Economy of China

The economy of China is a Mixed Socialist market economy composed primarily of state-owned enterprises and that uses economic planning, while still allowing for many private businesses to flourish, as well as private investment.

Quotes

• Chinese economic growth today also has several commonalities with both the Soviet and South Korean experiences. While the early stages of Chinese growth were spearheaded by radical market reforms in the agricultural sector, reforms in the industrial sector have been more muted. Even today, the state and the Communist Party play a central role in deciding which sectors and which companies will receive additional capital and will expand—in the process, making and breaking fortunes. As in the Soviet Union in its heyday, China is growing rapidly, but this is still growth under extractive institutions, under the control of the state, with little sign of a transition to inclusive political institutions. The fact that Chinese economic institutions are still far from fully inclusive also suggests that a South Korean–style transition is less likely, though of course not impossible.
  • Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (2012)
• [suspended by authorities due to] a change in the regulatory environment on financial technology
  • Ant Group according to Where is Jack Ma? Chinese billionaire suspected ‘missing’ after Ant Group IPO suspension posted January 4, 2021

• Regarding the Africa’s Business Heroes competition, Mr. Ma had to miss the finale due to a schedule conflict
  • Alibaba according to "Jack Ma's absence from public eye spark" Twitter Discussions posted January 4, 2021

• [Ma is] lying low for the time being
  • CNBC according to Barron's What the Stock Market Is Saying About the Georgia Runoff posted January 6, 2020

• After the Japanese withdrew, the combination of the communists’ proven nationalist fervor and their program for wealth redistribution resulted in a mounting tide of popular support. This support facilitated the relatively quick defeat of the GMD, and the People’s Republic of China was established on October 1, 1949. Subsequently China collectivized its agricultural, industrial, and commercial systems. After Mao died in 1976, China’s new leaders embarked on a policy of economic reform, including the personal responsibility system and market socialism. Innovations involved allowing farmers to cultivate land for personal profit at prices set by market demand (once state quotas were met), permitting privately owned businesses, and allowing state-controlled foreign investment.
  • James DeFronzo, Revolutions and Revolutionary Movements (2018), p. 319
• The economic reforms and related government policies unleashed spectacular economic growth. As China’s economy rapidly expanded, so did its need for energy, and after 1993 China dramatically increased oil imports. The booming economy permitted some citizens to become enormously rich while drastically reducing the percentage of the country’s people living in poverty. It also led to major environmental problems. Partly because China has made enormous economic progress and has improved the lives of the large majority of its people, the government appears to enjoy significantly more popular support currently than it did in the late 1980s. Contemporary public protests center on issues that have arisen from economic reforms or have resulted from the accompanying excesses and corruption. Many demonstrators appeal to national officials for help in combating local problems, and in recent years the central government has responded with policies to address some of their major concerns, like improving conditions for people migrating from rural areas to cities and reducing air and water pollution. Political change in China, including democratization, appears to be an ongoing but long-term process.
  • James DeFronzo, Revolutions and Revolutionary Movements (2018), p. 320
• The financial fallout would be far reaching. Evergrande reportedly owes money to around 171 domestic banks and 121 other financial firms
  • Economist Intelligence Unit "Evergrande: Embattled China property giant sparks economy fears" (September 20, 2021)

• [Chinese development has its roots in the 1949 Chinese Revolution, carried out by the Chinese Communist Party headed by Mao Zedong, whereby it liberated itself from the imperialist system. This allowed it to develop for decades under a planned economy largely free of constraints from outside forces, establishing a strong agricultural and industrial economic base. This was followed by a shift in the post-Maoist reform period to a hybrid system of more limited state planning along with a much greater reliance on market relations (and a vast expansion of debt and speculation) under conditions—the globalization of the world market—that were particularly fortuitous to its “catching up.” Through trade wars and other pressures aimed at destabilizing China’s position in the world market, the United States is already seeking to challenge the bases of China’s growth in world trade. China, therefore, stands not so much for the successes of late capitalism but rather for its inherent limitations. The current Chinese model, moreover, carries within it many of the destructive tendencies of the system of capital accumulation. Ultimately, China’s future too depends on a return to the process of revolutionary transition, spurred by its own population.
  • John Bellamy Foster, Capitalism Has Failed—What Next? (February 01, 2019), Monthly Review

• The problem for China is political. China is held together by money, not ideology. When there is an economic downturn and the money stops rolling in, not only will the banking system spasm, but the entire fabric of Chinese society will shudder. Loyalty in China is either bought or coerced. Without available money, only coercion remains. Business slowdowns can generally lead to instability because they lead to business failure and unemployment. In a country where poverty is endemic and unemployment widespread, the added pressure of an economic downturn will result in political instability.
  • George Friedman, The Next 100 Years: A Forecast for the 21st Century (2009), p. 96, Doubleday

• China’s capacity to meet new demands for agricultural products has been assessed by analysts inside and outside China since the 1980s. Economists have anticipated that market forces would induce China to import grains and other land-intensive crops, but Chinese officials (motivated by food security and other concerns) have long resisted these forces and sought to maintain self-sufficiency. However, officials are now adjusting their strategies to accommodate their country’s growing reliance on agricultural imports.
  • Fred Gale, James Hansen, and Michael Jewison, "China's Growing Demand for Agricultural Imports" (February 2015), United States Department of Agriculture.

• So far, the world economy, particularly Australia and the United States, have benefited greatly from Chinese economic growth. This is likely to continue to be the case for some time... There is no real alternative to the United States as the global leader. China doesn't want the role. It would only divert its focus from its own development challenges. And to be frank, China would not be trusted by many countries, particularly in the Asia-Pacific, to be the global leader... Authoritarian state capitalism, seen today in China and Russia. While both countries have introduced elements of a market economy, private companies there operate side-by-side and at a significant disadvantage to state owned entities favored by government regulators. This mixed economy is not paralleled on the political side. What is emerging is an increasingly authoritarian political system with decreasing space for civil society, free media, and dissent. This model is attractive to authoritarian leaders around the world who see it as way to maintain power while still growing their economies.
  • Stephen Hadley, "America's Role In The World" (30 October 2014), Lowy Institute.

• China's fourteen percent growth rate does not mean it's going to be a world power. It means that coastal China, where the economic growth is taking place, is joining the rest of the Pacific Rim. The disparity with inland China is intensifying.
  • Thomas Homer-Dixon, as quoted in "The Coming Anarchy" (1994), by Robert D. Kaplan, The Atlantic

• [It would be] naive to think that the turmoil in the market doesn’t have the potential to have second-order and third-order impact. Clearly with the changes that are taking place in the Evergrande situation, it’s concerning.
  • Noel Quinn chief executive officer of HSBC "How Canada is exposed to ripple effects of Evergrande debt crisis" (September 24, 2021)

• China’s battle against poverty has benefited the largest number of people in human history. To sustain poverty reduction gains, China will focus more on achieving endogenous development in areas that have been lifted out of poverty and introduce vigorous measures to support rural revitalization. Our goal is to achieve common prosperity and high-quality development including through the rural revitalization strategy with a focus in five key areas: industry development, human capital, culture, ecological environment and local governance.”
  • Ma Jiantang as quoted in [https://www.worldbank.org/en/news/press-release/2022/04/01/lifting-800-million-people-out-of-poverty-new-report-looks-at-lessons-from-china-s-experience World Bank Press Release No. 2022/072/EAP, Lifting 800 Million People Out of Poverty – New Report Looks at Lessons from China’s Experience, April 1, 2022

• Today, China’s economic power makes U.S. lectures about morality and human rights imprudent. Within a decade, it will make them irrelevant. Within two decades, it will make them laughable. By then the Chinese may threaten to withhold most-favored-nation status from the United States unless we do more to improve living conditions in Detroit, Harlem, and South-Central Los Angeles.
  • Richard Nixon, Beyond Peace (1994)

• China remains the world's largest manufacturer, with four trillion dollars in foreign-exchange reserves, a sum equivalent to the world’s fourth-largest economy... Last spring, China abolished registered-capital and other requirements for new companies, and in November it allowed foreign investors to trade shares directly on the Shanghai stock market for the first time... The risks to China's economy have rarely been more visible. The workforce is aging more quickly than in other countries, because of the one-child policy, and businesses are borrowing money more rapidly than they are earning it... The growth of demand for energy and raw materials has slowed, more houses and malls are empty, and nervous Chinese savers are sending money overseas, to protect it in the event of a crisis... To maintain economic growth, China is straining to promote innovation... After China had spent years investing in science and technology, the share of its economy devoted to research and development surpassed Europe's... The era of Xi Jinping has defied the assumption that China's fitful opening to the world is too critical and productive to stall.
  • Evan Osnos, "Born Red: How Xi Jinping, an unremarkable provincial administrator, became China’s most authoritarian leader since Mao." (6 April 2015), The New Yorker.

• I think the [Chinese government] wants to step in further to solve this situation.
• The economy's still going but the short term will be a bit painful.
  • Patrick Wong "China's real estate house of cards could be brought down by Evergrande, the world's most indebted company (September 21, 2021)

• Over the past 40 years, the number of people in China with incomes below $1.90 per day – the International Poverty Line as defined by the World Bank to track global extreme poverty– has fallen by close to 800 million. With this, China has contributed close to three-quarters of the global reduction in the number of people living in extreme poverty.
  • The World Bank Press Release No. 2022/072/EAP, Lifting 800 Million People Out of Poverty – New Report Looks at Lessons from China’s Experience, April 1, 2022

• The problem is that you don’t restructure the world without restructuring the Chinese economy and you can’t restructure the Chinese economy without restructuring the political system all the way up to the very tippy top. The people at the tippy top have some say in how that all goes down... the question is how much.
  • Peter Zeihan and Melissa Taylor, "The Cutting Room Files, Part 6: The Future of the China" (18 December 2019), Zeihan on Geopolitics

• In China, money – capital, to be more technical – is considered a political good, and it only has value if it can be used to achieve political goals. Common concepts in the advanced world such as rates of return or profit margins simply don’t exist in China, especially for the state owned enterprises (of which there are many) and other favored corporate giants that act as pillars of the economy. Does this generate growth? Sure. Explosive growth? Absolutely. Provide anyone with a bottomless supply of zero (or even subzero) percent loans and of course they’ll be able to employ scads of people and produce tsunamis of products and wash away any and all competition.
  • Peter Zeihan, "A Failure of Leadership, Part III: The Beginning of the End of China" (15 May 2020), Zeihan on Geopolitics

• In this struggle we are inspired by the example of those countries where staunch supporters of the socialist option are in power. They are China which has the world in awe of its spectacular successes in the economy and the social sphere. Cuba, which the US imperialism has vainly tried to strangle for six decades. The dynamically developing Vietnam. These countries challenge capitalist globalization, refuse to submit to their diktat and score successes on the socialist path. The experience of fraternal Byelorussia is highly instructive.
  • Gennady Zyuganov, "Socialism Is Genuine Freedom" (22 November 2017)

External links

• Encyclopedic article on Economy of China on Wikipedia