The Rise of China as an Economic Power

Abstract

In the twenty years since the Cultural Revolution, China has maintained fast real growth. This occurred despite China having similar problems to other transitional economies, e.g. loss-making State Owned Enterprises (SOEs), eroding fiscal revenues and inflation, (Section 3).Although China initially adopted the Soviet central planning model, after the 1950s break Chinese planning changed towards a regionally-based system with local planning (Section 2). In contrast to the centrally-based, functionally-specialised (U-form or unitary structure) Soviet model, the Chinese economy is organised on a multi-layer-multi-regional (M-form) basis. This encour aged development of small size township and village enterprises (TVEs), the main engine of Chinese growth.Power and control remained with the Party and the State, but was diffused much more widely, regionally and locally. This allowed initiatives at lower (political) levels to establish institutions, both in agriculture (the ‘household responsibility system’) and industry (TVEs), without state protection. Even among regionally controlled SOEs, ‘tournament rivalry’ between regions, etc., and between SOEs and TVEs provided competition.

Can China’s Growth be Sustained? A Productivity Perspective

“…Jefferson et al (2000) investigated industrial productivity during 1980-96 finding long-term productivity growth but at declining rates during the 1990s. Zhang (2002) also found a downward trend for the aggregate economy during 1993-98, noting that Source: Reproduced from Goodhart and Xu (1996). 1980-1996 2.83 1992-1996 1.50 1980-1984 2.49 1988-1993 3.80 1984-1988 4.66 1993-1996 -0.77 1988-1992 2.68 1992-1993 8.29 Source: Reproduced from Jefferson et al (2000).…”

“…4 The second wave started in the middle of the 1980s and continued into the early 1990s, during which managers and workers in state owned enterprises were gradually provided with greater incentives to improve efficiency. Township-village enterprises flourished, achieving higher technical efficiency levels than state firms (Zheng, Liu, and Bigsten, 1998), and helping shift much of the rural labor-force to industries (Goodhart and Xu, 1996). The third wave started with Deng Xiaoping's tour of Southern China in 1992.…”

“…Second, industrial reforms provided individual firms, managers, and workers with greater incentives to improve efficiency, and especially township-village enterprises (TVEs) achieved higher efficiency levels and TFP growth than state firms (e.g. Zheng, Liu, and Bigsten, 1998;Goodhart and Xu, 1996). Table 2 compares TFP growth in state and rural industries (TVEs).…”

Theorizing Economic Geographies of Asia

“…In deconstructing "the myth of the Asian miracles" and the recent Asian economic crisis, mainstream economic geographers once again have failed to assume intellectual leadership in the broader social sciences. Curiously, it is the economists and their political science counterparts who have spearheaded the debates about the downfall of Japan, the Asian economic crisis (Krugman 1994(Krugman , 1998Radelet and Sachs 1998;Wade and Veneroso 1998), and the alleged rise of China as a threat (Vogel 1989;Goodhart and Xu 1996;Gertz 2000). Asking "Where have all the geographers gone?," Kelly, Olds, and Yeung (2001, x-xi) noted the absence of economic geographers in debates on the origins and impact of the Asian economic crisis.…”

The Macroeconomic Effects of Waiting Workers in the Chinese Economy

“…For a detailed discussion of TVEs, see Goodhart and Xu (1996). 3 Since the collapse of the commune system, farmers have obtained long-term (about 15 years) land-lease contracts from the government and can claim all of their outputs.…”