China's Political Influence on its Economy
Very few economies today are influenced by the existence of political pressure or influence. A nation where important economic choices are made by politicians is China. The national leaders, local chiefs, bureaucrats, and the old administration in China continue to exert significant weight over the distribution of goods and services even after undergoing market reforms. (Zweig 192). Other significant factors that contribute to China's political system's impact on its economy include the legitimacy of the Chinese Communist Party, the country's expanding market, the growing inequalities in society, and the deep-seated corruption that permeates the nation. (Zweig 192). Both local and national leaders in China make a remarkable difference in the nation’s economic destinies since their preferences for various developmental plans and policies have shaped the country's goals for growth. Most of the administrators use their influence and mandate to press their preferences as well as the needs of the civilians (Zweig 193). The paper illuminates the way the economy of China has been influenced by politics since the start of Mao Zedong regime.
Leadership Design
Each political leader in China had played a role in the development of the economy based on the leadership structure and policy. The leadership design ensures that all administrators have a responsibility in the dissemination of goods and services. The administrative styles in China have changed tremendously over the years of courtesy of the proposed reforms in the nation’s politics. After the death of President Mao Zedong in 1976, Deng Xiaoping introduced the reform era (Zweig 193).Other leaders, who came later, followed the same leadership styles. Wen Jia and Hu Jintao introduced a fairer development plan than their predecessors so as to restructure the injustices which were present in the 1990s(Zweig 193). However, economic problems lagged behind the authority of leaders. The price restructuring, which was made in the summer of 1988, prompted fears of inflation in the country. As a result, Shanghai financial institutions allowed the conservative party administrators to attack the main collaborators of the price reforms. One of those leaders was the conservative party secretary; Mr. Zhao Ziyang, who was later sacked from duty given, as he was still a participant of the 1989 Tiananmen turmoil (Zweig 193).
Economic Measures
Another political component which influences the financial system of China is the economic deregulation since it threatens the authority of bureaucrats. As a result, the administration struggles to maintain and strengthen their political control on the economy. Years of economic regulations and planning empowered millions of officials from Beijing and other regions (Zweig 194). The laws enacted gave the bureaucrats a mandate to control the distribution of resources, wealth, jobs and civilian's rights to participate in the development of the economy. The reforms which decentralized the control over the fiscal scheme left even the local bureaucrats in charge of enormous resources, thus giving them a role to play in the growth of the nation's economy. Further, the governing laws in China were made clear and available to the common individuals hence making them aware of the roles of various leaders in the society (Zweig 191). Such knowledge made the people criticize leaders who performed their responsibilities poorly. The elections which were held after the economic reforms brought into powers leaders who were best performing in the planning and implementation of financial policies. China leaders were also able to compare country's economy with superior markets of the world, such as the United States of America (Zweig 195). The comparison of economic powers is very healthy to a nation since it gives a basis for improvement.
Political Economy in Mao Zedong Reign
The Chinese Communist party came into authority in 1949 under the leadership of Mao Zedong. From 1950 to 1952, land reforms were enacted, which lead to a redistribution of 42 percent of arable land from wealthy farmers to peasant people (Zweig 195). The objective of the reforms on land was to weaken the rich class that had backed Kuomintang, the nation's opposition of that time, and repay needy individuals who fought for Chinese Communist Party. The struggle between the two main parties in China was tough, and many of the peasant people died along the fight (Zweig 194). Before the Mao Zedong era, China was experiencing hyperinflation, which came as a result of poor leadership from the Kuomintang side. Mao's government was able to control the inflation in their first two years in administration (Zweig 195). New government promised the civilians to abandon the private economy but to put more emphasis on small capitalist class. The reforms brought a balance of classes in China where even the peasants were able to invest in their businesses.
China's Economic Development and Urbanization
China government copied the Soviet design of economic development in 1953 thus encouraging fats industrialization. About twenty million poor people were relocated from the villages to the cities to provide labor for a large number of new industries (Zweig 195). Consequently, industrial production grew, and urbanization expanded rapidly. During the same year, about 156 mega projects were initiated including seven iron sheets plants, 63 machinery factories, 24 electric power companies among other major firms (Zweig 196).Also, nation-owned institutions such as Luoyang tractor firm, Changchun's first auto works, Baotou and new steel plants in Wuhan were initiated.
Rural Collectivization and Expansion of Government Control
Further, the ruling Union started to expand its reach over sections of the economy. In the rural areas, the administration took over the grain markets in 1953 and private trading of the crops was banned (Zweig 195). The government realized that the peasant farmers had sold their lands to former landlords and local bureaucrats. To stop the emergence of new countryside ruling class, Mao Zedong in association with his counterparts in government encouraged the peasant farmers to join local cooperatives where they would own and manage the farms collectively (Zweig 196). Loans were issued to the cooperatives so as to encourage more people to join the movement. The financial support was meant to assist the peasant farmers to purchase seeds and fertilizers for their farms. At the beginning of 1956, about 98 % of the local farmers had turned their farms, oxen, and tools over to the movements (Zweig 196).The income was drone from the cooperative according to the work the members had performed collectively. Most people transferred their properties in the cities to the state. For instance, most small firms and professional businesses in large cities were converted to state property.
The Cultural Revolution and its Economic Impact
At the end of 1957, China entered into the duration of joyous anticipation of the arrival of the communalist utopia. The president and other leaders of the country argued that the big collective lands, consisting of poor people would eventually raise the economic production (Zweig 197). A famine affected the rural parts of China when the weather changed dramatically in 1959. The drought claimed more than 10 million Chinese people who resided in humble parts of the nation (Zweig 197). The famine situation made Mao Zedong to withdraw partially his management of the economy and allowed more realistic administrators to initiate reforms which undid the radicalism of the enormous leap. Some of the leaders who were allowed by the president to commerce the economic reforms were Liu Shaoqi and Deng Xiaoping. In the course of 1962 to 1966, the economy of China was thriving at a constant pace (Zweig 197).
Political Economy in the Reform Era
However, in 1966, Chairman Mao realized that the ruling Union, Chinese Communist Party was turning to be a new capitalist class. He started the disastrous Cultural Revolution so as to keep the nation and the party on what he regarded to be the right revolutionary route. Private economic activities were greatly discouraged both in the city and in rural areas (Zweig 193). Under the new policies, initiated between 1966 and 1976, the major towns made a key economic change, but the rural areas did not make a notable progress. The government constantly industrialized the weak China. The process of industrialization in the country limited injustices, raised education and health standards and enhanced farming infrastructure (Zweig 194). Economists and other researchers argued that other policies other than the great leap would have been better for the country. However, the collective farming lacked incentives to initiate constant growth. Mao Zedong policies, which encouraged more population in the country, have also created pressures in the economy (Zweig 194). Up to now, the nation has a very large population, which is a major threat to the growth of the economy.
China's Economic Reforms and Opening up to the World
From 1978, China experienced five pillars of reforms that have accurately varied every feature of both foreign and domestic economic plan. The reforms were started by the assembly of the federal committee which was held in December 1978 (Zweig 195).The meeting agreement redirected nationwide policy from the traditional beliefs to an emphasis on politics and ideology of the people so as to improve the economic status of the country. The third plenum reform initiated countryside reforms which established authorized political relations with the US (Zweig 193). The improvements opened the Chinese market to the outside world ending the class rebels that had divided the civilians into enemies and friends of the nation. The common citizens were given the right and power to negotiate the prices of their exports. Moreover, the new reforms made Deng Xiaoping return on the top administration position (Zweig 194).
Development of Special Economic Zones
The three successive decades led to unheralded economic growth and takeoff of the Chinese economy that was implemented fully in the rural areas in 1978. The new policies allowed de-collectivization that returned farm ownership and management to each family (Zweig 194). The law allowed people to continue owning the land collectively and linked the quantity of work the peasants did with their monetary rewards. Households now had the power to decide the crops to plant, how to distribute the farming returns and to allocate labor (Zweig 194). Accordingly, the peasants energized their efforts on the lands leading to increased incomes and outputs form the lands. People were willing to work harder knowing that the farms were in their control and the output was based on the amount of input placed on the lands. The production of grains soared as well as the farming of non-grain crops. Eventually, the wealthy peasants demanded home construction materials from the government so as to build more storage facilities for their enormous farm output (Zweig 194). The urban industries boomed since the raw materials they needed was readily available in their country.
Further Opening up and Decentralization of Economic Control
At the beginning of the 1980s, the first main initiative to open the Chinese market to other countries was implemented when the four special economic zones were established in the coastal region that connected the nation with overseas communities. The special economic zones were allocated special responsibilities regarding exports, imports, control of foreign direct investment as well as labor policy (Zweig 194). The second pillar of reform was established between 1984 and 1985. It led to the opening of 14 more major towns which were linked with foreign trade. The nation's universities as well as the research institutions were motivated to work with enterprises and earn profits. The local universities were allowed to connect directly with overseas colleges and other institutions of higher learning (Zweig 195). The control of foreign trade was decentralized to the local administrations. In big towns, more efforts were made to reenergize the government-owned firms which were given the mandate for most industrial production in the country. The federal planning was shortened, and most responsibilities were directed to the local producers. The countryside firms were allowed to make a decision about productions and selling of outputs only when they would meet their annual targets (Zweig 195). The pricing decisions were now made by the producers and the government in unison.
Coastal Development and Further Market Opening
The third pillar of reforms opened the coastal China to the world economy between 1987 and 1988. The coastal development plan consisted of the establishment of six thousand foreign trade firms that marked the start of China’s export-led market growth which continues up to today. The nation's countryside industry which significantly expanded in 1984 eventually became the main driver of the country's export boom (Zweig 194). However, in the summer of 1988, the reforms ran into problems. The further rising of prices of items in the country which had started in 1985, prompted people to move into their savings to withdraw money so that they can buy as many goods as possible anticipating that the costs of the commodities would increase (Zweig 194). The initiative left most financial institutions insolvent and unable to run their operations smoothly. The fear of inflation in the country had political effects, undermining the Chinese Communist party secretary general Zhao, who had initiated the reform in association with Deng Xiaoping(Zweig 194). The panic in the country gave the opposition a good basis to fight the ruling government. They called for better improvement of the economy and urged civilians to vote them in administration in the following elections.
Political Impact on Economic Growth
On June 4, 1989, there was a military attack in Beijing which had a major economic impact. The assault led to a negative economic growth and slowdown of development in the country until 1992. Also, more shock was observed in 1991 after the fall of Soviet Union in August 1991 (Zweig 194). The union played a major responsibility in the growth and stability of the Chinese economy. The collapse of the Soviet Union was impacted by the Mikhail reforms which were started at the beginning of 1989 (Zweig 194). As a result, the government did its level best to see that the economy of China was flourishing and taking corrective measures at the time of market recession. At the beginning of 1992, Deng Xiaoping moved to Shenzhen to encourage people to take more risks in the reforms he had initiated (Zweig 195). Even though he faced stiff opposition from the conservative party leaders in Beijing, Deng Xiaoping continued to lead people by encouraging social cohesion and foreign trade along the nation’s coastal region. At the end of 1992, the government announced that China would establish socialist market economy thus ending the capitalist era (Zweig 195). Socialist market was the fourth and final pillar reform of journey to economic prosperity. As a result of such a change, both domestic and foreign investment boomed tremendously.
Foreign Investment and Privatization
Between 1993 and 1995, larger companies from the United States, Europe, and Japan came to China for investment leading to foreign direct venture growth. The initiative to work with larger firms opposed the 1980s decision which welcomed overseas investors to small business (Joseph and Zweig 131). It was observed that the small enterprise's investment did not make a notable change in the economy hence there was a need to bring larger firms investment in the country. The countryside administration also dusted off earlier agreements and began to invest in new big projects in the rural areas. Foreign investors were also welcomed in the countryside to open new and larger development projects (Joseph and Zweig 131). The government privatized all state-owned firms to both local and foreign investors. Additionally, over ten thousand collectively owned companies were privatized to pave the way for improvement in all industries in the country. By 2003, the market share of the public sector was only four percent (Joseph and Zweig 133). The privatization move created more jobs for both locals and foreign thus improving the living standards of the civilians. The reforms were made by Jiang Zemin, who had succeeded Deng Xiaoping after his death in 1977 (Joseph and Zweig 131).During his reign, he reduced the number of state administrators into half and encouraged the private ownership of properties. Even since then, China has been following the reforms made by the ruler.
Conclusion
China is a nation with the economic prosperity being dictated by politicians. Most economic reforms that have happened in the country were made by both local and national administrators. Chairman Mao encouraged collective ownership of land and other properties, but he did not succeed extemporary in his reign. Deng Xiaoping encouraged Chinese to collaborate with foreign investors so that they can do business together and bring economic prosperity. He promoted privatization of both state-owned firms and collective companies in the areas. After the death of Deng Xiaoping, Jiang Zemin, who took over the lead, encouraged more privatization of property, and by 2003, the public market share reached only four percent. Since then the economy of China has succeeded tremendously.
Works Cited
Joseph, William A, and David: Zweig. New Perspectives on the Cultural Revolution. Cambridge, Mass: Harvard University Press, 1991.
Zweig, David. China's Reforms and International Political Economy. New Yolk: Routledge, 2009.
