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China
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Geography
Demography (internal migration)
History
Socialism (the appeal of socialist
industrialization for developmental catch-up)
Maoism (cult of personality and the
emphasis on mass fervor and non-material
incentives)
East and West
1820:the highest GDP in the world
 Enclave of the British and the French
 1911 the end of Manchu
 1921 the Communist Party
 1928 Kuomintang
 1937:Japanese invasion
 1946:the Civil War
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Evolving Economic
System
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Period of consolidation:1949-52
First five year plan:1953-57 ( imported Soviet central variety
and assisted by the USSR) Information flow and infrastructure
constraints for success, greater municipalities weight and lack
of centralized tradition.
The Great Leap forward:1958-60 (labor intensive industrial
overhaul) Tremendous quality and environmental costs and a
decline.
Proletarian Cultural Revolution:1966-69 Another politically
motivated campaign (GLP) Offsetting the new social class and
hierarchy campaign and re-instating crude egalitareianism.
Four Modernizations:1975
1984:price liberalization
Property
SOE
 Collectives TVE
 Individual
 Joint ventures
 Foreign (SEZs)
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Reform process
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The setting of an
incomplete
systemic
environment
Political maneuvers
of economic
initiatives
The divorce of
economics and
politics
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From abrupt
campaigns to
strategic
gradualism
Pragmatism and
de-ideologization
(Dengism)
Opening to the
West (SEZs)
Stages of reforms
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1.
2.
3.
First phase 1978-1993:
Agriculture (household responsibility) Chinese collectivized
farms were organized as communes consisting of brigades
and teams. Larger leased plots would pay rent in quota and
sell the remainder on the liberalized market Scissors crisis
and subsidies
The rise of rural enterprise (TVE) Hard budget constraint,
outside of the plan and driven by local market, no captive
market and active pursuit of demand, free prices, no social
expenses, performance based hiring, firing and rewards
Reforms of SOE contract and then tax responsibility system