China’s Economy: From Revolution to Reform PDF
Preview China’s Economy: From Revolution to Reform
CHINA'S ECONOMY Also by David J. Pyle CUTIING THE COSTS OF CRIME: The Economics of Crime and Criminal1ustice TAX EVASION AND THE BLACK ECONOMY THE ECONOMICS OF CRIME AND LAW ENFORCEMENT THE POLITICAL ECONOMY OF TAX EVASION China's Economy From Revolution to Reform David J. Pyle Dean. Faculty of Social Sciences and Professor 0/A pplied Economics University of Leicester First published in Great Britain 1997 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-25804-8 ISBN 978-1-349-25802-4 (eBook) DOI 10.1007/978-1-349-25802-4 First published in the United States of America 1997 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-17460-6 Library of Congress Cataloging-in-Publication Data Pyle, David J. China's economy : from revolution to reform / David J. Pyle. p. cm. Includes bibliographical references and index. ISBN 978-0-312-17460-6 (cloth) I. China-Economic policy-1949-76. 2. China-Economic policy-197~ 3. China-Economic conditions-1949-1976. 4. China- -Economic conditions-197~ r. Title. HC427.9.P95 1997 338.951 'OO9'045-dc21 97-205 CIP © DavidJ.Pyle 1997 Softcover reprint ofthe hardcover Ist edition 1997 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any Iicence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W I P 9HE. Any person who does any unauthorised act in relation to this publication may be Iiable to criminal prosecution and civil claims for damages. Tbe author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. Tbis book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Transferred to digital printing 1998 02/780 To my parents Contents List ofTables viii Acknowledgements ix 1 Economic Reforms, 1979-94: Introduction and Overview 1 2 Economy and Society, 1800-1978 24 3 Agricultural and Rural Reforms 50 4 Reform of Industrial Enterprises 76 5 Foreign Trade and Investment 103 6 Financial Reform and Macroeconomic Performance 125 7 Chinese Lessons or Chinese Puzzles? 150 Notes 171 References 180 Index 185 vii List of Tables 1.1 Output, Economic Growth, Inflation and Trade, 1952-94 4 3.1 AgriculturalOutput, 1952-94 54 5.1 Foreign Trade and Extemal Debt, 1978-94 108 5.2 Foreign DirectInvestment, 1979-94 110 6.1 Macroeconomic Indicators, 1978-94 126 7.1 Output Decline, Inflation and Falling Living Standards in Central and Eastem Europe, 1989-95 156 viii Acknowl edgements I visited China for the first time in the Autumn of 1985 and spent two fascinating months teaching at the Shanghai Maritime Institute. My work involved teaching lecturers and students at the Institute something of the arts of Western economic analysis, but I became convinced that we in the West had a great deal to learn from the Chinese, too. Since that time, I have become a fascinated student of Chinese history and politics and have kept a watchful eye on developments, as China's economic reforms continued. Whilst my own research over the last decade has been focused upon the areas of the economic analysis of law and taxation, I wished to devote some time to writing a book about developments in China. This desire was partly pure indulgence. I wanted an excuse to spend time reading more widely about the progress of economic reform in China. It was also partly motivated out of a belief that China' s experience had something to say in relation to the reforms that have been taking place in Eastern Europe. This book is not intended to be the definitive statement on China's econ omic reforms, but I hope that it will prove a useful guide to those like myself who are not China experts. Whilst I am an economist, and like most in that profession I fall into the trap of using economic shorthand Uargon), I hope that the book will prove to be readable by students of politics, history, sociology and other disciplines, who are interested in an assessment of the economic progress made by China over the last twenty years or so. Also, I hope that I have managed to show that economic reform in China cannot be treated in isolation from other aspects of Chinese society and that a knowledge of Chinese history is important in helping us to understand why the reforms have followed the path that they have. Finally, I would like to acknowledge the assistance of various people without whom this book would never have been completed. First, I would like to thank my colleagues Stephen Pudney, Subrata Ghatak and Minquan Liu, each of whom has read and commented upon drafts of various chap ters. I would like to blame them for any mistakes that remain, but I cannot find it in my heart to do so! Second, I would like to pay especial thanks to my secretary, Jasbir Pabla, who has typed and retyped various drafts ofthe book without any complaints about my awful handwriting. Finally, I wish to thank my editor at Macmillan, Tim Farmiloe, who has allowed me to get on unhindered. He has shown remarkable faith and understanding. ix 1 Economic Reforms, 1979-94: Introduction and Overview Cross the river by groping for the stones under your feet. A Chinese saying 1.1 INTRODUCTION The objective of this book is to provide a review of the economic reform process wh ich began in China in 1979 and has continued to this day. It is clear that when Deng Xiaoping took over the reins of power there was no real blueprint of how economic reform would proceed. As a result, the pace of reform has not been even. China has pursued both an experi mental and a gradualist approach to economic reform, which is in stark contrast to the 'big bang' approach adopted by the countries of Eastern Europe in the 1990s. No doubt some will argue that the success of China's reforms can be attributed to this cautious approach. However, others have argued that China's groping towards a market system pre sents its own special set of problems, especially in terms of macro economic management. We will examine these issues in more detail in Chapters 6 and 7 below. Before we examine the economic reform process undertaken in China we consider why economic reforms were feIt to be necessary. This is the subject matter of section 1.2. In section 1.3 we review the economic reform period which can be roughly divided into three subperiods of approximately five years each. In the first five-year period the emphasis was mainly upon agriculturaJ reforms. In the second five-year period attention turned to urban/industrial reform. In the final five-year period there has been much more emphasis upon financial reform. In section 1.4 we offer so me preliminary discussion of the impact of economic reform upon macroeconomic performance. This chapter therefore provides a background to the more detailed examination of reforms that will occupy us in Chapters 3-6 inclusive.
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