China: Building “Capitalism with Socialist Characteristics”
CHINA: BUILDING “CAPITALISM WITH SOCIALIST CHARACTERISTICS”
BACKGROUND:
In the beginning the core of the society was the extended family and an agricultural society.
In 1949 Mao Zedong proclaimed the establishment of the “People´s Republic of China”. (PRC)
CHINA UNDER COMUNISM (1949-1978)
The new government nationalized the country´s banking system and brought all currency credit under centralized control. It boosted government revenues by collecting agricultural taxes. Industry and commerce was under control of the state. Wages were calculated under the principle of “ to each according to his needs”.
By 1969 the power passed to the CCP, led by Deng Xiaoping, a pragmatic man who determined pragmatic policies to work and determined to bring china back from the devastation. • Reform in the countryside:
Deng allowed farmers to produce on their own and sanctioned the sale of surplus production.. Also, due to the shortage of food, he encouraged the one child policy. As a result, China´s rate population growth slowly began to subside. China created four “special economic zones” (SEZ) and by this welcomed investment, attracted potential investment with tax incentives, foreign exchange provisions and a decided lack of regulation. China also opened some coastal cities to foreign trade. All these reforms began to open China up to the outside world. • Rural industrialization and enterprise reform:
At that time the state determined prices, input & output and retained any profits form enterprises. But in 1983, the government introduced a variant of responsibility system making the enterprises free to run their business (managers could set wages, make investment decisions and retain profits). This was clearly making China a more market-oriented country.
By the establishment of township and village enterprises (TVE´s), villages raised money to fund everything. TVE´s grew competitive with each other and became very successful, reinvesting their profits to
BACKGROUND:
In the beginning the core of the society was the extended family and an agricultural society.
In 1949 Mao Zedong proclaimed the establishment of the “People´s Republic of China”. (PRC)
CHINA UNDER COMUNISM (1949-1978)
The new government nationalized the country´s banking system and brought all currency credit under centralized control. It boosted government revenues by collecting agricultural taxes. Industry and commerce was under control of the state. Wages were calculated under the principle of “ to each according to his needs”.
By 1969 the power passed to the CCP, led by Deng Xiaoping, a pragmatic man who determined pragmatic policies to work and determined to bring china back from the devastation. • Reform in the countryside:
Deng allowed farmers to produce on their own and sanctioned the sale of surplus production.. Also, due to the shortage of food, he encouraged the one child policy. As a result, China´s rate population growth slowly began to subside. China created four “special economic zones” (SEZ) and by this welcomed investment, attracted potential investment with tax incentives, foreign exchange provisions and a decided lack of regulation. China also opened some coastal cities to foreign trade. All these reforms began to open China up to the outside world. • Rural industrialization and enterprise reform:
At that time the state determined prices, input & output and retained any profits form enterprises. But in 1983, the government introduced a variant of responsibility system making the enterprises free to run their business (managers could set wages, make investment decisions and retain profits). This was clearly making China a more market-oriented country.
By the establishment of township and village enterprises (TVE´s), villages raised money to fund everything. TVE´s grew competitive with each other and became very successful, reinvesting their profits to