China’s Modern Economy: An Introduction

Dr. Li Zhiqing

School of Economics

Fudan University

• Arrangements For the Class

• General information – Course meets Tuesday 10:00 – 11:30 am

– Place at H6309

• Mid Exam: October 29 10:00 – 11:30 am, 2013

• Final Exam: December 24 10:00 – 11:30 am, 2013

• Office hour: Thursday 2:00 – 3:00 at Room 502 at School of Economics, 600 Guoquan Road.

– Contact: reach me by email zhiqingli@fudan.edu.cn or cellphone 13817781969.

– Each PPT slides will be available at email: chinamoderneconomy@hotmail.com (password: fd09012013) after the class.

• Textbook and main readings

– Naughton, Barry. The Chinese economy : transitions and growth. Cambridge, Mass. ; London : MIT, 2007.

– Wu, Jinglian (2005). Understanding and Interpreting Chinese Economic Reform. Singapore: Thomson.

– Lin, Justin Yifu, Fang Cai, and Zhou Li (1996). The China Miracle: Development Strategy and Economic Reform. Hong Kong: Chinese University Press.

– Starr, John Bryan. Understanding China : a guide to China's economy, history, and political culture,3rd ed. New York : Hill and Wang, 2010.

• Extensive readings – Naughton, Barry. Growing out of the plan : Chinese economic reform, 1978-

1993. Cambridge, UK : Cambridge University Press, 1996.

– Spence, Jonathan D. The Search For Modern China. New York. London: W.W.Norton & Company, Inc..1991.

– Gregory C. Chow. Interpreting China's Economy, World Scientific Publishing Company, 2010.

– Cai Fang. Transforming the Chinese economy. Leiden ; Boston : Brill, 2010.

– Jin Bei, Li Gang. Road to development : The journey of the Chinese economy. Economy & Management Publishing House, 2010.

– Wu, Li. China's economy / Wu Li, Sui Fumin & Zheng Lei ; Translated by David

Gu. Beijing : China Intercontinental Press, 2010. – Mitter, Rana. 1969-Modern China : a very short introduction. Oxford ; New

York : Oxford University Press, 2008.

– Andrew G. Walder. China's transitional economy. Oxford : Oxford University Press, 2001.

• Grades.

• Grades will be approximately based on the presentation, term paper, midterm and final examination, all of above should be completed by the date listed on the teaching schedule and cannot be changed without any compelling reasons. – One presentation (15-20 minutes) during the course 25%

– One term paper (10-15 pages), due at the last week before final exam 25%

– Midterm examination 25%

– Final examination 25%

China’s Modern Economy: Transition

• Where does China’s Modern Economy transit from? – Spring Festival: History, Culture and its Economic

Consequences

• What did and do the Transition mean? – Why Modern, not Contemporary

• How to Understanding the Current and Future Situations – Factors – Trends and Challenges

• Arrangements for the Class

Gross Domestic Product and the Growth Rates 2008-2012

Sources: http://www.stats.gov.cn/

GDP of France: $2.609 trillion

USD (2012) $8.358 trillion

Sources: IMF

Sources: www.rbth.ru

US$6,000

US$50,000

Sources: By Barry Ritholtz, http://www.ritholtz.com/blog/

US$6,000

• Where Does China’s Modern Economy Transit From?

• Where does Modern Economy Transit from?

– Long history before the normalization of Social and Economic development

– 63 years after PRC’s founding in 1949

– 34 years after starting the latest round economic reform in 1978

– 11 years after entering WTO in 2001

• What did and do The Transition Mean?

• Different Transition path

Transition

Big Bang Gradualist

• Early stage transition

– From socialist planning dominated economy to market oriented economy

– ‘Crossing the river by feeling the stone’ (Deng Xiaoping)

– Four Modernizations (desire for the development)

• Four Modernizations

– Independence, self reliance

– Economic growth, going far away the poor • Agricultural modernization

• Industrial modernization

• National Defense modernization

• Science and technological modernization

– Culture confidence

• Current stage transition

– Overcome new challenges and problems derived from past development • Invest in human skills and physical infrastructure

• Create effective institution

• Protect underprivileged and vulnerable sections of population

• Improve living condition for migrating workers and relief the congestion for the residents

– Deepen the institutional reform • Keep economic factors flowing free(such as “Hukou” deregulation,

and information flow)

• Establish the rule of law

• the Dual Economic Structure

– East vs. West

– Urban vs. Rural

– Wealthy vs. Poor

• Firecracker and PM2.5

– The economic growth and environmental degradation

– The current people and the future generation

– The clean industry and dirty

• The modernization and traditional culture under the pressure of economic growth

– Change of the way for holiday’s life, such as communication for the greetings

– Change of the attitude on the customs

– Change of the social interacting

– Not changing is the dream of Modernization

Chunyun and the Reunion for the holiday

– According to the transportation authorities, Chinese made 440 million trips during the Spring Festival holiday, which lasted from Feb. 9 to 15.

– Over 250 Million migrant workers

• Passengers enter Guiyang Railway Station in Guiyang, capital of southwest China's Guizhou Province, Feb. 15, 2013. (Xinhua File Photo/Ou Dongqu)

• How does the Chunyun Happen?

– Holiday reunion tradition

– ‘Hukou’ or ‘Huji’ system: household registration policy

– High education institution’s distribution

– Migrant workers

– The concentration of Holiday

– One-child policy

– The private vehicle stream on the highway, a new country on wheels coming • 260 million licensed

drivers in china

• Factors behind China’s economic growth

– Structural factor

• Economic development: investment dominated

• Social system re-organizing

• Dual-wheel driving

– Transitional

• From Disorder to order

• Market mechanism: replacing the plan

• Governmental intervention: human and institutional capabilities

– Traditional

• Rich institutions – Formal: Long history of state operation

– Informal : Confucian heritage (Ren Yi Li Zhi Xin: Benevolence, Righteousness, Manners, Wisdom, Credit )

• Relation(Guan xi) – Connection used to facilitate something

– Family, classmate, friend, work, township

– Traditional economic relationship with HK, TW, SE Asia and oversee Chinese

• Familiar with commercial procedures – Original bank system happened AD 900

– Normal but distinct approaches and performance

• Mixture of socialism and marketilization

• Over-industrialized: high investment, export rate and low consumption

• Under-urbanized: high land urbanization and low population urbanization

• High energy-pollution intensity: high energy and environmental consumption and low efficiency – Adapt and address the global climate change

– Recover the local environmental quality

– Demand high living standard

• Future trends and challenges

– Promoting Domestic Consumption • Household spending ratio

– Urbanization • Chase high quality, not quantity of urban development

– Environmental Protection • Revalue the environmental quality and set up environmental

friendly economy

– Financial Reform • Further reform of China’s banking system and the development of

China’s capital markets

– Addressing Income disparity • Double income by 2020 and improve public service

• Narrow down the gap under dual track system

• Photo taken on 00:13 on Feb. 10, 2013 shows smog covering the downtown area of Zhushan County, central China's Hubei Province, after residents around the area set off fireworks to celebrate the arrival of Chinese Lunar New Year. Setting off fireworks is a tradition in China during the Spring Festival, which result in air pollution in varying degrees. (Xinhua/Zhang Lei)

• Preliminary reading for next class – Chapter 1: Geographical setting, The Chinese economy : transitions

and growth. Barry Naughton. Cambridge, Mass. ; London : MIT, 2007.

– Chapter 1: Geographical inequalities. Understanding China : a guide to China's economy, history, and political culture,3rd ed. Starr, John Bryan New York : Hill and Wang, 2010.

Ends