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CHINA FACING 21ST CENTURY..

PRESENTED BY:

OOOPPSS.. JOLIE GROUP:P

Wajahat Ahmad 000456230 Saloni Madhok 000699549 Niraj Chandnani 000699023 Arun Prasanth Bacthavatsalam 000666629 Cem Sadikoglu 000698493

CONTENTS:
Introduction and History (Waji) Development Strategy&Economic Reform(Niraj) Economic Performance (Arun) Barriers to Development (Cem) Opinion of New Strategies (Saloni)

INTRODUCTION & HISTORY:


Presented By: Jet Li

INTRODUCTION:
Known

as Peoples Republic of

China
Population

1.3 Billion

Location;

East Asia

QUESTION:
Why is China Famous??

Great Wall Of China

ST 21

CENTURY:

HISTORY

Longest History Technological Inventions (Paper, Iron casting etc.) Making the world aware of its economic potential strategies Dynastic China ( 3 Pillars Imperial System, Collapse of the last Dynasty)

HISTORY CONT.

The Republic Era


GMD and CCP (4th May) Long March

The Moist Era


Political Consolidation and Economic Reconstruction (1949-1957) Great Leap Forward (1958-1960) Economic Recovery (1961-1965)

Cultural Revolution (1966-1976)

CHINA 1978
Most Advanced Economy (wealth avg.) Economic Reform 1970s-1980s (decollectivization of agriculture, foreign investment, entreprenuers) Privatization and contracting out, lifting price controls etc. Economy recovering at 9.5% a year until 2010

SOVIET UNION 1985


Leonid Brezhnevs death Economic growth stagnated Failed attempt of recovery for Economy Mikhail Gorbachev Drop in Price of OIL Consequent lack of foreign exchange reserves

DEVELOPMENT STRATEGY & ECONOMIC REFORM:


Presented by: Bruce lee

DEVELOPMENT STRATEGY AND ECONOMIC REFORM

Rural Reforms
Instructions to peasants for producing fixed quantities of agricultural products Dual price system was introduced Innovation of the Household Responsibility system Relaxed restrictions on interprovincial trade in agri products

RURAL REFORMS CONTD.

Increase in agricultural output between 1978- 1984 Grain yield at a rate of 5.7% Rise in the production of Pork, Beef and Mutton by 80% Growth in rural incomes and savings Increased demand of consumer goods leading to development of Town and Village Enterprises Employment to 129 million people

TRADE AND INVESTMENT REFORMS

Licensing of local firms by FTCs (Foreign Trade Corporation) Reduction on import tariffs Liberalization of Foreign Direct Investment Designation of Special Economic Zones Foreign Currency

TRADE AND INVESTMENT CONTD.

Growth of firms with Foreign trade rights up to 10,000 by mid 1990s Exemption of central plan, labor regulations and many taxes to enterprises operating in SEZs

Domestic firms were allowed to retain portion of foreign exchange


Tremendous increase in exports ($11 Billion in 1978 to $154 Billion in 1996) i.e.; 4.9% to 18% GDP Rise in FDIs from $57 Million in 1980 to $27 Billion in 1990 and then steadily to $42 Billion in 1996 Largest developing country recipient of FDI

STATE OWNED ENTERPRISE REFORM

Management responsibility system Dual Tracked prices

Impacts; Fall in industrial output from 78% in 1978 to 55% in 1990

Decline in monopoly

STATE OWNED ENTERPRISE CONTD.

Sharp decrease in contribution to central government :


38% GDP in 1978

Only 3.6% in 1990

Increased corruption opportunities resulting in making china one of the most corrupt countries in the world

INSTITUTIONAL REFORM

Increased provincial autonomy Fiscal reform Financial sector reform

Currency reform

ECONOMIC PERFORMANCE:
Presented by: Jackie Chan

ECONOMIC PERFORMANCE Economic liberalization has boosted exports which rose 19 percent a year during 1981-94 Strong export growth , in turns appears to have fueled productivity growth in domestic industries

Encourage growth of rural enterprises and not focusing exclusively on the urban industries Moved millions of workers off farms and into factories without creating an urban crisis Leads to giving employment to many people

ROLE OF EXPORTS IN CHINA ECONOMY

Ignited economic growth

IMPORTANCE OF EXPORTS

Increase in domestic demand

Formation of many domestic industries


Giving employment opportunity to overcome poverty Production of high value added goods Higher level of exports enables increased productivity Overall increase in economic growth

WHAT IS FDI ?

FDI

Foreign Direct Investment

foreign investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor FDI is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization.

FOREIGN DIRECT INVESTMENT


Spurred foreign direct investment

Economic liberalization

Open door policy

International markets

Chinese economy

Creating more jobs oppurtunities

BARRIERS TO DEVELOPMENT:
Presented by: Chow Yun Fat

PROBLEMS FACED IN 1997


Unresolved issues under 7 topics:

SOE Reform
Unemployment The Financial Sector Provincial-Center and Province-Province Tensions Political Liberalization and Human Rights Economic Integration The Environment

SOE AND UNEMPLOYMENT


Soe Reform

The financial performance of SOEs was breaking down. Excessive investments in fixed assets, Very low rates of returns Low sales-to-production ratio

Solution: Grasping the big ones and letting go of the small ones

Unemployment The population in China was growing, Approximately 14million people per year. Need to create jobs. Loosened political control. Seeking job from city to city.

FINANCE AND PROVINCIAL CENTER


The Financial Sector

Government directed state banks to cover for SOE losses


Using 70% of bank loans. Unmached international analysis on loans and GDP Provincial-Center and Province-Province Tensions The income inequalities between rural and urban households Alwyn Young (professor of economics): Industrial duplication, Large opportunity costs Regional tension growth.

POLITICAL AND ECONOMIC

Political Liberalization and Human Rights


In search for political freedom, incidents has occured. Increased the tensions with other countries Economic sanctions against China. Tiananmen Square Protests (Tank Man) Suspension of foreign loans to China

Economic Integration
Chinas WTO entry problems, Increasing trading-partners concerns Developed country vs. Developing country Deficit Surplus problems with U.S.

ENVIRONMENT
The Environment Urbanization, construction, fast growing economy, Pollution in both water air 20% part in overall deaths Deforestation Losing farmlands

NEW STRATEGIES:
Presented By: Gong Li

SUSTAINABLE ENERGY STRATEGY:

Proper usage of Non Renewable Energy Resources. If done they can contribute 10% to total needs. Concurrent improvement in the energy system should be parallel to the development in economy of China. Shifting from smoke generating sources towards the cleaner energy carriers like hydrogen, which is produced with out oil and fuel cells. Properly distribute the energy resources through out the nation.

BROADENING THE FRAMEWORK:


Land reformation by the joint development of urban and rural areas as well as creating the rural productive forces. Up-gradation in regulatory and legal system by enforcing the judicial forces, effective allocation of financial system. Setting up different training organizations with in the country to retrain the workers that were displaced during the restructuring of the economy. Empowering the coordination competencies in the central government to make sure about the policy alliance among all the ministries and activities.

ECONOMIC INTEGRATION STRATEGY:

In its policies toward the United States and other powers In its policies toward military modernization
In its policies toward territorial claims In its policies toward international regimes

REDIRECTING THE INNOVATION SYSTEM

Expanding Technology Dissemination programs


-deploy throughout China instruments such innovation centers at a rate of 100 per year, locating them near business and education communities;

Benefiting from global knowledge and technology


-negotiate mutual cooperation agreements with foreign investors that ensure strong transfer of information, skills, and technologies; -encourage further internationalization of the research system by developing mutually benefiting R&D collaborations with multinational enterprises;

Strengthening the research system


-rationalize public support to R&D in the enterprise sector, focusing it on smaller firms; establish tax incentives for R&D in all sectors;

REFERENCES

Report: China: Facing the 21st Century (Robert E. Kennedy Documentary: The Tank Man (about Tiananmen square protests of 1989 in Beijing China). Thakur, M., Burton, G. E. & Srivastava, B. N. International Management: Concepts and Cases. (Tata McGraw-Hill, 1997. p.404-405). http://www.nationsencyclopedia.com/World-Leaders-2003/China-RISE-TO-POWER.html

http://www.eeas.europa.eu/china/csp/07_13_en.pdf
http://www.rand.org/pubs/research_briefs/RB61/index1.html http://info.worldbank.org/etools/docs/library/108303/ChinaDevStrat.pdf

http://en.wikipedia.org/wiki/Sino-Soviet_split
http://en.wikipedia.org/wiki/Chinese_economic_reform http://news.bbc.co.uk/1/hi/world/europe/1112551.stm http://news.bbc.co.uk/onthisday/hi/dates/stories/february/25/newsid_2703000/2703581.stm

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