Page 42 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
1958. Farming was collectivized in order to produce enough up to foreign investment and trade. The changes have
for the large population to survive and what is now perceived transformed China from one of the world’s poorest
as unrealistic quotas were enforced. This strong drive toward countries into the globe’s second-biggest economy.
self-sufficiency produced economic breakdown. Disruption Business people have joined the party and China has
to agriculture is blamed for the deaths by starvation of promoted free trade on the international stage. But the
millions of people following poor harvests. bottom line set by Deng in 1979 remains in place: there
can be no challenge to the party’s rule. When Deng
According to the PRC’s official Summary on Chinese started his push for reform and opening up, his goals
Economy, from 1956 to 1966, prior to the Cultural were to prevent a recurrence of the Cultural Revolution
Revolution, socialist construction was carried out as and to salvage communist rule devastated by the decade
new industries like electronics and petrochemical of chaos and Mao Zedong’s personality cult. The new
engineering came into being and the industrial layout direction was set December 18-22, 1978, when the party’s
was improved. Starting in 1965, China became self- Central Committee, chaired by Deng, formally abolished
sufficient in oil supply. The capital construction and the “Two Whatevers”, a principle that upheld whatever
technical upgrading of agriculture were launched Mao said was the truth, and replaced it with the principle
on a large scale and results were achieved gradually. of “Practice is the Sole Criterion of Testing Truth”.
Remarkable success was also achieved in science and
technology. However, the “Great Leap Forward” in 1958 In the following years, party meetings and state
and “several natural calamities” severely affected the media echoed the call to liberalize mindsets, unleashing
development of the national economy. In the winter of a wave of experiments, including the setting up of many
1960, a policy of “readjusting, consolidating, filling in and special economic zones, firstly in the coastal provinces
raising standards for the national economy was adopted of Guangdong and Fujian, and then in Shanghai and
and China’s economic construction was brought back to the north. The conservatives questioned the value of
the right track”. “The Cultural Revolution, which began in the new economic direction, prompting Deng to head
1966, resulted in a decade of social turmoil and China’s to Shanghai and Guangdong to spread his message. It
economic development experienced the most severe was on his 1992 trip to Guangdong that he declared that
setback and biggest loss ever since the founding of “development is the hard truth” and all open debates
the PRC. It’s hard to imagine that almost 40 years ago, about whether reform policies were capitalist or socialist
more than 88 percent of China’s population lived on should stop. Instead, support should go to whatever
less than three American dollars a day. While the figure reforms benefited productivity, the overall strength
has dropped to less than 6 percent in 2017, Jane Golley, of the country and living standard of the people. The
acting director at Australian Center on China in the World approach culminated in 2001 with China’s admission to
at the Australian National University, said the difference the WTO and its formal integration into the international
between the poor and rich is dire: “China’s high-tech market economy. By then, Jiang Zemin was in charge.
industries, artificial intelligence, genetic engineering, The government agreed to make concessions to the
robotics, space and aviation are becoming globally WTO and change China’s economic regulations because
competitive and highly innovative enterprises that you he was convinced that globalization was an irreversible
just couldn’t conceived of two decades ago — obviously trend. In 2002, the party adopted Jiang’s “Theory of
not four decades ago” (Zhou and Bang). the Three Represents” as part of its charter, allowing
capitalists to join the organization. While China has been
That reform era began in late 1978 when the ruling willing to embrace market reforms, the Communist
Communist Party’s top decision-making body, the Party has been reluctant to embark on political change.
Central Committee, met to end ideological turmoil, set In the past four decades, there have been intermittent
aside class struggles and open the door to experiments attempts to better define the functions of the party
such as private ownership. The push was driven by and the government, and introduce some election
Deng Xiaoping and was the start of a new pragmatic procedures and transparency in the selection of party
period in which the results of economic policy would officials (Ma and Guo).
determine the value of the approach. In the intervening
years, the party has continued to loosen state control in China has been among the world’s fastest-growing
many economic and social activities, legalizing private economies since opening up to foreign trade and
ownership, allowing market competition and opening investment and implementing free-market reforms in
42
1958. Farming was collectivized in order to produce enough up to foreign investment and trade. The changes have
for the large population to survive and what is now perceived transformed China from one of the world’s poorest
as unrealistic quotas were enforced. This strong drive toward countries into the globe’s second-biggest economy.
self-sufficiency produced economic breakdown. Disruption Business people have joined the party and China has
to agriculture is blamed for the deaths by starvation of promoted free trade on the international stage. But the
millions of people following poor harvests. bottom line set by Deng in 1979 remains in place: there
can be no challenge to the party’s rule. When Deng
According to the PRC’s official Summary on Chinese started his push for reform and opening up, his goals
Economy, from 1956 to 1966, prior to the Cultural were to prevent a recurrence of the Cultural Revolution
Revolution, socialist construction was carried out as and to salvage communist rule devastated by the decade
new industries like electronics and petrochemical of chaos and Mao Zedong’s personality cult. The new
engineering came into being and the industrial layout direction was set December 18-22, 1978, when the party’s
was improved. Starting in 1965, China became self- Central Committee, chaired by Deng, formally abolished
sufficient in oil supply. The capital construction and the “Two Whatevers”, a principle that upheld whatever
technical upgrading of agriculture were launched Mao said was the truth, and replaced it with the principle
on a large scale and results were achieved gradually. of “Practice is the Sole Criterion of Testing Truth”.
Remarkable success was also achieved in science and
technology. However, the “Great Leap Forward” in 1958 In the following years, party meetings and state
and “several natural calamities” severely affected the media echoed the call to liberalize mindsets, unleashing
development of the national economy. In the winter of a wave of experiments, including the setting up of many
1960, a policy of “readjusting, consolidating, filling in and special economic zones, firstly in the coastal provinces
raising standards for the national economy was adopted of Guangdong and Fujian, and then in Shanghai and
and China’s economic construction was brought back to the north. The conservatives questioned the value of
the right track”. “The Cultural Revolution, which began in the new economic direction, prompting Deng to head
1966, resulted in a decade of social turmoil and China’s to Shanghai and Guangdong to spread his message. It
economic development experienced the most severe was on his 1992 trip to Guangdong that he declared that
setback and biggest loss ever since the founding of “development is the hard truth” and all open debates
the PRC. It’s hard to imagine that almost 40 years ago, about whether reform policies were capitalist or socialist
more than 88 percent of China’s population lived on should stop. Instead, support should go to whatever
less than three American dollars a day. While the figure reforms benefited productivity, the overall strength
has dropped to less than 6 percent in 2017, Jane Golley, of the country and living standard of the people. The
acting director at Australian Center on China in the World approach culminated in 2001 with China’s admission to
at the Australian National University, said the difference the WTO and its formal integration into the international
between the poor and rich is dire: “China’s high-tech market economy. By then, Jiang Zemin was in charge.
industries, artificial intelligence, genetic engineering, The government agreed to make concessions to the
robotics, space and aviation are becoming globally WTO and change China’s economic regulations because
competitive and highly innovative enterprises that you he was convinced that globalization was an irreversible
just couldn’t conceived of two decades ago — obviously trend. In 2002, the party adopted Jiang’s “Theory of
not four decades ago” (Zhou and Bang). the Three Represents” as part of its charter, allowing
capitalists to join the organization. While China has been
That reform era began in late 1978 when the ruling willing to embrace market reforms, the Communist
Communist Party’s top decision-making body, the Party has been reluctant to embark on political change.
Central Committee, met to end ideological turmoil, set In the past four decades, there have been intermittent
aside class struggles and open the door to experiments attempts to better define the functions of the party
such as private ownership. The push was driven by and the government, and introduce some election
Deng Xiaoping and was the start of a new pragmatic procedures and transparency in the selection of party
period in which the results of economic policy would officials (Ma and Guo).
determine the value of the approach. In the intervening
years, the party has continued to loosen state control in China has been among the world’s fastest-growing
many economic and social activities, legalizing private economies since opening up to foreign trade and
ownership, allowing market competition and opening investment and implementing free-market reforms in
42
