Economic Implementation Reform Project of China
The Chinese economy has experienced a gradual expansion since 1978 when there was the law reform process and the open door policy. There was also a transformation that took place around 1992 when there was an introduction of various market and economy mechanisms. Due to these developments and advancements, there has been a high growth rate in 1978. China’s gross domestic product (GDP) has been growing by an average of 9 percent (World Bank 184). This paper will examine the economic reform implementation project of China. It will also analyze the cases and factors that have accelerated or delayed the economic reform and consider them in general.
The developments that have been making headlines in the Chinese economy relate to the external economic issues which include factors like trade and foreign direct investments. Considering the latter, particularly the directives implemented by the southern lecture tour back in the year 1992, it is clear that the number of contracts increased greatly (World Bank 184). This has led foreign firms, that are in the Chinese market, to promote economic growth in China. However, there are few obstacles to overcome like the differences in income between the urban and rural areas in the country. The Chinese economy has enormous potential to exploit due to the fact that it has a multitude of people (Zweig and Chen 44).
The main goals of the development project are to ensure that the Chinese government gets the help it needs in the implementation of the economic reforms and the clear development agenda. The program will be able to meet these objectives by ensuring that it increases institutional capabilities at the national level so as to undertake such reforms. This project in turn aims to offer the use of good development strategies and policies through a profound consequences of smaller assistance projects designed to deal with the challenges through the institutional capacity building (World Bank 184). The development projects have been able to constitute numerous achievements and make noticeable progress toward the objectives. Due to these accomplishments, there have been some very good outcomes of the smaller projects. In order to ensure that the strategy is making progress, there are numerous studies that have been conducted to secure the improvement witnessed and whether or not this progress is genuine.
These studies have focused on some specific sectors like governance, social protection, agricultural insurance, and health. The results produced from these researches have played a huge role in the policy discussions and have been used to make the important decisions for policy making. Some of the various procedures appeared as a result of these studies include the reform practices and the service sector for general practitioners in the chosen pilot cities (Lardy 56). This is one of the subprojects of the implementation office and the consultants conducting a study in order to get a deeper understanding of the reforms being implemented.
An example of a subgroup in this project is the building of aged care facilities using the socialized service system. The analysts are able to provide international consultancy in order to learn the practices of the five countries involved in the care of the elderly. The main reason is to adopt the useful strategies and tactics considering the experiences of other countries so as to inform the leaders and policy makers that the aged care strategies are the most suitable for the situation in China. This will therefore ensure that the development of the Chinese future aged care program is possible to facilitate (Jian, Sachs and Warner 76).
One of the subprojects in the economic development strategy is the quantitative analysis of the national debt management. In 2014 on the department of the treasury’s website, there was the release of China’s government bond yield curve combined with the key terms. This was due to the support of the Chinese authority, particularly its depository trust and clearing corporations (Groves et al. 183). This move took place because of the decision to regulate and improve the yield curve that ensured the supply and presented a demand in the Chinese market. It also increased the output of the quantitative analysis that was a part of the subproject and in turn benefited from the international practices adopted from the capacity building projects launched in the smaller ones (Cable 35).
Another subproject relates to the functions of the Chinese government procurement policies. It was launched due to the fact that there are priority needs in China’s entry to the GPA and the subsequent negotiations involved (Sachs and Woo 102). The office of the GPA in the departments of treasury is important in studying different experiences of the country, hence bringing together the international experts in the field and demonstrating the knowledge of the regulations and the negotiation rules to the Chinese negotiators and the GPA practitioners in the policy making in the industry. Recently, the workshop that was international by nature was held in Beijing. The World Bank was congratulated for the way they showed an ability to promote international best practices (Freeman 62).
Another subproject of China’s economic reform is the agriculture insurance study. The main purpose of this study is to ensure that the government support comes. Together with the financial assistance and the aquaculture insurance products, itis therefore important to reduce risk exposure, thereby assuring the funds from the fish households. With the help of the different technical consultations, the studies together with the simulation expand a total output of the project (World Bank 185).
The weather index insurance is yet another subproject for the subsequent production of a rubber. This is among the numerous strategies that deal with Hainan province which has some priority needs in its dealings with the amount of crop losses caused by wind damage. The most principal objective of this subproject is to ensure there is the development of a weather index insurance product which in turn facilitates risk pooling. The people’s insurance company aims to develop building an infrastructure for the innovative agricultural insurance product to make it affordable and quality for the local farmers. Due to the complexity of this subgroup, there have been some follow-up studies to examine the issues at the operational level (Bardhan 1320).
Despite the fact, that in most countries a crisis in the country’s economy motivate economic reforms, the latter occur without the factor of an intervention due to the country’s economic problems. The master motivator for these reforms in China is the concept of the countries relating to the ideological change. Since China did not face any economic crisis in 1978, they did not pursue any stabilization policies in the process of their reforms. Due to this absence of the crisis, there was also no outside pressure applied to the potential targets so as to avert the crisis. These characteristics were very unique for China, and they played an important role in ensuring that the country was successful in implementing its reforms (Gérard and Dewatripon 1207-1223).
The regulations in China started with the country’s experience of a 0.7 rate of inflation which the state was in control of. The unemployment rate at the time was 5.3% which was the highest one as compared to the previous years (Groves et al. 183). Under these conditions China had to begin undertaking the reforms. The regulations implemented were either experimental, related to priority, or gradual by nature. In the course of the reforms, there has been a considerable emphasis on stability. The regulations were very helpful as the problems of unemployment along with the low supply of goods in the market were addressed. Promotion policies and high economic growth in small towns allowed the Chinese government to maintain low unemployment. Although stability was the main element of the reforms there was a priority given to specific areas. The fact that there was an establishment of the economic reconstruction committee to deal with the elements of introducing and undertaking the reforms may have contributed to the success of the reforms to a greater extent (Dewaatripont and Maskin 541).
These reforms began in the areas where they were implemented and later expanded on the territories where they were not fully put into practice. This tactic was also an effective one for the success of the reforms. The reforms being undertaken in China can be simply described as the learning of undertaking different types of regulations. Once the initial reforms succeeded, the Chinese people were convinced that they had worked very well, and they were also educated about the issues of reforms and their importance (World Bank 23). In the areas where the reforms were not fully accepted, the Chinese government has been very careful in ensuring that it attacks the huge problems and makes them minor. These types of tough areas for reforms include the SOE and the financial sector of the country. To overcome the problem of the SOE, China has dealt with them in such a manner when instead of privatizing them at once, the government tackled them taking numerous steps.
Among the steps taken were the introduction of the system which dealt with job responsibility issues. There was also such a tactic, when the profit remittance was in turn changed into the value-added taxation. From there, the country made a decisive step that involved the replacement of fiscal grants for bank loans (Groves et al. 186). The government also decided to allow the venture of private and foreign investments. There was also the immediate separation between administrative functions and management activities among many others. This tactic of solving difficult problems step by step in turn ensured that the adjustment cost was considerably reduced. This also played a huge role in the maintenance of the low unemployment rate, therefore leading to the socioeconomic stability of the country (Sachs and Woo 102).
Changing from a planned economy to a market one was among the most crucial things to deal with. First of all, China needed to create a very competitive environment for business. Policies were established to reflect different changes the reforms produced in the following steps. They used relevant measures as a method of adjusting to the economic activities of the country. These techniques included the optimization of the economic structure so as to sustain a balance between individuals, firms, and government interests, restoring the socio-economic stability in terms of the maintenance of the low unemployment and the rate of inflation (World Bank 23).
The financial reforms had come a long way in the China’s economic development. In the past, banking in China played a crucial role. Around 1978, the bank of China was the sole bank. It was responsible for many things since it was an issuing bank while at the same time, it was a commercial one (World Bank 23). Due to the rural reforms, there was the re-establishment of the rural banking system in China that gave deposits and addressed all the financial issues related to the these areas. In the year 1979, the national bank was separated from the People’s Bank of China, and it obtained the mandate for specializing in foreign exchange transactions. Around 1983, there was the establishment of the Industrial and Commercial Bank of China to deal with the commercial issues. Long-term financing related to the People’s Construction Bank of China.
By the 1980’s, the Chinese government had established specialized national banks which it owned. The state controlled and was in charge of the activities of all these institutions. Since then, the Chinese government had allowed the establishment of banks by offering shares, and this even led to the formation of the financial institutions that are privately owned (World Bank 186). China then strived for establishing a number of policy banks which main role was to separate the policy loans from the commercial ones, thereby enabling the commercial banks to become independent. Around the year 1995, the laws governing the commercial and central banking were formally adopted.
Chinese-Pakistani Proposed Economic Corridor
Table 1. Chinese-Pakistani Proposed Economic Corridor.
The Chinese reforms have been very successful. The government should therefore ensure that they occur. The reforms aim at their implementation with regard to what the government needs at the economic level. The coordination is the backbone of the regulations’ success. The main reason why China had managed to implement the reforms even in the low supporting areas was the fact that the country put them into practice step by step. This played a key role in the implementation of the reforms as the authority was able practice then in a manner that ensured that the regulations integrated into the various parts of the country.