Making Sense of China’s Economic Transformation

Abstract

China's sustained rapid economic growth over the post-1978 reform era, which is also the era of globalisation, is of worldwide importance. This growth experience has been based mainly on China's internal dynamics. In the first half of the era, economic growth was propelled by improvement in both allocative efficiency and productive efficiency. From the early 1990s until the present time, however, economic growth has been increasingly based on dynamic increasing returns associated with a growth path that is characterised by capital deepening. In both periods, the growth paths and their associated long-term-oriented institutions contradict principles of the free market economy -i.e., doctrines of globalisation.In the form of an analytical overview, this article seeks to explain and interpret the historical background, logic of evolution, and developmental and social implications of China's

The Labor Share Question in China

“…Another possible reason might be the growth of labor productivity caused by the state--owned investments. Lo and Zhang (2010) and Lo and Li (2011) This study highlights the Marxian approach in addressing the labor share question, thus in methodology it differs from the orthodox literature, most of which follows the neoclassical approach, and also differs from the majority of heterodox literature, which considers labor's share measured by the conventional approach as a proxy for the power relation. This study follows the Marxian approach in two aspects: first, it measures labor's share with the Marxian approach; second, it emphasizes the Marxian proposition that the power relation in the sphere of production plays a crucial role in the determination of distribution.…”

“…A simple fact is that the average working hours in private enterprises are much longer than those in state--owned enterprises. 72 Also, state--owned enterprises are different from their private counterparts in promoting labor productivity growth (Lo and Zhang, 2010;Lo and Li, 2011). Globalization may lead to more intense competition between workers across countries, which in theory may also cause labor's share to change.…”

Primitive Socialist Accumulation in China: An Alternative View on the Anomalies of Chinese “Capitalism”

“…However, Lo and Zhang (2011) argue that Chinese SOEs constitute an important and egalitarian part of China’s systemic features with a market-supplanting character. The most noticeable difference is that “the institutions of SOEs have significantly deviated from principles of the market economy, notably individualistic property rights” (Lo and Zhang 2011: 47)…”

Has outward foreign direct investment contributed to the development of the Chinese economy?

“…But evidence about the extent of such benefits remains inconclusive (Sigurdson, 2005, pp. 97-98;Fan, 2003, p. 50;Lardy, 1995;Shan et al, 1999;Lo, 2006;Taylor, 2002, p. 214;Young and Lan, 1997 (Wang, 2002, p. 203). Moreover, before the late 1990s, export-processing activities in China undertaken by companies from the neighbouring economies of "Greater China" (e.g.…”