This book is a faithful record of China’s economy that spans almost 70 years. Starting from 1949, it portrays in a panoramic picture how the economy has developed over these decades. From the initial restoration and retrenchment, to the great leap outward that resulted in the two phases of economic reform; from its accession to the WTO to the unprecedented process of urbanization, the book uses four chapters to depict in a chronological order how China becomes what it is today.  For scholars on modern Chinese economy, this book offers a detailed account of a wide range of events that happened during clearly-divided time periods. On this basis, they can deepen their research on different individual subjects. Teachers of universities and colleges may use this book as a reference when preparing relevant courses. For economics majors, this book is a key that helps them clarify important issues. Learners who are interested in knowing more about China, especially the dramatic changes that have taken place in its economic scene, can equally acquire the needed facts and figures.

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499167_1_En_Print.indd

Yu, Chenyi

0009172

Springer Nature Singapore Pte Ltd Fka Springer Science + Business Media Singapore Pte Ltd

Springer Singapore : Imprint: Springer

Springer Nature, Singapore, 2020

Singapore, Singapore

1, 20201020

sm84459195

producers:
Acrobat Distiller 10.1.16 (Windows)

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Foreword 5
Acknowledgements 7
Contents 8
Abbreviations and Acronyms 13
List of Graphs and Photos 16
List of Tables 21
1 Introduction 25
References 27
2 China from 1949 to 1977 28
1 Restoration of the National Economy (1949–1952) 28
1.1 A Pressing Need of Restoration 28
1.2 Adoption of a Four-Pronged Approach 29
1.3 Impact on Prices: From Fluctuation to Stabilization 38
2 The First Five-Year Plan (1953–1957) 42
2.1 Agriculture: From MATs to Higher APCs 42
2.2 Industry: A Heavy-Industry-Centered Model from the Soviet 44
3 The Great Leap Forward of the Second Five Year Plan (1958–1962) 48
3.1 People’s Commune, a Step Further to Collectivized Farming 48
3.2 The Iron and Steel Campaign for Industrial Modernization 50
3.3 The Great Famine and Economic Adjustment 51
3.4 An Episode Worthy of Contemplation 54
4 Retrenchment and Readjustment (1963–1965) 55
4.1 Corrective Measures Underway 55
4.2 The “Third Front” and Its Impact 56
5 The Cultural Revolution (1966–1976) 58
5.1 Urban Industrial Enterprises in the Movement 58
5.2 Rural Policy Changes and Their Effects 63
5.3 Lessons from the “Cultural Revolution” 65
6 A Window to the Outside World: Foreign Trade 68
6.1 A Policy Consistent with the Heavy-Industry-Centered Model 68
6.2 A State-Monopolized Sector 70
6.3 A Centrally-Planned System 72
6.4 A Uniform Pricing Mechanism 73
6.5 Stringent Control Over Foreign Exchange 75
6.6 Mirror of the Macro Environment 76
References 79
3 Economic Reform, the 1st Phase 84
1 The Great Leap Outward 85
1.1 One More Ambitious Yet Unrealistic Plan 85
1.2 Obstacles Challenging Its Fulfillment 86
2 Initial Reforms Kicked Off (1978–1983) 88
2.1 The Guiding Ideology 90
2.2 De-collectivization of Agriculture Via HRS 91
2.3 From CBEs to TVEs 97
2.4 De-centralization in Industry 100
2.5 Rationalization of the Banking Sector 106
2.6 Centralization-Decentralization Cycle of the Fiscal System 112
2.7 Internationalization via SEZs 118
2.8 Dual-Track System of Managing the Exchange Rates 122
3 New Wave of Reform (1984–1988) 125
3.1 The Price-Formation Mechanism 126
3.2 Urban Area: CRS of the SOEs 129
3.3 Rural Area: TVEs 132
4 Summary of the 1st-Phase Reform: 1978–1988 137
4.1 GDP Growth 138
4.2 FDI and Export Increase 139
4.3 Inflation Under an Overheated Economy 140
References 141
4 Eve of Socialist Market Economy: The 2nd-Phase Reform 146
1 Systemic Change 146
2 The Southern Tour Amid Ideological Clashes 147
3 Retrenchment Efforts and the Tradeoffs (1989–1991) 148
4 Monetary Instrument for Economic Cool Down 150
5 Tax Assignment System, the 2nd Round of Fiscal Reform 152
5.1 Establishment of the System and Its Administrative Organs 153
5.2 Arrangements to Stimulate the Local Governments 154
5.3 Restructuring of the Turnover Tax System 155
5.4 Unification of Nominal Tax Rates on Enterprise Income 157
5.5 Positive Effects of the Reformed Scheme 158
5.6 Problems Behind the Unsatisfactory Performances 158
6 Restructuring of the SOEs 160
6.1 The Ailing SOEs 162
6.2 Transforming the LMSOEs Via Modern Enterprise System 165
6.3 Privatization of Small SOEs 172
7 Banking Sector Reform 181
7.1 Central and Commercial Banks 182
7.2 Foreign-Funded Banks 189
8 The Foreign Exchange Regime 197
8.1 The Tale of Multiple Currencies Under the Kuomintang Regime 197
8.2 The Post-1949 Mechanism of Forming the RMB Exchange Rates 199
8.3 Stagnant Foreign Trade Under the Rigid Exchange Regime 201
8.4 Retention Scheme for Export Earnings 204
8.5 The Short-Lived IRTS and Initiation of the Swap 205
8.6 The Booming Foreign Exchange Adjustment Centers 207
8.7 A Unified Managed Floating Regime 211
8.8 The Inter-Bank Foreign Exchange Market 212
8.9 Free Convertibility of RMB Under Current Account Transactions 214
8.10 A Tight Control of the Capital Account 215
8.11 Rationales to Keep RMB Intact Under the Asian Financial Crisis 219
8.12 Necessity to Liberalize the Capital Account 221
9 The Securities Market 222
9.1 A Retrospect of the Days Long Ago 222
9.2 Post-1949 Decades, A Transition Stage 228
9.3 Resurgence of Securities Exchanges Since the 1990s 228
10 Foreign Trade, A More Decentralized External Sector 240
10.1 Composition of Imports and Exports 241
10.2 Relaxation of Trading Rights 242
10.3 Coexistence of Command and Guidance Plans 243
10.4 Losses of FTCs 244
10.5 Implementation of Contract Responsibility System 246
10.6 Correlation Between Export and the Rebate Mechanism 247
10.7 Another Round of Reform 249
10.8 Accession to the WTO 250
11 Foreign Direct Investment, a Critical Engine of the Economy 251
11.1 From Closeness to Openness 253
11.2 Enlargement of the “Laboratories” 255
12 Evolution of Outward-Looking Policies 260
12.1 Phase One: 1979–1986 260
12.2 Phase Two: 1992–1999 262
References 263
5 New Century, New Economy 272
1 Accession to the WTO, a Fresh Beginning 273
2 Capital Market 274
2.1 Convertible Bond, a Hybrid Security 275
2.2 Split-Share Structure Reform 276
2.3 Delisting of Underperforming Stocks 280
2.4 Multi-Tiered Stock Exchange 281
2.5 Private Equity 284
2.6 Bond Market 291
3 Foreign Trade in the New Era 299
3.1 Revision of the Foreign Trade Law 299
3.2 Reduction on Import Tariffs 300
3.3 Restructuring of the State FTCs 302
3.4 Trade in Services: A Growth Engine for the Future 304
3.5 Trial of Free Trade Zones 308
4 RMB Exchange Rates and Capital Account Liberalization 312
4.1 Initial Adjustment of the Mechanism, a Gradual Approach 312
4.2 Conditions Prepared for the Next Stage of Reform 315
4.3 New Exchange Rate Regime in 2005 316
4.4 Establishment of Market Maker System 319
4.5 Launch of Foreign Exchange Derivatives 321
4.6 Capital Account Convertibility 323
5 Outward Foreign Direct Investment 342
5.1 Ready for Takeoff 342
5.2 Growing Presence on the Global Stage 343
5.3 Accelerated Pace of OFDI 345
5.4 The Belt and Road Initiative 347
6 Agriculture, the Lifeline of the Nation 349
6.1 Situations During the Pre-reform Stage 349
6.2 The Critical Move of Relaxing Grain Circulation 351
6.3 Endeavors of Structural Adjustment 353
6.4 Growing Reliance on the External Supply 356
6.5 Concerns Over Food Security 359
6.6 Means to a Sustainable Development 362
6.7 From “Bringing in” to “Going Out” 364
7 Urbanization and the Fate of Migrant Workers 366
7.1 “Hukou” System, a Constraint on Labor Mobility 367
7.2 ID Card: “Passport” to Liberalized Migration 368
7.3 Headaches Following the Designation of New Towns and Cities 369
7.4 “Secrets” Behind Export Miracle 371
7.5 Citizenization of Migrant Workers 372
7.6 Relationship Between the Service Sector and Urbanization 375
7.7 Key to Sustainable Urbanization 378
References 382
6 Conclusion 391
References 395

Front Matter ....Pages i-xxviii
Introduction (Chenyi Yu)....Pages 1-3
China from 1949 to 1977 (Chenyi Yu)....Pages 5-60
Economic Reform, the 1st Phase (Chenyi Yu)....Pages 61-122
Eve of Socialist Market Economy: The 2nd-Phase Reform (Chenyi Yu)....Pages 123-248
New Century, New Economy (Chenyi Yu)....Pages 249-367
Conclusion (Chenyi Yu)....Pages 369-373

2020-11-06