You are on page 1of 4

How important to the Chinese economic miracle of the 1980s and 1990s were the special economic zones,

first established in 1980s? 1980s and 1990s : Change and continuity of the importance of SEZs Criteria Setting: Intensity of impact how SEZs led to miracle. Nature of importance Time based criteria. Immediate/Fundamental factor. Geographical extent? Rural reforms 1st major move to market-oriented economy Abandoned collectivization and adopted privatization for profit incentives Policies: Chinas 1982 constitution declared the existence of individual economy would complement socialist economy. 1984 Long Term Leases 15-20 years that could be passed on to children though state still owned land 1988, allowed to buy and sell land use rights like individual ownership of land. Evaluation: Necessary precondition only. Not immediate factor or underlying fundamental constant. Most far-reaching and successful. Agricultural output grew and increased peasant income Agricultural reforms created the psychological climate, the feeling that reforms had worked, that was important so the people would be receptive to other reforms. However, the rise in grain production levelled off and declines, rural economy stagnated. Massive dislocation of population, rural unemployment, surplus workers migrated to city. Which was important for abundant and cheap labour for industries in urban areas.

Industrial reforms Adoption of efficient Western production techniques, end of state subsidies, foster competition & cost saving schemes e.g. hire-fire workers, introduction of incentives with differential earnings according to performance & genuine contribution to replace the previous fixed state wages. Policies: Township-Village enterprise

Peasants given licences to become small private entrepreneurs. Production increased, surplus labour since migrated to urban areas and thus abundant and cheap labour. + Technonlogy. Evaluation: Most dynamic sector of Chinas rural economy growing 20-30 percent year. Satisfied demands that state owned economy failed to deliver, spurred production and filled gaps in system. TVE vigorous and fundamental driving force for rapid growth because huge and superior in performance, technologically innovative, most active role in resisting recession and hastening recovery, source of reemployment, alleviation of poverty. Increased demand for consumer goods and provided employment to rural labour. However, SOE not efficient. SOE dropped from 78% (1978) to 42% (1996) to 24% (2001).

Special Economic Zones and expansion Features: Free trade areas: special concessions and preferential treatment to foreign companies to encourage investments e.g. financial freedom, special tax concessions, tax free zones, minimal red tape or bribes to do business, concentrated development, joint ventures with foreign companies to hire and fire employees freely. Guangdone province: Shenzhen, Shantou, Zhuhai, Expansion 1984: 14 open coastal cities. Opening of economic regions in feb 1985, open economic zones-area, open coastal economic belt and expansion

Evalutation Werent dead end reforms Extend and evolved industrial rural reforms Most important. Promoted rapid economic growth by attracting huge foreign investment (foreign capital/expertise) Increase infrastructural development in China Enabled growth of industries Increased production Reduced COP With Chinas abundant and low cost labour (rural areas) Reduced price of g/s Increase export market demand Increased trade Increased foreign exchange etc. Generated great foreign trade and rapid development. Brought into China valuable foreign currencies. SEZ played key role in promoting development in inland regions through inward investment. Chinese exports grew over 500% between 1981 and 1991 and inward foreign investment quadrupuled. 9.5% GDPincrease 1978 & 99.

EXTERNAL FACTORS

Integration into global economic order: global demand, market, investment 1980 joined IMF, WB, increased borrowing, 2001: WTO Comparitive advantage shifted from other countries. Lower COP, Lower price of g/s, Increase export market demand, increase foreign exchange, Increase investment, Increase growth.

End of sino-soviet split Gorby satisfied 3 demands, economic exchanges, increase in border trade, end of diversion of resources for military defence. Despite split in early 1980s, still able to rise economically so not much impact.

1979-1989 Internal External

1989 - 1992

1992 2000

1. SEZ in relation to other economic factors 2. SEZ within economic factors in relation to political and other facts 3. SEZ across the two decades

The essay will now look at the impact of SEZ.

1. SEZs were important to the miracle (Intensity of impact) Mention state of China before 1980. Needed dollars and expertise. Promoted rapid economic growth by attracting huge foreign investment (foreign capital/expertise) Increase infrastructural development in China Enabled growth of industries Increased production Reduced COP With Chinas abundant and low cost labour (rural areas) Reduced price of g/s Increase export market demand Increased trade Increased foreign exchange etc. 2. Because of the early successes, Deng expanded, changed nature of coastal zones regions cities inland and continued into 1990s. 3. Kickstarted/created the conditions/context for the miracle to affect a wider area.

4. SEZs were especially important to the miracle during early 80s because of the state of China in 70s no dollars, no talents, needed Investments.

The essay will now dispute the assumption.

1. The importance of SEZ should not be over-stated because they merely provided the zone for actual reforms/changes to be carried. Its like a shell hardware. Other factors important too. 2. The importance of SEZ was dependent on political factors stability, new mindset of leaders, reduced emphasis on Maoist ideology + the reassertion of political control. (Precondition that made it possible enabling factors) 3. The impt of the SEZs dependent on economic factors fundamental immediate factors that determined timing and sustainence of miracle a) agricultural reforms b) industrial reforms. a) About providing surplus food + surplus labour but useless without b) industrial reforms! SOEs remove, reduce them, and when reduce them reform them with capitalist practises Surplus Labour, Lower COP, etc. etc. 4. External factors good relations with other countries more free trade agreements etc. for global demand/market.