北京大学工学院 PKU College of Engineering Globex. China s Economy: Growth and Global Connections. July Past to Present & Export-led Development

Transcription

1 北京大学工学院 PKU College of Engineering Globex China s Economy: Growth and Global Connections July 2015 Past to Present & Export-led Development Susan Mays, Ph.D., contact smays999@yahoo.com Globex Faculty Fellow, Peking University; Faculty, The University of Texas at Austin

2 Agenda July 9 1. Admin: midterm, projects, thank you! to companies 2. Lecture: finish Past to Present and Export-led Development 3. Group projects: dates and groups 4. Lecture: State Owned Enterprises 2

3 3 Overview: finish and video

4 In the past 15 years, China s economy has sustained growth, despite fundamental weaknesses A few examples of major debates n Rule of law (lacking) n Financial system (capital markets and the banking system are inadequate) n Export-led development (over reliance on low-wage manufacturing) n State capitalism (growing and inefficient) n Over-investment and too-high capital formation (versus a consumer driven economy) n Foreign companies: face new obstacles, less favoritism n Environmental degradation: food supply, air and water pollution n Corruption: both political and economic n Also, currency manipulation, rising wages, social/political unrest, elite flight, etc. In spite of these obstacles, China has not only not failed, but China has actually far exceeded growth expectations 4

5 Given the sustained growth, we ll takes a long-term view on accomplishments, trends, and present-day obstacles n Interdisciplinary approach n Qualitative as well as quantitative perspective n Research by Chinese and foreign analysts n Sources: scholars, business leaders, journalists, and others Other sources and authors: China Labour Bulletin; Human Rights Watch; Reporters Without Borders; Amnesty International; Xiaobo Liu (China); Jamie Horsley,The China Law Center, Yale Law School; and Dali Yang. 5

6 6 Past to Present

7 China has had four very different economic systems in less than 100 years 1978-Present PRC Reform Era, >30 years Deng ushers in an open door policy which allows for reform of the centrally planned economy, market growth, and foreign trade PRC High Socialism, <30 years Mao pursues centrallyplanned, socialist development, emphasizing industry & infrastructure for a closed, self-reliant society Instability, 40 years: China s economic growth is thwarted due to warlord disputes, the Sino-Japanese War ( ), and the civil war between the Guomingdang and the CCP The Qing Dynasty: a mainly agricultural economy but one with significant trade, including foreign trade 7

8 Political timeline from the Qing Dynasty to Republican China to the PRC the search for modern China : Qing Dynasty, prosperous but declining ~ Confucianism, scholar-officials, institutions, trade, agriculture : 1 st Industrial Revolution in Europe Western powers encroach on China and : Opium Wars in China Domestic Challenges for the Qing : Taiping Rebellion 1895: Sino-Japanese War : Boxer Rebellion : Various Qing reforms and Qing falls : Republican China, ~40 years political disunity : Warlord Era 1910s/1919: New Culture Movement and May 4 th Movement and 1921: Chinese Communist Party (CCP) forms : Nationalist China, capital in Nanjing : War with Japan : Civil War, CCP vs. Nationalists 8 ~

9 Political timeline from the Qing Dynasty to Republican China to the PRC the search for modern China ~ : 100 Years of Humiliation 1949: Nationalists form Republic of China (ROC) on Taiwan : The ROC holds the UN s China seat; PRC holds China seat after present: PRC under the CCP on mainland PRC under Mao Zedong : 1 st 5YP, collective agriculture, pursue industrialization : 2 nd 5YP, famine, Sino-Soviet split : 3&4 th 5YP, 10 years of chaos, Cultural Revolution : 5 th 5YP, Mao dies in : Deng Xiaoping era begins 1997: HK reverts from British rule to PRC under one country, two systems From foreign incursions and the fall of the Qing, to PRC s founding in 1949, to China s rise in 2000s, history influences Chinese officials priorities and strategies 9

10 China s reform and opening from 1978 n Prior to 1978: 10 years ( ) of poli/econ disruption in Cultural Revolution The Lost Generation Communes and central planning in place in late 1970s n Causes for reform and opening: preserve stability and legitimacy thru econ growth n 4 Modernizations : agriculture, industry, defense, S&T Initial large tech projects (dry dock at Hebei, larger tanker, seabed cable to Japan, satellites, 3 jumbo boeings, selling Coke, etc.) Cultural Revolution behind, so socialist modernization in 1979 Foreign investment, technology, train students overseas March 1978: announce high priority areas energry, computers, space, genetics, etc train 800k in new research centers 8 key universities and many tech colleges Jan 1979, Deng goes to DC greeted by ecstatic crowds and eager press, gala reception, visited Houston space center, Boeing, Coke 10

11 China s reform and opening from 1978 n Distinctions between 1980s, 1990s, and 2000s in China s economic reforms Gradualism, experimentalism 1980s discussion, 1990s experiments, 2000s change is notable Rounds of reforms in different areas (law, agr., registration, FDI, etc.) n Distinctions between 1980s, 1990s, and 2000s in the global poli/econ environment 1970/80s: Cold War and Rise of East Asia 1990s: Democracy? 2000s: Globalization 11

12 1980s: economy and consumption still very low, controls still high n Four Modernizations 20% cut in bureaucracy (ministries/industries) Generally, push for younger better educated cadres 18,000 overseas students (2/3 paid by gov) in 54 countries by 1983 Demobilize ¼ of PLA also PLA to sell arms abroad and keep $ to invest in tech n Agriculture: Household Responsibility System ( rural contract system or agr production responsibility system ): Agr: farming, forestry, animals, fishing, side-occupations (market fruit, livestock, etc.) Modernize farming and adapt to local conditions. Machinery and farm products prices reduced and grain prices increased. Families contracted to farm a plot of land and could sell anything about the gov quota for a profit on the local market and also pursue side-line activities; rich peasants?...wealth thru diligent labor different ways of implementing, but also contracts extened for longer periods to incent investment and making it like ownership. Also encouraged to invest in all manner of enterprises, pool funds, etc. Cherish specialized households, give them the services they need in info, supply and marketing, and technology n Industry: SOE reforms and dual-track pricing Industry: shift authority from leadership to lower levels distinction between CCP, local gov, and enterprises 12

13 1980s (cont.): economy & consumption still very low, controls still high n Outcomes 1988 Taiwan lifts travel restrictions to mainland w/ 10k people/month going settting up businesses Entrepreneurs rise, but workers conditions poor ~6000 Sino-foreign JVs but with problems unrealistic expectations, bureaucrats not cooperating Law becomes necessary understood, studied, practiced Also, economic crimes by cadres 150,000 investigated n End of 1980s: end of the Cold War, USSR falling apart, Yugoslavia breaks up inflation and recession in China, citizens demands.and re-assertion of political control opening too fast?...even talk of shutting down the SEZs 13

14 1990s: CCP retains control, but deepening reforms, more opening to the outside, and a clean up in the late 1990s n 1992 Southern Tour reaffirms economic opening Ideology cannot supply rice, the ultimate goal of socialism is to achieve common prosperity Rapid development without plans (roads, high-rises) Countryside and cities changing rapidly n Industry: SOE reforms and technology transfer, lots of layoffs by late 1990s (unrest?) Increase in foreign trade, SEZs, and FDI yet US threatened to remove MFN status to China re HR (Dala Lama, Wei jingshing, FLG, dissidents, etc.) n S&T: Growth in students studying overseas Research institutes released (un-funded), personnel make contracts for production, lower tech (people taking 2 or 3 jobs), jumping into the sea n Defense: US new, global hegemon, evidenced by 91 Gulf War technology China s moves to pursue IT as defense Late 1990s military and other reforms ( clean up ); stop the smuggling in the southeast, get the military out of non-military activities 14

15 1990s: CCP retains control, but deepening reforms, more opening to the outside, and a clean up in the late 1990s n Decentralization (will China break up?) giving provincial and local governments more control and fiscal responsibility, but after 89, party does not separate from government (Goodman and Segal: China Deconstructs ; Foreign Policy China s Coming Collapse ; Gordan Chang: The Coming Collapse of China ) Capitalistic south, bureaucratic-authoritarian north Elites rewarded, regulatory capacity increased in center, professionalization, key institutions/industries central leaders still define regional goals, appoint and reward local leaders diverse policy outcomes by region (migration, birth control, employment, development) diversity was possible without fragmentation because the upside was growth and China weathered the 1997 Asian Financial Crisis well Some saw a strong China as a China Threat (Cold Warriors who only saw growth, but didn t see problems and weaknesses domestically) n Prepare to earn WTO entry and Olympics by circa 2000 The 1990s were the foundation of today s economy 15

16 1990s Tech Transfer : China s SOEs achieved technology transfer from abroad, often by forming Sino-foreign JVs 1990s: Technology Transfer and Origins of Export Industries Importation of Complete Production Lines (1) n Import whole systems and production lines from abroad n Initiate technology transfer agreements 100% 75% 90% 87% n Imitate/reverse engineer foreign products n Former institutes and researchers seek market opportunities, with lower tech Meet global demand for lower tech products Meet local demand (appliances, etc.) 50% 25% 0% 38% 11% Many of today s tech firms and managers (people over age 40) worked in these institutes and enterprises (1) Source: Oded Shenkar, The Chinese Century, 2006, from China Statistical Yearbook, 2002, and Ministry of Science and Technology,

17 From 2000: rapid take-off -- urbanization, technology, economic growth & diversity, new generation leaders, global power n ~2000: WTO, Olympics for 2008, capitalists can join CCP n Internet use and media expansion n Rapid expansion of global supply chains and vertical disintegration n Rural to urban migration, ~300million n Rule of law expanded n Leaders backgrounds begin to shift n Growth of the state sector and state revenues n Expansion of higher education (5x) n Infrastructure boom n Environmental issues increase 17

18 18 Export-led Development

19 s: SEZ s for trade; original 4 were near Hong Kong, Macau, & Taiwan; now many open areas

20 20 China established more open cities and trade/ investment zones in the 1980s and 1990s

21 21 Comments on export zones

22 China s comprehensive hukou system has long had an enormous influence on China s society and economy 1 n Household registration (hukou, 户口 ): The hukou systems continues to be a major obstacle for workers with rural hukou as they are often not entitled to urban services and are even living illegally in cities n System established in the1950s to control geographic mobility, restrict urbanization, and register the populace n Hukou card was essential to show citizenship and status but also to get food rations, housing, benefits, marriage, etc. n State responsible for urbanites, but not rural hukou holders (high population, little capital) n 1950s to 1970s, cities free of visible poverty indicators: squatters, beggars, unemployed (poverty in countryside) n Urban-centric industrial development n Countryside forced to absorb surplus people, yet peasants sought urban jobs/benefits (1) From Mark Seldon s The Political Economy of Chinese Development (1993) and [China s] State Statistical Bureau,

23 China s comprehensive hukou system has long had an enormous influence on China s society and economy 1 n Economic control: By mid to late 50s: 97% of rural households in cooperatives, with 88% in large collectives 68% of factories were nationalized and others were joint state-private enterprises Planned economy with urban private home ownership nearly eliminated and with peasants bound to collective villages was in place 2 n Hukou card for rations: grain, other foods, and cloth all rationed from mid 50s n By late 50s, hukou system required certificates for all moves, intra-urban, intra-rural, as well as rural-to-urban n During , peasants recruited to cities for industrial work; by 1960 urban population was 20% n After the famine of 58-62, for 2 decades ( ) officials used hukou system for iron control in city and countryside, halting migration to cities Today, those with rural registration still experience different conditions than those with urban hukou (1) From Mark Seldon s The Political Economy of Chinese Development (1993) and [China s] State Statistical Bureau,

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34 Economic mobility for rural-to-urban migrant laborers is mixed and follows non-institutional 1 patterns n Today, hukou does not entirely block geographic mobility but does stifle econ mobility More job changes, but less upward progression Dual segments: rural/urban, public/private, professional/low-skill Migrants pushing into public & professional segments may acquire local hukou Migrant income compared to whole non-migrant population is decent, but many of the whole population are farmers comparing to urban hukou holders, migrant income is low Parental education, occupation, and hukou have strong correlations with nonmigrants outcomes but little correlation with migrants outcomes Gender and work unit ownership affect income for non-migrants but less effect for migrants Social network is very important, i.e., chain migration Social Coverage for Migrant Workers 3 Informal Employment Formal Employment Locals Migrants Locals Migrants Pension Health insurance (1) Chinese Academy of Social Sciences, Li Chunling, Institutional and Non-institutional Path: Different Processes of Socioeconomic Status Attainment of Migrants and Non-migrants, (2) From the study above in (1), these figures average the figures of census and CASS data. (3) OECD Economic Surveys: China 2010, page199, Table 7.7, from China Statistical Yearbook Note: For more on migration in China, see works by Dorothy Solinger and Pun Ngai; Alexandra Harney, The China Price, 2008, various authors in On the Move: Women in Rural to Urban Migration in Contemporary China; Honglin Zhang and Shunfeng Song, Rural urban Migration and Urbanization in China: Evidence from Time-series and Cross-section Analyses, China Economic Review, 14, 2003; Kam Wing Chan, Internal Labor Migration in China: Trends, Geographical Distribution and Policies,

35 China has the largest human migration in global history, presently ~260+ million people n Remittances n Education: illiterate 4% primary school 23% middle school 48% high school 16% 2..64% middle or high school n Other: 1 ~80+% employed ~65% not in mfg ~55% over age 30 ~70+% married ~50% female many 2 nd generation, without agricultural background 2012 ~RMB2270/month (2008 ~RMB1300/month) 1/3 in cramped dorms Migrant Laborers in Chinese Cities More migrant workers are bringing spouses and children and are staying longer in urban areas 35 (1) Author s estimates from various sources. (2) Estimates from data in Chinese Academy of Social Sciences, Li Chunling, Institutional and Non-institutional Path: Different Processes of Socioeconomic Status Attainment of Migrants and Non-migrants, 2012.

36 Tonight Reading Tomorrow (Wed) is AM company visits: Allergan and Kunhe Qat Audio 36