ANALYSIS OF CHINA

China

• Historical Background: China has one of the world's oldest people and continuous civilizations, consisting of states and cultures dating back more than six millennia. The People's Republic of China (PRC), commonly known as China, was established in 1949.
• Geography: China is situated in eastern Asia, bounded by the Pacific in the east. It is the third-largest country in the world, next to Canada and Russia, with an area of 9.6 million square kilometers.
• Population and Language: China is the most populous country in the world with 1,371 million people (as per 2015 estimates) and a growth rate of 0.5% per annum. Most languages in China belong to the Sino-Tibetan language family, spoken by 29 ethnicities. There are also several major dialects within the Chinese language itself.
• Economy:  Being one of the oldest civilizations in the world, China has been the world's largest economy. After the establishment of the People's Republic of China under one-party rule, all the critical sectors of the economy, enterprises and lands owned and operated by individuals, were brought under government control.

1. Great Leap Forward (GLF) campaign:

• In 1958, a program named 'The Great Leap 42...Forward (GLF)' campaign was initiated by Mao to modernize China's economy.
• The aim of this campaign was to transform the agrarian economy into a modern economy through the process of rapid industrialization.
• Under this program, people were encouraged to set up industries in their backyards.
• In rural areas, communes were started. Under the Commune system, people collectively cultivated lands.
• 1958, there were 26,000 communes, covering almost all the farm population.
• GLF campaign met with many problems. A severe drought caused havoc in China killing about 30 million people.

2. Great Proletarian Cultural Revolution:

• In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966-76), under which students and professionals were sent to work and learn from the countryside. However, when Russia had conflicts with China, it withdrew its professionals, who had earlier been sent to China to help in the industrialization process.

3. Reforms Introduced in China:

• In the initial phase, reforms were initiated in agriculture, foreign trade and investment sectors.
  • In agriculture, commune lands were divided into small plots which were allocated (only for the use and not as ownership) to the individual households.
  • They were allowed to keep all income from the land after paying stipulated taxes.
• In the later phase, reforms were initiated in the industrial sector.
  • Private sector firms and township and village enterprises (enterprises that were owned and operated by local collectives) were allowed to produce goods.
  • At this stage, enterprises owned by the government (known as State-Owned Enterprises or SOEs), were made to face competition.

4.  Dual Pricing in the Reforms Process:

 The reform process also involved dual pricing. This means fixing the prices in two ways:

• Farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs on the basis of prices fixed by the government.
• For other transactions, the inputs and outputs were purchased and sold at market prices.

5. Special Economic Zones (SEZ):

In order to attract foreign investors, special economic zones were set up.