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7/26/2019 Chinas Growth Story (3)
1/21
CHINAS GROWTH STORYToo Good to last forever?
Mithila Yaul 2014161
Nachiket Bhagdikar 2014165
Nilesh Thakur 2014180
Nishant Agrawal 2014181
Neha Nahata 2014172
Prerna Gaba 2014204
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REASONS
Infrastructure development
Open Economic Policy
Foreign relations
Technology
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Current Macroeconomic Indicators
GDP- 7.3%
Inflation rate- 1.6%
Interest rate- 5.6%
Savings rate- 0.35%
Unemployment rate- 4.1%
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Date: December 18-22, 1978
Third Plenum of the CCP Eleventh Party Congress
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REFORMS
Opening-up
Policy
Establishment of
Four
SEZs(Shenzhen,
Zhuhai, Xiamen &
Shantou)
Reforms in ForeignTrade regime
Trade Liberalisation
SEZ
ImportHigh
Technology
IncreaseExports
AttractForeign
Investment
EarnForeign
Exchange
CreateJobs
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Agricultural Reformchange the collective farming institutions with a
household responsibility system (HRS)
Decentralization of the Government
delegating fiscal and administrative powers
from the central government to the provincial
and lower level governments
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State-Owned Enterprise Reform
enlarge enterprise autonomy and to expand the
role of financial incentives
two-track system
Moving towards a Market Economy
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Financial Reforms
Peoples Bank of China
Industrial and CommercialBank of China
China Construction Bank
Agricultural Bank of China
Bank of China
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Approaches
A Pragmatic and Incremental Approach
A Micro-first and Self-propelling Approach
Dual-track and Growing-out-of-plan Approach
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A Pragmatic and Incremental Approach
Pragmatism success are determined by experiment rather than by
ideology Incrementalism
idea is implemented locally or in a particular economicsector
reduce the transitional costs increase the reform benefits
minimize the uncertainty of economic reforms
maximize the possibility of success.
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A Micro-first and Self-propelling Approach
the government took measures to improve the micro
incentives
granting partial managerial autonomy
profit-sharing to the micro units
introduced a dual-track price and allocation system
the resources to be allocated increasingly by the micro units
liberalized the price
gradually introduced and strengthened the necessary market
institutions
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Dual-track and Growing-out-of-plan
Approach
economic agents are assigned rights to andobligations for fixed quantities of goods at fixed plan
prices as specified in the preexisting plan the commune -sell a fixed quantity of output to the
state procurement agency & pay a fixed tax to the
government
it can liberalize markets without creating losers andthus is politically appealing
can also achieve efficiency
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CONSEQUENCES OF CHINESE ECONOMIC
REFORMS Diminishing State Sector
o Share of GIOV produced by SOEs decreased from 77.6% to 13%.
o SOEs have been consolidating through mergers, bankruptciesand regrouping.
o Chinas SOEs have nearly completed separating themselves
from the social functions of providing housing, day care,
hospitals, and schools for their employees.
o The government has also relaxed the restriction that the state in
a state-holding enterprise must hold more than 50 percent of
the shares.
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Integrating China into the Global Economy
China as a world factory
Top producer for more than 100 products
Increase in global exports
FDIs Contribution to Chinas
Economic Development Investments
Industrial output and value-added
Exports
Foreign exchange
Tax revenues
Employment
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Causes for Slowdown
Fall in exports Recession in Europe and a patchy
economic recovery in the U.S, increasing cost of
labour. Fall in Domestic Demand
Middle income trap Chinas per capita income
projected to reach $10,000 by 2015 . combined withhigh old age dependency ratio, high investment rate
with low rate of return, undervalued exchange rate.
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Wage inflation
The Invisible debt The debt of households and
corporations amounts to 130% of GDP
Over heated Investment It has an investment
rate of nearly 50% of GDP.
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Poor governance A weak and relatively
decentralized government.
Ageing population
Housing and Banking are a mess Following a
real estate bubble, in addition the countrys
shady banking sector which is overloaded with
bad loans.
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CAN THIS GROWTH STORY LAST
FOREVER?
Increase of GDP to debt ratio from 147 per cent at the end of
2008 to 251 per cent by the end of June this year.
When China started economic reform in 1978,it was very
backward and had very less productivity.
Chinas banking Sector is still dominated by State Controlled
banks.
No Synchronization between economic reform and political
reform.
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BIBLIOGRAPHYhttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_story
http://www.businessinsider.in/8-Charts-That-Clearly-
Confirm-China-Is-Slowing-Down/articleshow/33834171.cms
http://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.html#axzz3L8TQiNgS
Journal of Economic PerspectivesVolume 26
https://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_storyhttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_storyhttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.ft.com/cms/s/0/ccb72910-60f1-11e4-894b-00144feabdc0.htmlhttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttp://www.businessinsider.in/8-Charts-That-Clearly-Confirm-China-Is-Slowing-Down/articleshow/33834171.cmshttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_storyhttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_storyhttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_storyhttps://www.academia.edu/8629850/Why_rapid_economic_growth_in_China_The_success_story7/26/2019 Chinas Growth Story (3)
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THANK YOU