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1. Market transition

   MappingBusiness Opportunities in China
2. Since 1996China had moved away from command to market economy Transitionstill not completed. Why? Reforms could never hinder economic growth (in contrast – Eastern Europe or Russia “big bang”) China didn’t necessarily want free market, it just wanned to improveitseconomy In China – giving limited concessions in market economy were given to meet unmet needs It was accepted that these concessions will eventually erode the whole system Surprisingly, it worked very well
3. Howdiditall start? Beginningof 80s decision to reduce 30 years lasting pressure on the farmers. The procurement prices were Farmersstill had to delivercertain amount of grain (procurement)BUT could sell rest in the market. Agricultural production began to surge. In 1984, one third higher then in 1978. Simply because of the market forces! The market finallyclearlywonovertheplan!
4. Key features of early Chinese reformtill 1993 Dual track system Growing out of theplan Entry allowed No privatization Dramaticreformsstill ONLY in non-essential sectors for planned economy
5. Shift in the reformsafter 1993 Till 1993 reforms gradualist – “no loosers” (rural citizens wonbetter life, urban citizens still OK) Since 1993 – reform with loosers – in mid 90s plans were almost instantly canceled – SEOs had to sell theirproducts for market prices – bankruptcies(theirproductiontooexpensive) 2001 – China enters WTO – evendeeper market reforms carriedout – market economy almost completed But almost no social protection, no social safety network Is China still a communist countrynow?