DISCUSS THE ECONOMIC AND SOCIAL CHALLENGES
FACING RURAL COMMUNITIES IN CHINA (25)
Emerging Asia ­ China (1.2)…read more

INTRODUCTION
nd
China's economy is the 2 largest in the world, and is
currently the fastest growing with an average growth rate
of the 10% over the last 10 years. Its economy took a major
change in direction after Mao's death in 1976, bringing it
out of isolation from the rest of the world. There were a
number of economic factors that triggered the positive
change brought about by Deng Xiaoping like the Open
Door Policy in 1978. Today, China's 21st leaders and tough,
focused and determined on economic growth at all costs,
but only on China's own terms.…read more

In 1978 China is competing for significant economic, political and cultural
influence around the world. As a result, the Open Door Policy was
introduced by Deng Xiaoping, leader of the Chinese Communist Party. Deng
realised that China needed Western technology and investment, and
opened the door to foreign businesses who wanted to set up in China. China
opened up their economy to global activities which would make the country
more efficient. One of these approaches was State-Owned Enterprises
(SOE's) which are companies owned by the government (Public Sector in
the UK) to boost China's economy. They were mainly heavy industries such
as oil, chemicals, power, iron and steel. A key incentive towards
independence in a market economy was enabling SOE's to keep some of
their profits. however, the books of state-owned enterprises were often
cooked to make the company appear profitable when in really they were
losing heaps. At one point 50,000 state enterprises sucked up 70% of all
domestic loans while producing less than 34% of industrial output.
1…read more

Therefore, China introduced Special Economic Zones (SEZ's). This is an area in
which foreign and domestic companies can trade and invest without the same
control and regulations from Beijing as other parts of China. Since 1979, five
special economic zones and 14 open cities have been proclaimed. The Open
Door Policy of Deng Xioaping aimed to China benefitted from SEZ's since It
attracted foreign technology and foreign investment, and they are able to
open foreign markets to Chinese goods. For example, Pudong was one of
these zones on the east coast of China that were it was created to enclave
China's very fast development. They had a special set of economic regulations
due to being a Free Trade Zone; infrastructure planning, reduced restrictions
on land, labour, wages, taxes and planning regulations and higher wages than
elsewhere in China but cheaper than elsewhere in the world. However, the
development of the eastern coast was at the expense of the interior
since SEZ are built on agricultural land. The farmers have lost their livelihood as
they are not skilled labourers and it would be tough to relocate them to other
jobs in the area.
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Consequently, small local businesses also had to change in
order to match the rate of China's rapid economy growth.
Therefore, Township and Village Enterprise (TVE's) were
created to help keep up China's economy. During Mao's era,
rural industries called TVE's produced heavy goods ­ iron,
steel, cement, chemical fertilisers, hydroelectric power, and
farm tools. After 1978, they expanded to develop a wider
range of businesses. Many Chinese farmers preferred to
invest their resources in rural industry rather than
agriculture. This encouraged the growth of small businesses
run by the most successful peasants. Thus a new
entrepreneurial class began to emerge as TVEs became the
backbone of development in china's economic growth.
3…read more

China also joined the World Trade Organisation (WTO) in
2001. This has been seen generally as a major, positive
development and beneficial to the rest of the world. After
China joined the WTO, the service sector was
considerably relaxed and foreign investment was
allowed; restrictions on retail, wholesale and distribution
ended. Banking, financial services, insurance and
telecommunications were also opened up to foreign
investment. Furthermore, political systems and
businesses in China had to adapt to westernised
economic systems which meant SOE's had to modernise
in order to compete.
4…read more