A comparative study on China before and after 1978, in terms of their trade and economic institutions

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Introduction

The increase in China’s trade over the last 20 years has been dramatic. China’s share in world exports is growing fast, and the penetration of China’s exports into industrial country markets has been equally dramatic compare than before 1978, even China’s growing combination with the global economy has contributed to sustained growth in international trade. Its exports have become more diversified, and greater saturation of industrial country markets has been accompanied by a surge in China’s imports from all regions—especially Asia, where China plays an increasingly central role in regional specialization. This paper will be illustrates a comparative study on China before and after 1978, in terms of their trade and economic institutions through over the changing patterns, the major momentum, and the features for Chinese economic development.

SO, I will post Part by parts the first one is Changing pattern!!

Changing patterns: China has faced several kinds of failure before 1978 such as policy failure, for example many of China political leaders, including several emperors and much of the Confucians bureaucracy, failed to understand the nature of the challenges, fighting their won civil war until 1949, Unstable Government policy, education system. According to Liu, G he mentions that “From its establishment in 1949, the People’s Republic of China adopted, for a long time, a highly centrally planed economic system. The third Plenary Session of the Eleventh Central committee of the Communist Party of China (CPC) held in December 1978 initiated the policy of reform and opening up. After 15 years of market oriented reform, fundamental changes have taken place in China’s economic system. There are six such changes

1. With public ownership as the dominant element, a heterogeneous structure of state ownership, collective ownership, individual ownership, a private economy, a foreign funded economy has emerged. The rapid development of the non state owned economic sector , causing its share to output to expand, has made china’s economic growth more dynamic
2. The operation mechanism of state-owned enterprises is gradually changing with the implementation of various forms of reform, including decentralization, the contract responsibility system, and the share holding system.
3. The rule of the market is more and more prominent. At present controls have been relaxed over the prices of more than 80 percent of the means of production, more than 85 percent of agricultural and sideline products, and more than 95% industrial consumer goods.
4. The state’s control of the macro economy has begun to shift from direct control through administrative order to indirect adjustment through economic and legal means.
5. The household contact responsibility system in the rural economy has been further consolidated and improved. The booming township enterprises are playing an active role in absorbing rural surplus labour and promoting the integration of rural and urban areas.
6. International economic and technological exchanges are widely carried out and a new structure of all-round opening to the outside world is taking shape. (Liu, G)

We also find several kinds of changing patterns such as A. Increasing Role in World Trade,is one of the important event of China’s international trade that has prolonged little by little since the opening of the economy in 1979. China has greater than before its access into advanced country markets, and has simultaneously become a more key export purpose, particularly for regional economies. Exports and imports have grown faster than world trade for more than 20 years and China’s share in global trade has increased steadily since 1979 (Table 1 and Figure 1). This development began comparatively slowly in the 1980s after the relaxation of pervasive and complex import and export controls, but accelerated in the 1990s with broader trade reforms, including significant tariff reductions.

B. Changes in Composition of Trade that makes China’s export more diversified from an initial heavy reliance on textiles and other light manufacturing. In the early 1990s, light manufacturing accounted for more than 40 percent of China’s exports. These products largely consisted of footwear, clothing, toys, and other miscellaneous manufactured articles. A large part of the remaining exports was accounted for by manufactured goods (mostly textiles) and machinery and transport (small electronics). In recent years, China has made substantial gains in other export categories including more sophisticated electronics (office machines and automated data processing equipment, telecommunications and sound equipment, and electrical machinery), furniture, travel goods, and industrial supplies. For example, the proportion of China’s exportsrepresented by machinery and transport (which includes electronics) increased from 17 percent in 1993 to 41 percent in 2003, while the share of miscellaneous manufacturing declined from 42 percent to 28 percent.

C. Changes in Regional Pattern of Trade

China’s trade has been growing rapidly with imports from nearly all trading partners growing at double digit rates. Imports from Asia in U.S. dollar terms have increased by 43 percent in 2003, while imports from Europe and the U.S. increased by 31 percent and 24 percent. On the export side, the numbers are nearly reversed with exports to the United States and Europe growing by 32 percent and 49 percent respectively, and exports to Asia by 31 percent. China’s imports from other parts of the world have also increased dramatically during this period. For example, imports increased by 81 percent from Latin America and 54 percent from Africa, and China is now the third largest importer of developing country exports after the United States and the European Union. While China’s overall trade balance did not change significantly in recent years,these changes in regional trade patterns caused a significant shift in bilateral trade balances.