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I. The Political and Economic Structure of the PRC economy 1. one-party rule by the CCP

Lecture 1: An Overview of the Chinese Economy in the Era of Reform. I. The Political and Economic Structure of the PRC economy 1. one-party rule by the CCP 2. transition to a market economy (Socialism with ______________characteristics) 3. economic profile of the country. Sept 2003.

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I. The Political and Economic Structure of the PRC economy 1. one-party rule by the CCP

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  1. Lecture 1: An Overview of the Chinese Economy in the Era of Reform I. The Political and Economic Structure of the PRC economy 1. one-party rule by the CCP 2. transition to a market economy (Socialism with ______________characteristics) 3. economic profile of the country Sept 2003

  2. II. China's 1979 reform • 1. Objectives • (a) to liberate the hidden productivity of all productive inputs or work units • (b) to increase the welfare of people through the increase in _____________________ • (c) to put the country on to the right path to (market) socialism • (with the ____________________characteristics).

  3. 2. Means • (a) decentralisation of control and planning • (greater market forces) – greater initiative, autonomy and power to • ________________________________ • ________________________________ • ________________________________ • in respects of p__________, ______________, investment, _________________ ______and • __________________________________.

  4. (b) open-door policy to facilitate the absorption of capital, knowledge and technology through the establishment of SEZs, open coastal cities, technology development zones. • 3. Theoretical justification • (a) The Socialist Planned Market Commodity Economy - the _________ stage of socialism in PRC (The _________session of the CCP)

  5. 4. Benefits and costs of the reform for PRC? • (a) benefits • higher agricultural and industrial growth rates • technology upgraded • _____________consumption choice • active member of the international economic community with strong _________________.

  6. (b) costs • income inequalities among different classes of people and in different provinces => ________________________ • regional protectionism • inflation • pollution • _____________________________crimes

  7. 5. Why the reform has been successful (or unique)? • (a) strong government • (b) role of Hong Kong and Taiwan • (c) role of overseas Chinese - _________Chinese in Asia and other parts of the world. • (d) appropriate strategy - gradualist approach (________________________________________________________________________________) • (e) financial stability and liberalisation • (f) no internal and external debt to begin with

  8. III. China Business • 1. Meaning • Direct - Trade, Investment between Hong Kong and China. • Indirect - Teachers of Mandarin, China Business Centre, C__________________

  9. 2. A multi-disciplinary approach • a. economics • b. political science • c. history • d. law • All these have impacts on the production costs (especially for direct investment) and transaction costs of engaging in business in another country.

  10. 3. Functional approach/areas • a. management • b. marketing • c. accounting • d. finance

  11. IV. HK/Mainland Business • 1. Types • (a) trade • In 2002, the share of HK’s total imports from China in HK’s total imports from the world was 44.3% and that of HK’s domestic exports to China in HK’s total domestic exports to the world was 31.6%. (The figures were 43.8% and 29.8% in 1999 respectively.) • (b) direct investment • HK is the largest direct investor in China. Its investment in the Mainland amounted to US$17.9 bn in 2001. The amount was only US$1.5 bn in 1986.

  12. (c) banking and finance • HK's money and capital markets are being increasingly utilised by PRC's financial institutions • 2. Reasons for the links • (a) background • Geographical, ethnic, and cultural links have facilitated the business links between Hong Kong and Mainland of the PRC. • (b) transport • HK has the ____________________________ • ______________________________________.

  13. (c) investment opportunities in HK • i. almost every province, region and municipality in China now has a resident representative office in HK • ii. most major PRC Foreign Trade Corporations have subsidiaries, joint ventures, representative offices, agents or distributors in HK • (d) political considerations • i. Pledges to maintain the stability and prosperity of Hong Kong before and after 1997. • (e) vast market potential in the PRC

  14. 3. Importance of China business to HK • (a) Hong Kong is a small open economy lacking natural resources. • (b) HK economy is an international trading, commercial and financial centre. • (c) Since China's reform in 1979, the revival of HK as an entrepot centre and the role of an international financial centre are reinforced

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