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China’s Modern Economy

China’s Modern Economy. A Socialist Market Economy (It’s a mix!). China’s Economic Transformation. In the 1980s new economic “rules” were introduced and applied only in certain urban areas on the Pacific Coast known as Special Economic Zones Senzhen Zhuhai Shantou Xiamen

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China’s Modern Economy

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  1. China’s Modern Economy A Socialist Market Economy (It’s a mix!)

  2. China’s Economic Transformation • In the 1980s new economic “rules” were introduced and applied only in certain urban areas on the Pacific Coast known as Special Economic Zones • Senzhen • Zhuhai • Shantou • Xiamen • (3 more were added later)

  3. The Goal: attract technologies and investments from abroad • Government Incentives included • Low taxes • Less environmental regulations • Eased import-export regulations • Simple, low-risk leases • Hiring [relatively cheap] labor under contract • Profits were allowed to be sent back to investors’ home countries • Additionally, the Chinese Government built business-friendly infrastructure • Expanded seaport facilities, roads, railroads and airports • Constructed apartment buildings to accommodate hundreds of thousands of workers

  4. Did the experiment work??

  5. “Made in China” • What % of the goods sold at Walmart are made in China? • Less than 25% • Between 25 and 45 % • Between 45 and 70% • Over 70%

  6. Made in China China assembles more toys, stitches more shoes, and sews more garments than any other nation. It has also become the world’s largest maker of electronics. WHY? Cargo lines the docks, awaiting export from the Yantian International Container Terminal in Shenzen

  7. Why is China the “world’s factory floor of choice”? • While we are sitting in class… • How many Chinese children will be born? • How many American children will be born? 1.4 billion people = greatest natural resource on the planet! Largest human migration in history as hundreds of millions of peasants move from the countryside to live in urban areas

  8. The “world’s factory floor of choice” • People not machinery = savings • Little to no regulation = savings • Cultural values reinforce self-discipline and obedience = lower management costs • Only 15 managers for 5,000 workers • Our High School: 3 managers for 129 workers • Lower Cost of Living = Lower Wages • Companies don’t have to provide ‘benefits’ like healthcare or retirement/pensions • NOT the cheapest labor! • Stability & reliability

  9. China does not have the cheapest labor!

  10. What is the “China Price”? The price at which Chinese manufacturers can deliver certain goods and services The price American (or any other country’s) manufacturers/suppliers have to match to keep their customers The pros and the cons?

  11. “China Price”

  12. “China Price”

  13. “China Price”

  14. Apple & China People flooded Foxconn Technology with résumés at a 2010 job fair in Henan Province, China. • “How the U.S. Lost Out on iPhone Work” • “We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

  15. While we were sitting in class… • How many Chinese children were born? • 1, 394 (34/minute) • How many American children were born? • 328 (8/minute)

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