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北京大学工学院 PKU College of Engineering Globex

北京大学工学院 PKU College of Engineering Globex. China’s Economy: Growth and Global Connections -- State-led Development -- Past to Present -- Export -led Development - - Labor Migration. State Led Development discussion. Past to Present.

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北京大学工学院 PKU College of Engineering Globex

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  1. 北京大学工学院 PKU College of Engineering Globex China’s Economy:Growth and Global Connections-- State-led Development-- Past to Present-- Export-led Development-- Labor Migration

  2. State Led Development discussion

  3. Past to Present

  4. 1980s and 1990s policy changes laid the foundation for huge growth… US$ trillion 2017

  5. China’s Deng visited the U.S. in 1978…

  6. 1980s (cont.): Important outcomes.... Important outcomes Taiwan: 1988 Taiwan lifts travel restrictions to mainland w/ 10k people/month going, often setting up businesses Entrepreneurs: Small entrepreneurs rise, but workers’ conditions poor JVs: ~6000 Sino-foreign JVs but with problems…unrealistic expectations, not all officials were cooperating Law: law becomes necessary…understood, studied, practiced, new laws Corruption: economic crimes by cadres…150,000 investigated End of 1980s (~1990): end of Cold War, USSR falls The global community wonders if China will move away from authoritarianism and socialism due to 1990s emphasis on democracy, human rights, and free markets/trade

  7. Import whole systems and production lines from abroad Initiate technology transfer agreements Imitate/reverse engineer foreign products Former institutes and researchers seek market opportunities, with lower tech Meet global demand for lower tech products Meet local demand (appliances, etc.) 1990s “Tech Transfer”: China’s SOEs achieved technology transfer from abroad, often by forming Sino-foreign JVs 1990s: Technology Transfer andOrigins of Export Industries Importation of Complete Production Lines(1) Today’s professionals age 40+worked in the institutes and enterprises of the 1990s; they remain influenced by their experiences Source: Oded Shenkar, The Chinese Century, 2006, from China Statistical Yearbook, 2002, and Ministry of Science and Technology, 1999 * SOE = state owned enterprise; JV = joint venture

  8. 1978 to current: trends by decade Distinctions between 1980s, 1990s, and 2000s in China’s economic reforms 1980s discussion, 1990s experiments, 2000s change is notable Various “rounds” of reforms in different areas (law, agr., registration, FDI, etc.) “Gradualism, incrementalism, experimentalism” Distinctions between 1980s, 1990s, and 2000s in the global poli/econ environment 1970/80s: Cold War and Rise of East Asia (…especially US allies) 1990s: Cold War ends and Democracy and Human Rights at fore (affects foreigners’ perceptions of China); orthodox, neoliberal market focus is dominant 2000s: Globalization: internet, global supply chains, global practices/norms

  9. After 2000s huge growth; China’s econ now about 12x the size of 2000; what happened at ~2000? US$ trillion 2017

  10. What changed from 2000? Globally: Internet and e-communications Rapid expansion of global supply chains and “vertical disintegration” of industries In China: Continuing... Migration: rural to urban migration continues, ~260million+ (helps exports) Policies/investments: particular industries/sectors/areas/human capital are supported SOE reform: growth and reform for state sector (grows from ~20% to ~40% of economy) Legal reforms: support new businesses, contracts, IP, etc. New... ~2000 China joins WTO but implemented ~2005 (capitalists can join CCP ~2000-01) Expansion of higher education (5x) Infrastructure boom Capital market and financial systems develop Leaders’ backgrounds begin to shift (study humanities, time abroad, etc.) Environmental issues increase

  11. Export-led Development(a sub-set of State-led Development)

  12. Many changes in 1980s/1990s; also begin export of low-cost goods due to low wage labor • Many changes in China in 80s/90s • Exportation was not the ONLY or primary change in China’s economic reform and opening • The 4 original SEZs, at right... • Initial problems:foreigernsdon’t bring tech; lowskill and quality mfg; high bureaucracy;expensive investments • 1990s:HK$; black markets(smuggling); corrupt officials; crimeand prostitution, etc. • Finally, many more port cities opened, development zones, “open cities,” “border regions,” etc. (OPCs, ETDZs, FTZs, HTDZs)

  13. Export-led development: SEZs and other special zones • SEZ (and other zones) benefits for businesses: • Tax breaks; subsidized electricity, water, land; simplified paperwork; special investment or ownership options; credit; no import duties on equipment; etc. • SEZs as proven tactic in East Asia: • Japan’s “Silicon Island” from 1984 in Kumamoto prefecture on Kyushu Island • Korea’s free export trade zone at Masan in ‘70 & “Taedok Valley” (“TaedokScience Town”) in 80s • Taiwan’s free export zone at Kaohsiung in 1965, Hsinchu Park in 80s, and Tainan Park from 1995

  14. Export-led development: spatial synergies and benefits • Synergies: • Spatial benefits of clustering businesses together are well-known, e.g. Silicon Valley. Sharing and learning for people, tech, and management • Organic versus developed clusters. Developed clusters have mixed reviews, yet degree of activity is large. • My view: developed clusters are a a start. They can help locals as well as foreigners or returning locals • Benefits of exportation: • Businesses (and government) earn revenues, so create jobs and wages...and then re-invest profits in more businesses, including more advanced businesses, tech, and whole supply eco-system • Businesses and workers learn from suppliers, customers, partners, etc. and move into higher quality, higher value products • But an individual worker may not benefit in the short-term beyond wages

  15. Labor Migration

  16. China’s Labor Migration: “largest human migration in world history”

  17. In 2017, >285mm+ people, larger than US workforce and ~1/3 of China’s workers • Discrimination; abuses; insecurities (hukou system) • Remittance $ sent home: major force for ^ in rural areas (less now) • Education: • illiterate 4% • primary school 23% • middle school 48% • high school 16%2 so, 64% middle or high school school Millions of Migrant Laborers in Chinese Cities 2017 • Author’s estimates from various sources. • 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.

  18. Continued.... Millions of Migrant Laborers in Chinese Cities • Other factors:1 • ~80+% employed • ~65% not in mfg • ~1/3 in cramped dorms • ~55% over age 30 so, mostly older, • ~70+% married married, w/ jobs • ~50% female • many “2nd generation” migrants without agr background • “left behind kids”: living in village with grandparents • Income rising: 2016 ~RMB3,275/month (2012 ~2,270; 2008 ~1,300) 2017 More migrant workers are bringing spouses & kids & staying longer in urban areas • Author’s estimates from various sources. • 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.

  19. Video on “left behind” children….

  20. Video on migrant laborers....

  21. 北京大学工学院 PKU College of Engineering Globex China’s Economy:Growth and Global Connections

  22. The following slides are not on the quiz...

  23. Political timeline from the Qing Dynasty to Republican China to the PRC… “the search for modern China” 1644-1911: Qing Dynasty, prosperous in 1700s but declining ~1800-1911 Confucianism, scholar-officials, institutions, trade, agriculture 1760-1830: 1st Industrial Revolution in Europe Western powers encroach on China 1839-1842 and 1856-60: Opium Wars in China Major Domestic Challenges for the Qing (…and there were others!) 1851-1864: Taiping Rebellion 1895: Sino-Japanese War 1898-1901: Boxer Rebellion 1860-1911: Various Qing attempts at reform and Qing falls 1912-1949: Republican China, ~40 years political disunity, new ideas 1912-1927: Warlord Era 1910s/1919: New Culture Movement and May 4thMovement 1921: Chinese Communist Party (CCP) forms 1925-1937: Nationalist China, capital in Nanjing 1937-1945: War with Japan 1945-1949: Civil War, CCP vs. Nationalists ~ This page not on quiz. ~1850-1950 are “100 Years of Humiliation”

  24. Political timeline from the Qing Dynasty to Republican China to the PRC… “the search for modern China” • ~1850-1950: “100 Years of Humiliation” (also, Western colonization around the world) • 1949: Nationalists form Republic of China (ROC) on Taiwan • 1949-1971: The ROC holds the UN’s China seat; PRC holds UN China seat after 1971 • 1949-present: PRC under the CCP on mainland, now 65 years • 1949-1976 PRC under Mao Zedong • 1953-57: 1st 5YP, collective agriculture, pursue industrialization • 1958-1962: 2nd 5YP, famine, Sino-Soviet split • 1966-75: 3&4th 5YP, 10 years of chaos, “Cultural Revolution” • 1976-80: 5th5YP, Maodies in 1976 • 1978: Deng Xiaoping era begins • 1997: HK reverts from British rule to PRC under “one country, two systems” • Post 2000: growth accelerates after ~20 years (1978-98) of careful reform .….~12 yrs high socialism (1953-1965) ……~20 yrs gradual reform & opening (1980-2000) …...~20 yrs high growth and integration (2000-2020) 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

  25. 1980s: economy and consumption still very low,controls still high “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 Agricultural Reform: “Household Responsibility System” (also called “rural contract system” or “agr production responsibility system”): Modernize farming and “adapt to local conditions” Side occupations: profit on the local market and also pursue side-line activities; there will be “rich peasants” Contracts: different ways of implementing, but install contracts and extend for longer periods to incent investment & making it like ownership Investments: encouraged to invest in all manner of enterprises, pool funds, etc. “Specialized households”: give them the services they need in info, supplies, marketing, and technology Industry: SOE reforms and “dual-track pricing” Leadership: shift authority from leadership to lower levels Party-Gov-Mgmt: distinction between CCP, local gov, and enterprises Dual-track pricing: central plan pricing but also market pricing for output above plan; starting markets This page not on quiz.

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