Final Paper Outline and Annotated Bibliography
1. Introduction: An overview of China’s economic reform. (1 page)
a. Abstract: This paper examines the past, present and future of the China Economic Reform implemented since 1978. Specifically, interpreting the economic and political background that leads up to the reform, investigating the successes and failures in economic, political, global, cultural and environmental aspects, and looking ahead into the prospect of the reform.
b. An introduction of what the economic reform is and why it is important to study: China has transformed significantly since 1978. The Chinese Economic Reform is perhaps the single most significant state-led movement that fundamentally changed the lives of all Chinese through economic growth. It impacted China in every way, including culture, economic system, governmental structure, and many more. The contemporary China would not have been the same without the reform. Studying this reform is not only beneficial to understand the movement itself, but also understand the foundation of contemporary China.
2. Context: The background and the history of the reform.
a. What China was like before the economic reform (1.5-2 pages): Since the founding of the country, Chinese Communist Party had been experimenting with economic development and faced challenging bottlenecks. China’s economy was trapped and even declined through Great Leap Forward, Cultural Revolution, and natural disasters (Hou, 2011). The economy in China before 1978 was “extremely politicized” (Tisdell, 2009). Because of the absolute rule of Mao and the focus on politics, ideologies and party’s purity as well as purging instead of economic development, market-change reforms were often discouraged and oppressed (Hou, 2011; Chen, 2002; Tisdell, 2009). It was until Mao’s death in 1976 that left China and CCP the chance to shift its attention to politics to economic growth. With Deng Xiaoping’s succession in the leadership position in the Third Plenary of the Eleventh Central Committee of the Chinese Communist Party, he proposed to shift the attention from “political class struggle to economic construction” (Chen, 2002).
b. What is the reform and what it looks like today (1 page): The Economic Reform is a comprehensive transformation in the system. It reshapes the property rights. Although public ownership did not die out, it has been gradually replaced by multiple kinds of non-state ownership including private ownership. It fosters global integration. The history of slow economic growth left China desperate need for investment and technology. The reform encouraged international engagement and a more open trade. It sets up special economic zones (SEZ). SEZ by definition, means the appointed cities provinces have preferential policy to development. Some of the SEZs are today the biggest metropolitans where attract most of the young workers in China, such as Shanghai, Guangzhou, and Shenzhen. It establishes a socialistic market economy. In the new “socialistic market economy with Chinese characteristics,” it allows market freedom, but also leaves the state the ultimate control in the macro level (Hou, 2011). (more areas will be listed in the final version.) Largely due to the reform, China’s GDP rose from 218.50 billion USD in 1978 to 11.20 trillion USD in 2016, making China world’s second largest economy in the world (National Bureau of Statistics of China, 2016). (a comparison about growth rate from 1949 to 1978, from 1978 to 2016 will be listed in the final paper) China experienced an almost exponential growth, but the reform is now in a crucial period (X. Zhang, 2016b). Other than a slower economic development rate, this country is going through many societal issues including ever-widening income and wealth gap, worse environmental state, and bureaucratic institutions. Therefore, it is necessary to take a holistic and unbiased perspective looking at the reform. The next section dives deeper into the successes and failures of the reform in many aspects.
3. Impacts: The economic, political, global, cultural, and environmental implications of the reform.
a. The economic structure: privatization and inequality (2.5 pages): Growth and Market change. In terms of the state’s role in the market, it is not doing central planning anymore after 1978 because of the market reform. The socialist market economy allowed privatization to gradually increase since 1980s and become an important part of the market (Eby, Iverson, Smyers, & Kekic, 2011). Through this transition, the economy becomes market oriented since the reform. The state tried many ways to motivate the entrepreneurs by developing adequate financial and legal help, specifically, a better protection of property rights stimulates the private sector. The state placed financial repression on large entities, but small start-ups are not effected and even encouraged. As a result, it has become the key reason of the success of the reform (Yueh, 2013b). Inequality. The economic reform is successful in terms of economic growth, but it is now plaguing China with the ever-widening income and wealth gap, which was intentionally left unaddressed at the starting period of the reform. A serious case of social inequality facing China today is demonstrated by the discrimination against migrate workers legally and socially (Yueh, 2013a). The development of the labor market in urban areas attracts many rural-urban migrants and send remittances back home. However, traditionally, if one has residency in an urban area, he or she is protected in the labor market, education, and healthcare, as opposed to rarely any resources for rural-urban migrants. Therefore, the migrants tend to cluster in low-skilled and minimum-wages jobs with usually bad working environment. Nonetheless, there are still growing numbers of rural-urban migrants because their salary exceeds far more than rural income (Yueh, 2013a). The root of their disadvantage the residency registration system. To gain lawful residency, one must purchase a residential property and the housing price is usually unrealistically high for minimum wage earners. Because it is hard to attain a local residency, they cannot share the local resources of the community, such as free schooling, medical compensation, and job opportunities. Besides the governmental protection of restricting migrant employment so as to protect unemployed urban citizens, another layer of their disadvantage comes from the somewhat hostile attitudes towards the migrants from the citizens (Hewitt, 2008) (M. Zhang, 2003).
b. The reconstruction of government function (1 page): Even though the government is still has the ultimate control in terms of macro-level activities, the role of the government in the economy has changed in several directions (X. Zhang, 2016a). First, state-owned enterprise is becoming less important since 1978, in contrast with the planned economy in former Soviet Union. Second, the government incentivizes a market-orientated economy (Eby et al., 2011). However, after 30 years of economic reform, lack of change and inadequate administration is slowing down the development. Therefore, it is crucial that reform happens on the administrative level. Measures like adjust finance incentives for local government, abolish land finance, prioritize public interests, and diversify public service provider can be taken to reconstruct the government function (X. Zhang, 2016a). Corruption in China’s economic reform: a review of recent observations and explanations (a backup topic).
c. Global Integration and global impact (1.5 pages): Engage world economy. China opened its door and engaged in world economy. The “open door” policy, which is the most important part of the reform, encouraged foreign investment, international trade. The first benefactors of this policy are the Special Economic Zone by receiving preferential treatments, which includes “up to 50% reduction of custom duties, corporate income tax,” and more (Yueh, 2013c). The cities that were under the treatment experienced unprecedented growth because of foreign investment. China develops policy that fosters partnership between domestic entities and foreign investment. China also joined WTO in 2000 as a way to increase domestic products exports. In 2000s alone, the export have doubled the amount that of 1990s. It also opened its market to international competitors. With the strong foreign competitions, the industries in China have become increasing complex and technology-driven. Change global economy. Given the growing size of the economy of China, the global impact is becoming more significant. China has fundamentally changed the world market since 1978. Currency – global imbalance. (Will be covered in the final paper)
d. Cultural (1 page): (Dialogue and literature is drawn from Getting Rich First: Chapter 12 cultural shock, but I don’t have enough space to cover here)
e. The environmental concerns (2 pg.): Compatibility of economic growth and carbon emission. The relationship between carbon emission and human economic activities gives attention to China’s carbon dioxide emission. It is estimated that by the end of 2018, China’s mission will grow 218% to 9billion tons, far surpassing other countries (Fang & Yang, 2008). With the current international pressure to reduce emission, it is not sustainable because external restraints lack real incentives. The questions lie within if the government is willing to enforce emission cut policy, if the local government is prepared to sacrifice for long term sustainable growth, and if the enterprise is willing to cooperate with the state policy (Fang & Yang, 2008; Sheehan & Sun, 2008). Water crises in northern China. The northern and southwestern China is facing increasing amount of water shortage, especially for agriculture. It is mainly caused by the rising demand and inadequate supply. Because of the reducing resources of surface-water, the usage of ground-water for agriculture rose from almost 0 in 1950s to 70% as of 2004 (Wang, Huang, Rozelle, Huang, & Zhang, 2008). As a result, serious environmental problems such as water depletion, land subsidence, and more (Wang et al., 2008). Air pollution: Shanghai as an example (will be included in the final paper). Foreign direct investment and the environmental consequences (a backup topic).
4. Conclusion: This paper investigates into the history and successes and failures of the reform in economic, political, cultural, and environmental aspects. The future of a sustainable development waits for issues of inequality, governmental function, environmental crisis to be solved. (More information from the last chapters of The Logic of Economic Reform in China, China’s Dilemma and China’s Growth will be included to discuss the future pathway of the reform)
Annotated Bibliography
Source 1:
Bao, Q., Yang, D., Chen, Y., & Song, L. (2008). The environmental consequences of foreign direct investment in China. In L. Song & W. T. Woo (Eds.), China’s dilemma: Economic growth, the environment and climate change (pp. 243–264). ANU E Press.
Source 2:
Chen, S. (2002). Economic reform and social change in China: Past, present, and future of the economic state. International Journal of Politics, Culture, and Society, 15(4), 569–589. https://doi.org/10.1023/A:1015319920054
Summary: Accounts for the importance of the public policy in shaping China’s economic system. This journal article provides information about the political background of the reform. The information is used in the context section.
Source 3:
Fang, C., & Yang, D. (2008). The political economy of emissions reduction in China: Are incentives for low carbon growth compatible? In L. Song & W. T. Woo (Eds.), China’s dilemma: Economic growth, the environment and climate change (pp. 226–242). ANU E Press.
Summary: Investigates whether the severe increase of carbon emission is compatible with economic growth under the economic reforms, and gives policy implications. The information drawn on in this paper is mainly about the facts about the increasing carbon emission. It is used under the environmental implications section.
Source 4:
Zhang, M. (2003). China’s poor regions: Rural-urban migration, poverty, economic reform and urbanization. London: RoutledgeCurzon.
Summary: Discusses the migrant and poverty issues in contemporary China and provides policy solutions to the problems. This information about migrant and poverty is used under the inequality subsection of the economy section because it demonstrates economic inequality for migrants.
Source 5:
Health and Mortality Transition in Shanghai Project Research Team. (2008). The impact of air pollution on mortality in Shanghai. In L. Song & W. T. Woo (Eds.), China’s dilemma: Economic growth, the environment and climate change (pp. 297–309). ANU E Press.
Source 6:
Hewitt, D. (2008a). Cultural shock. In China: Getting rich first (pp. 348–375). New York: Pegasus Books.
Summary: Reveals the history of the cultural change since 1978 in a micro-level. Information about people’s lifestyle adjustments to their new lives is used under the cultural implication section.
Source 7:
Hewitt, D. (2008b). The land they left behind. In China: Getting rich first (pp. 289–321). New York: Pegasus Books.
Summary: An ethnography of the migrant worker in metropolitans that reveals the hardship of being “the floating people.” The vivid portrays of the lives of migrant workers demonstrate the wide economic inequality in China. This information is used in the inequality subsection under economics section.
Source 8:
Hou, J. W. (2011). Economic reform of China: Cause and effects. The Social Science Journal, 48(3), 419–434. https://doi.org/10.1016/j.soscij.2011.06.009
Summary: Explains the cause and effects of China’s economic reform by presenting four facets of the reform action. This journal article touches on some background of the reform, but mostly lists out the areas of change brought by the reform. The information is used in the context section, giving detailed account to what the economic reform actually is.
Source 9:
National Bureau of Statistics of China. (2016). Gross Domest Product: 1949-2016. Retrieved from http://data.stats.gov.cn/english/easyquery.htm?cn=C01
Source 10:
Sheehan, P., & Sun, F. (2008). Emissions and economic development: Must China choose? In L. Song & W. T. Woo (Eds.), China’s dilemma: Economic growth, the environment and climate change (pp. 392–414). ANU E Press.
Source 11:
Tisdell, C. (2009). Economic reform and openness in China: China’s development policies in the last 30 years. Economic Analysis and Policy, 39(2), 271–294. https://doi.org/10.1016/S0313-5926(09)50021-5
Summary: Tells the story of what the Chinese general consensus of the events that led up to the reform. It provides some degrees of political background within the CCP. The information is used in the context section to provide political details about CCP before 1978.
Source 12:
Wang, J., Huang, J., Rozelle, S., Huang, Q., & Zhang, L. (2008). Understanding the water crisis in northern China: How do farmers and the government respond? In L. Song & W. T. Woo (Eds.), China’s dilemma: Economic growth, the environment and climate change (pp. 276–296). ANU E Press.
Summary: Discloses the increasing water shortage especially in Northern China, and provides government’s solutions and farmers’ responses. The information this paper draws on is about the facts of the water shortage and whether this environmental issue is properly addressed by the government. This is used under the environmental section.
Source 13:
Yu, O. (2008). Corruption in China’s economic reform: A review of recent observations and explanations. Crime, Law and Social Change : An Interdisciplinary Journal, 50(3), 161–176. https://doi.org/10.1007/s10611-008-9133-5
Summary: Reveals the downside – corruption – of the government under the economic reform with plenty of data to explain the situation. It serves to disclose the negative implications of the government that are hard to be addressed because of the reform. This information is used under the political implication section.
Source 14:
Yueh, L. (2013a). Conclusion: The role of the state. In China’s growth: The making of an economic superpower (pp. 301–320). Oxford: Oxford University Press.
Summary: Explores the decreased role of the state since 1980s because of the state-market model introduced by the reform. The market shift induced by the change of the role of the state explains the economic characteristics under the reform, which is used under the economic section.
Source 15:
Yueh, L. (2013b). Endogenous growth: Human capital and labour market reforms. In China’s growth: The making of an economic superpower (pp. 110–153). Oxford: Oxford University Press.
Summary: In subsection 6, it gives a comprehensive look about the migrants and discrimination they face. The upsurge of the migrant employee in urban labor market and inequality they face is presented in the inequality subsection of the economics section.
Source 16:
Yueh, L. (2013c). Financial and legal development: The role of private enterprises in growth. In China’s growth: The making of an economic superpower (pp. 231–255). Oxford: Oxford University Press.
Summary: Explains the significant role of private enterprises when China allowed private ownership in the reform. The information is used in the economic section to describe a crucial part of market shift of China’s economy.
Source 17:
Yueh, L. (2013d). Global integration and growth: Rebalancing the economy. In China’s growth: The making of an economic superpower (pp. 256–300). Oxford: Oxford University Press.
Summary: Accounts for how China engaged in world economy and how it changed world economy. This information that this paper draws on focuses more on how China has impacted the world economy. It is used under the global implication section.
Source 18:
Zhang, X. (2016a). Better play the role of the government: Reconstruction of the government functions. In The logic of economic reform in China (pp. 149–168). Springer.
Summary: Talks about the transformation of the government’s function from being a “big brother” to service-oriented under the reform. The adjustments and improvements in its functions explain the political implications of the economic reform. The information is used under the political section.
Source 19:
Zhang, X. (2016b). China’s reform under the global perspective. In The logic of economic reform in China (pp. 111–126). Springer.
Summary: Compares China’s gradual reform to the radical transition of the former Soviet Union and Eastern Europe countries. This information is used under global implication by explaining how China’s economic reform is different from other international practices.
Source 20:
Zhang, X. (2016c). The reform has dived in the key stage. In The logic of economic reform in China (pp. 127–148). Springer.