China: History, Culture and Economic Situation

Introduction

China is one of the oldest countries in the world with a history spanning thousands of years. It has one of the most ancient civilizations. The country had been ruled by strong organized monarchies dating about 2,000 thousands years. This enabled it to achieve high levels of civilization as evident from its complex social economic civilization. Its history has however been turbulent with various internal political uprisings during various dynasties that were characterized by heavy lose of human lives soaring up to millions of people. For example, the Taiping rebellion in the 19th century resulted in the death of about 30 million people. The French, British and Japanese incursions were particularly devastating for the empire.

Historical development of China

Empress Tz’u-hsi whose regime ended in 1911 started the modernization of China. Her rule also marked the end of the Ching dynasty the same year. The scramble for China began in the 19th century led by United States, European nations, Russia and Japan which led to the emergence of the Boxer rebellion (Roseberg, n.d., Para. 1). His was a secret group of people who fought against the foreign influence (Chinese Cultural Studies: Concise Political History of China, n.d., Para.16). Following a humiliating defeat of the government backed boxer resistance and the signing of the peace of Peking treaty, the Ching dynasty fell following evolution that led to the coming to power of Dr. Sun Yat-Sen.

China became a Republic in 1911 with the election of Shih-Kai as the president following the resignation of Sun Yat-Sen. The introduced a raft of institution reforms in ha including the institution of a premier, cabinet, a draft constitution and the introduction of Kuomintang government. Shih- Kai died in 1916 which followed a series of uprisings until Sun Yat-Sen, the father of modern china returned to power in 1923. He embarked on remodeling f Kuomintang (National People’s Party) government in the model of Soviet Communist Party.

The May fourth movement emerged May 4, I919 agitating for a new style of vernacular writing, promotion of science and revocation of Confucian ideas. During the movement, revolutionary leaders like Mao Zedong emerged with the formation of Communist party of China (CCP) in 1921. Joint cooperation with Russia was initiated in 1923 leading to joint military training program. After the death of Sun Yat-Sen in1926, Chiang Kai-Shek succeeded him in power and continued with a military expedition against the northern warlords which was met with little resistance. He led the unification of China in 1928 with the defeat of the warlords and take takeover of Peking.

The nationalist era between the years 1928 to 1937 started off well promising a lot of hope to the country but his regime was later to be characterized with a period of corruption and Japanese aggression. He neglected the much needed land reforms which led to the reorganization of the communists in the countryside who had been kicked out of the cities. Led by Mao Zedong, re communists organized peasant farmers in the South Eastern province of Jiangxi. His Red Army initiated the Agrarian revolution in the belief that his course would be best won by gaining control of the rural areas and self sufficiency in food supply. Chiang was arrested by his own military in 1936 following a spate of failures to Japan and their seizure of Inner Mongolia due to his insistence to annihilate the communists. He was later released later on his promise to lead an incursion against Japanese occupation.

China found itself in the middle of the Second World War from 1937 following the Japanese invasion which led to heavy losses on China. The United States came to its aid from 1944 to 1945 until the defeat of Japan in 1945. Following demoralization of the military and rising inflation, the KMT government was defeated by the communist rebels in 1949 and Kai-Shek fled into Taiwan where he established a nationalist government.

The People’s Republic of China was formerly founded in 1949 by Mao Zedong who chaired the Communist People’s Party up to 1982 when he died. The Red army was renamed the People’s Liberation Army. The communist government introduced a series of social and economic reforms. The Cultural Revolution led to a series of political upheavals especially among students leading to a biting food shortage, decreased productivity and collapse of industries. The Great Leap Forward campaign before it was been more devastating to the state. In matters of foreign policy, the relationship between china and Russia soured in Mid 60’s while countries increasingly extended diplomatic relations with the country. The impasse caused by the North Korea nuclear program, the Tibet issue and the Taiwan stand was also another point of departure between the United States and China causing a lull in the diplomatic relationship.

Economic History of China

The economic modernization of china was started on a small scale by Empress Tz’u-Hsi and later taken over by Dr. Sun Yat-Sen in 1911 who succeeded her. These introduced a rat of measures aimed at boosting China’s economic wellbeing. Chairman Mao later founded the infamous Great Leap Forward campaign that was particularly devastating for the country. For example, it led to the fall of steel production from 19 million tons in 1960 to 8 million tons in 1961. Economic productivity recovered late but was dealt a major blow by the Cultural Revolution. Major oil discoveries were made in 1960s but were not fully utilized.

The idea of Four modernizations of China was articulated by Zhou Enlai but popularized by Deng Xiaoping in 1975 (Watkins & Alley, n.d.). This was a four pronged strategy touching agriculture, industry, science and technology and national defense. In practice it meant electrifying of the rural areas, automation of the industry and introduction of a new economic outlook and the enhancement of the defense system.

The ten year plan was coined by Hua Guofeng in 1978 who unveiled a 10 year strategic planning involving 120 projects. This was a multi-sector plan covering: iron and steel industry, non-ferrous metals, oil and gas, coal and mines, electrical generation, railway, and water transportation. To achieve this, the government entered into bilateral agreement with Japan and Germany to help construct steel complexes.

Due to the law of diminishing marginal returns, china whose economy was largely agricultural dependant and mainly employed traditional farming methods experienced stagnation in production up t o 1977. The ten year plan envisioned a $33 billion investment in agricultural mechanization and improvement of agriculture. Institutional reforms wee instituted to boost individual imitative and flexibility production arrangements. At the start of the plan, the economy was starved of capital as the plan required an injection of between $350 billion to $630 billion. The major source of government revenue was mainly agriculture while agricultural enterprises were heavily subsidized which discouraged agricultural productivity leading to stagnation in production.

As a result of the above factors the plan called for diversification of revenue base. To achieve these, one of the major avenues was to develop the tourism industry which was revamped with help of Germany and Japan. The foreign loans policy was amended to allow acquisitions of loans from British banks. Due to conspicuous flows in the ten year plan, readjustments were carried out to give more emphasis in agricultural investment and light industry.

Institutional reforms and structural reorganizations were carried out in the economy from 1979 onwards. The economic reforms have made China one of the fastest growing becon0mies in the world today (Morrison, 2006. 3). The country’s economy has been growing at an average annual rate of 9.6% form 1979 to 2005. The country is slowly surpassing the USA in terms of the trade volumes in international trade. This was evident by a 28.4% increase in exports in 2005 which amounted to $762 billion while imports expanded by 17.6% to $660 billion resulting to $102 billion surplus.

Cultural development in China

The period between the 8th century and 221 BC witnessed the unification of China along with the end of the feudal system which was replaced with bureaucratic rule under monarchy. As feudalism declined, urbanization started taking shape leading to development of fortified cities. There was substantial exchange in northern china while assimilation occurred in the south. Monarchy started taking shape with the rise of powerful kinships.

Foot soldiers emerged leading to development of war as an art. Organized battles involving thousands of men wee organized by professional commanders. A class system called Shi emerged which composed the descendants of the old nobility. These were well educated either in literary tradition or in military arts. The class provided teachers, administrators and intellectual leaders. Amongst renown members include the legendary Confucius, Mencius and Xunzi (Encyclopedia Britannica, 2009). Writing in China was preserved over generations through calligraphy and also painting. This was passed on from one generation to another while some of arithmetic and symmetry wee taught in schools. Performing are has also been well preserved in China through acts like Peking opera among others which are very famous to date.

Current growth and development policies

The government embarked on structural and institutional reforms which have been ongoing since 1979. These have continued to buoy the growth of China to unprecedented levels. Initially the government has also undertaken to decentralize economic policy making the government introduced the price and ownership incentives to farmers allowing them to sell a part of their produce in the free market. In a bid to attract foreign direct investment, the government establishing special economic zones along the coast. This move also allowed the importation of technology to the country. This has positioned China among the upcoming industrial powers to reckon with in the world. This is due to the impressive growth of the manufacturing industry as the leading source of economic development taking the position previously occupied by the agriculture industry.

Decentralization of the economic policy making processes wee carried out in most sectors especially in trade. This gave some form of economic control to provincial and local governments giving them some autonomy to operate in free market without direct control of the state. The marked freedom of decision making gave inceptive to producers to produce more as economic activities became more profitable. In addition the resource wastage experienced under the previous policies characterized by the monopolies was now prevented. Firms that were working under excess capacity are now able to efficiently utilize resources leading to higher returns.

Price controls have also been eliminated leaving the market to be determined by the forces of supply and demand mechanisms. This has marked another additional incentive for the firms to produce more because production is now profitable. Another effect of the policy is the increased competition among firms resulting to lower prices and increased quality of products. The result has been a boom in the industrial sector especially textile industry which has emerged to be one of the major export commodity and a significant earner of foreign exchange.

The current reforms in the macroeconomic policies in China today focus on steady economic growth and stable prices (Xinhuanet, 2009, Para. 1). In 2008, the China’s cabinet authorized an injection of 4 trillion Yuan economic stimulus to stimulate the domestic consumer demand following a string of decline in the country’s exports. This has borne fruits as the country was among the first to rebound from the effects of the current global recession.

The agricultural sector is another area that was targeted for a series of comprehensive reforms. The communes were reduced in size to encourage productivity. Some level of individual ownership was also initiated in the system to allow individual initiatives. Along this initiative was a reward system which encouraged people to improve their productivity. Technologically, the government has undertaken to mechanize agriculture along the introduction of scientific farming. Use of modem inputs, machinery and consolidation of small farms has led to a massive increase in agricultural productivity.

Reforms have also been carried out in supply and marketing cooperatives which serve an important role in distribution of agricultural products in China. State control was eased off to allow the cooperatives to operate more competitively in the market. One of the major changes was the allowing of cooperatives to transact directly in the international market and also to source funding from the global market. This has helped increase the growth of the agricultural sector by giving farmers incentives to produce more. The policy has helped farming to maintain its position as one of the leading pillars in spurring the economic development of China.

Impact of globalization

Globalization opened the Chinese economies to the international market hence accelerating the growth processes of the country. For example, the country has been able to build a formidable level of technical capacity. This was achieved through continuous exchange of technology (Zheng, 2004, Para. 2). The country managed to ship in capital machinery along the related technology whose fruits are evident today thorough increased production. The country today has emerged as a global player in manufacturing of heavy machinery along other products and services. China has also benefited in capacity building in terms of highly trained personnel. Globalization enabled the country to import technical personnel in areas where it was deficient. This enabled training of local personnel which increased its pool of technical experts hence accelerating development (Bukisa, 2009, Para. 4).

Globalization has also facilitated transfer of productivity gains in the economy to the rest of the country (Lo, 2008. 9). Without globalization there would be minimal growth n productivity as was the case prior to the economic reforms. But with entry of globalization, productivity increased and the benefits trickled down to the rest of the economy through improved quality of products and services (Zhiqiang, n.d., Para 1). Increased productivity also meant increased in job opportunities in the economy leads to increased absorption labor hence reduced unemployment. The welfare of the Chinese also improved in the process.

Globalization has also led to the expansion the of labor market for Chinese citizens. In 2005, China’s contribution of workers to the labor market accounted for 25% of the total global workforce (Lo, 2008. 25). Many Chinese workers today work in world’s capital cities as engineers, IT experts and in other sectors. This in turn helped to stem out the high rate of unemployment was souring up in 1990s.

The impact of the global financial crisis

The global economic crisis had an adverse effect on the Shanghai stock exchange market losing up to two thirds of its value by the close of 2008 (China International business, 2008, Para. 1). This just like in other countries of the world led to a loss n confidence of the financial market further pushing the prices down. The effects were also evident in the depreciation of the Chinese Yuan to the dollar recording the highest drop since 2005. Changes in currency valuation led to a drastic decline in foreign currency reserves in early January (Lardy, 2008, 45).

One of the greatest victims of global down turn is the labor intensive export industry which has been beaten badly. He volume f exports has declined drastically due to reduced output of the Chinese firms who were struggling from the effects of biting credit crunch. The shrinking of the international market dealt a severe blow to these firms leading to closure of some of the firms (China Daily, 2009, 57).

. As a result many workers especially in the textile industry lost their jobs resulting in a serious employment crisis. This in turn led to the decline to a drastic decline in the aggregate demand as a result of the decrease in the purchasing power which threatened to spell doom to the Chinese industries.

Another downside of the crisis was a setback n some of the reform efforts initiated by the state (Liew, 2009, 4). This has led to some of these plans to be postponed into future under less favorable conditions. This has indeed reduced the Chinese government capability to respond appropriately to such crisis. This is because, the government has had earlier on ceded much of the policy making powers to the local government and provincial authorities hence e weakening its ability to respond effectively to such occurrences. In the current settings the line ministries have very little potential to influence changes in the economic system.

Chinese economic growth has also slowed down recording a marked decline from 11.9% in 2007 to 9% in 2008. This is a serious drawback to the government’s strategic plan and growth forecast. The result of the slump was losing employment opportunities in the country and declining output by domestic firms. This has forced the government to embark on stimulus package to arrest the situation which threatens to wreck the country economically. These stimuli have had the effect of displacing the government spending from productive investments to rescue packages hence derailing the states development plans. The loses by foreign investors are likely to result to capital flight out of the country (McNally, 2009, 6)

Areas of growths to cause international impact in china

The textile industry has and will continue making the greatest impact among the Chinese exports in the international market. For several years it has ranked among the best performing industries in the country. In 2008 alone it pumped $119 billion into the economy which was a 4.10% increase from the previous year (Chinese research and Intelligence, n.d., Para. 1). Exports to America and the European countries have growing consistently since 1990s accounting to 60% of the textile imports across the globe. The industry still shows a huge potential with minimal reforms in the industry over the next 3 years (Xinhua, n.d., 6). Given the African and the Far Asian market are still largely untapped, sign of robust growth are still rife. The low cost of operation and low cost of input will continue to make the textile products more competitive relative to other countries’ textile exports giving China a higher leverage over other textile exporters (Reuters, 2009, 26).

The pharmaceutical industry is another export that promises to deliver impressive growth prospects for the next three years. China is currently one of the greatest pharmaceutical manufacturers in the world. It has registered a consistent annual average growth of 16.72% for the last couple of years (BioPortfolio, n.d., Para. 9). This is far higher than many drug manufacturing countries of the world hence making it one of the most promising producers in the next 3 years. Using the benefit of expansive channels of production and distribution the country’s pharmaceutical companies can seize the available opportunity to expand their market share across the world. With adherence to patent laws that is largely lacking among the countries and improvement of the production and technology the industry is poised to make a heavy impact in the international market in the next few years.

Reference list

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Bukisa, 2009. Economic Impact of Globalization on China’s Economy. Web.

China provinces see zero 2009 export growth. Reuters, 2009.

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China International business, 2008. China and the Global Financial Crisis. Web.

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China warns of risks from ‘abnormal’ crossborder capital flow. Xinhua, 2009.

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Encyclopedia Britannica. 2009. China: Encyclopedia Britannica. Web.

‘Grim times ahead’ as China battles worsening crisis. China Daily, 2009.

Lardy, Nicholas R., 2008. Financial repression in China. Policy Brief PB088, Peterson Institute.

Liew, Leong H. 2009. Dealing with the inharmonious world: China and the global financial crisis. Web.

McNally, Christopher A. 2009. Dealing with the Inharmonious World: China and the Global Financial Crisis. Web.

Morrison, Wayne M. 2006. CRS Issue for the congress: China’s economic Conditions. Web.

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Watkins, T. & Alley, T. Economic Development in China After Mao: The Four Modernizations. Web.

Xinhuanet, 2009, Window of China: China’s economic policy to focus on steady growth, stable prices: think tank. Web.

Zheng, Y. 2004. Globalization and state transformation in China, Cambridge. Web.

Zhiqiang, L. The impact of globalization on the Chinese economy. Web.

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