr. President Hu Jintao. Being an advisor to the president I would request the following amendments in the policies to ensure that liberty is being exercised in its true sense, and the state of China is not just an economically liberalized but the people of China are educated, skilled, employed and treated equally.

The first priority should be given to the formulation of policies that will eradicate the inequality among the Chinese nation. The basic reason why this fact has been duly raised is that due to unequal distribution of the resources many people of china, being bounded by their ethnicities are moving towards the other part of the world to render their services there. As due to the lack of equal opportunities the brain drain is taking the skilled labor out of the Chinese market.