Module 3: Modern China Modern China Topic 3 Industrial Reforms and Outcomes CHAPTER 1: REFORM AND OPENING UP Topic 3: Industrial Reforms and Outcomes Reform Policies 1979 1984 Contractual management(economic) responsibility system 1. Enlargement of the Enterprises Autonomy After the Third Plenary Session of the 11 th Central Committee The Central government reduce control over state run enterprises Granted State run enterprises the power to hire and dismiss middle and low level employees Make changes in the organizational structures 2. Profit Incentives for the Enterprises ( surrounding profits ) Encourage the enterprises to earn more profit e.g. Once the enterprise had completed the state s production assignments, it can Purchase raw materials on the market, produce and sell the products for a profit Share extra profits with their staff in form of bonuses and remunerations Increase staff productivity 3. Bear own financial responsibility Under the system Ying Kui Bao Gan Responsible for both profits and losses, if an enterprise did not complete the task, it had to cover the losses with its own capital Exert economic incentive and pressure to enterprises 4. Relieve constraints on private enterprises Private enterprises can enter important industries including finance, electricity and telecommunications
Loopholes of Contractual management(economic) responsibility system Enterprises still supervised by government departments Did not operate according to market needs Reply on government funding and loans from state owned banks. Companies may take advantage of the close relationship with government officials to defer loan payment A lot of redundant employees and a huge expense on their remunerations, e.g. medical insurance, child care, retirement Constitute heavy financial burden, affect its investment, competitiveness, and profitability Government s response (1997) Encourage enterprises to enhance efficiency: Implementations such as lay offs, mergers, collectivation Closure of less competitive state run enterprises Help Medium and large sized enterprises through restructuring and debt consolidation: State run enterprises are among the world s top 500 enterprises NEGATIVE IMPACTS: Massive unemployment (XIAGANG) Under xiagang system, unemployed workers were given small pensions by state run enterprises
Achievements of enterprise reforms 1. Increasing autonomy of enterprises: Enterprise work under the rule of survival of the fittest More driven to compete against other competent 2. Separating ownership and management From 1987 1992, state run enterprises state owned enterprises Ownership separated from management SOEs are merely owned by the nation, operated by themselves Role of government: Owner Investor State will not interfere with daily operation or the decision making of the enterprises Efficiency of SOEs enhanced 3. Assisting state owned enterprises adapt to marketization Enterprises that suffered from heavy financial losses were closed down Fair competition allowed, diversified forms of business enterprises are achieved through Actions, mergers, or joint operations Ownership can be transferred from state owned to collectiveowned, private owned (except some with extreme importance) 4. Achieving a more balanced economic structure Primary, secondary and tertiary industries share in the GDP: 1978: 30:45:25 2009: 11: 49: 40 5. Breaking Market monopoly To ensure prices decided by supply and demand and that fair trade is achieved, the government smash monopoly by: Opening up market and lowering market entry requirements Spliting monopolies into a number of competing firms E.g. China s airline industry divided into Air China, China, Eastern Airlines, China Southern Airlines Enacting the Anti monopoly Law Corporations that were suspected of being involved in monopolies were investigated, prosecuted, and punished e.g. in 2009, Ministry of Commerce rejected Coca cola s proposed acquisition of China Huiyuan Juice Group Limited
Challenges of developing a Market Economy
Module 4: Globalization Chapter 3: Political globalization Political Globalization Topic 4 International governmental organisations and conferences Topic 3: Political Globalization Concept words 1. Political globalization Under accelerated integration around the globe: Influence of a country s policies is no longer confined within a single country, but different countries worldwide. Countries over the world carry out international cooperation so as to deal with international issues collectively. Policy decisions of the government get beyond national boundaries. 2. Global governance A transnational administration model in which Government in countries around the world solve transnational problems collectively through international means, e.g. global warming, transnational crimes, epidemics, terrorism 3. Transnational Issues/Cross border Issue Do not confine to a certain country, countries are in the same boat. As a result of blurred national and regional boundaries, these problems cannot be solved by a single country, should be jointly tackled. 4. Global citizenship(world citizens) World citizens refer to those who are concerned and engage in social and international affairs. Two modes of global citizenship: Individual: Think Globally, Act locally (GLOCALIZATION) Improve the globe through acting locally, emphasizes on one s responsibility for mankind. Examples: Waste reduction, recycling, purchasing fair trade products, support global values and standards, such as environmental protection and human right. Corporation/Organization: Think Globally, Act Globally Actualize the concept of global citizenship work towards a better globe Examples: World Fair Trade Organization Responsible for promotion of fair trade worldwide Setting the second Saturday of May as World Fair Trade Day, raising public
awareness of fair trade. Reason of emergence of PG 1. Diplomatic disputes among countries Armaments development and scrambling for resources have threatened regional safety. For example: Nuclear weapons: Iran and North Korea Territorial disputes: e.g. East Sea between China and Japan, South Sea between China and Southeast Asian, South Kuril Islands between Japan and Russian Federation National interests: e.g. Persian Gulf War in 1991, Israeli Palestinian conflict (long term, since declaration of establishment of state of Israel in 1958) 2. Disputes on trade among countries Disputes on trade: e.g. China levied punitive tariff on American vehicles in 2011 Disputes on currency: e.g. Value of Renminbi is constantly argued Coping Method: Establish an international, authoritative and neutral organization to arbitrate and mediate countries disputes, in order to avoid trade disputes from hurting diplomatic relations among countries. 3. Global environmental problems Global warming: Surge of CO2 emission have raised the global temperature by 0.74C over the past decade. Extreme climatic hazards like heat waves, droughts, torrential rain arose. Pollution: Sewage, exhaust gas, solid waste discharged during industrial production process leads to water pollution, air pollution and soil pollution. Coping Method: Establish international cooperative organization to handle pollution problems collectively. 4. Cross border crime problem: 1. Economic crime: e.g.1: Money laundering: Criminals use money obtained via illicit means to undergo legal transactions, so that money from illicit sources can be turned into legal asset. e.g.2: Fraud: Grab others properties with fraudulent conducts 2. Drugs trafficking: Fact 1: According to United Nations Office on Drugs and Crime, amount of money generated by transnational crimes reaches 2.1 trillion USD (3.6% of
GDP) Golden Triangle : southeast Asia, South America 3. Smuggling: Criminals carry out illegal cross border trades without inspections from local customs and levy of tariff. e.g. China Xiamen Yuanhua smuggling case: Taxes amounted to Renminbi 30 billion were fraudulently avoided. 4. Piracy: Particularly serious at the Gulf of Aden of Somalia, where more than 1200 privates savagely commit their atrocious crimes. Since 2005, started to kidnap ship vessels from different countries, blackmailing for ransom. Coping method: Regarding the difficulty in garnering evidence and lack of extradition ordinances, it is essential to consolidate international cooperation and establish transnational police organizations. 5. International terrorism A type of violent assault with specific political purposes, intending to create social uneasiness and fear. e.g.1: 911 attack led by al Qaeda organization e.g.2 Extremist Islamic State initiating bombing attacks at Britain (2005), France Paris(2015) Coping Method: Pinpointing the rampant terrorist activities in underdeveloped countries, counties should establish effective cooperative mechanism and strengthen exchange of intelligence, or even adopt collective actions, in order to suppress cross border terrorist activities. Origin of transnational issues 1. Frequent global interaction A high degree of economic dependence among countries, together with technological advancement and rapid development of transport network, communication and interaction among countries are much easier than before. 2. Intellectual development of mankind In the past, transport system and spread of knowledge were not advanced, not many people can acquire knowledge. Now, with advancement in education and mass communication, spread of knowledge and information is infinite, facilitating advancement in social progress. People can think in different was without being restricted by the environment.
3. Exploitation of the environment Human abuse natural resources excessively, developing its economy at the expense of environmental destruction. E.g. Logging leads to disappearance of tropical rainforests, at a speed of 130000 square meter per tear. 30000 square meter in Amazon rainforest has disappeared, which account for 40% of total amount of oxygen generated in the world. Core elements of global governance (What is meant by governance, how to govern, who to govern, what should be governed, how s the governance) Value of global governance: achieve Idealistic goal within the globe Universal value such as democracy, human rights should be placed ahead of country, race, sovereignty, ideology Subject of global governance(who to govern) Government of different countries Formal international organizations, such as UN, World Bank, world Trade organization, International Monetary Fund Informal global civil society organization Parameters to measure effect of global governance Effectiveness of international regulations: Transparency, completeness, adaptability, knowledge foundation Government capacity Division of power Interdependence between nations Participants and role of global governance: International Government Organization: A discussion platform for transantional issues, Provision of international capital aiding and fostering international movements; garnering national information; formulate credible standards recognized by nations International Non government Organisation: Humanitarian Aid, Followers of global issues, free spread of ideology as they are not restricted by sovereignty and commercial interest Multinational corporations: Providers of market view, focus on improving business environment, under the supervision of international organisations to prevent it from engaging in illegal deals or exploiting public interest