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Mutations or Reforms?: Reflections on the Chinese ...

Mutations or Reforms?: Reflections on the Chinese Economy

From a biological point of view, species undergo the survival of the fittest: traits that are beneficial are passed down while the less advantageous ones are phased out. Many of these beneficial traits arise through mutation. In society, the concept of adaptation is equally relevant, as exemplified by the Chinese economy. From Mao’s ideologies to Xi’s vision and everything in between, China has been constantly implementing changes to grow economically, mutations which reflect its evolution and, arguably, its progress over the past 70 years.

They say that five years can change a lot. In the case of China, it could not be more true. When I visited Shanghai back in 2009, I had the chance to stay in Shanghai’s Grand Hyatt, a golden hotel nested in, from the 53rd to 87th floor, the Shanghai Financial Tower. I was staying on the 72nd floor and couldn’t help but marvel at the view from what, at the time, was the second tallest building in the City. As a passerby on the ground level, I enjoyed viewing the tower as it loomed over the city skyline. When I returned three years ago, I could barely see the tower. Not only was the skyline obstructed by numerous new buildings, but the hotel was soon to be relegated to third tallest building, as the Shanghai Tower was just on the verge of completion.

The Shanghai skyline, with the Shanghai Financial Tower in the center (Photo: swfc-shanghai.com).

Just like the Shanghai Financial Tower, the Chinese economy has experienced a similarly dramatic transformation over the last few decades. After ten years of Hu Jintao ending in 2013, the Chinese GDP increased an average of 10% per year, allowing the Chinese Economy to climb to second place among countries with the highest nominal GDPs and first place in terms of purchasing power parity. With the progress, more people have been lifted out of poverty, and China has effectively become a middle-income country. Cities have expanded, as buildings sprawl farther and grow higher, wages have increased, and more people are connected through the internet. Much of the change has to do with the relentless application of economic policies, and the mutation and modification of the economic system.

Since its founding in 1949, the People’s Republic of China has often been referred to as a Communist country. This label is not so surprising, given the fact that the ruling party of the People’s Republic of China over the years has been the Communist Party of China. Indeed, China is characterized by many of the things that make a state socialist or communist: big government, centralized television broadcasting, centralized media, no official religion, to name a few. The state of the economy, however, has always been in constant flux.

From Mao, who sought to bring industrialization into China, to Deng, who, among his many economic reforms, implemented the one-child policy, to Xi, the current President, China has always tried to make their economy flourish, looking to capitalism, not just communism. The first few years of the People’s Republic were undoubtedly difficult, with the country just coming out of a civil war which had been preceded by the Sino-Japanese War within WWII. Efforts were focused on repairing infrastructure that had been ravaged during the conflicts, as well as the centralization of banks and currencies. During this time, Chairman Mao Zedong applied his Marxist doctrines, distributing land and resources to the citizens so that they could work the land. Soon China recovered and was doing alright.

Home furnaces were set up in people’s backyard during the so-called Great Leap Forward (Photo: thegreatleapforward101.weebly.com)

One of the first reforms came in the early sixties, when Mao attempted to emulate the western powers. He proposed a Chinese industrialization process, where citizens who had previously been farmers would make steel. The entire nation was mobilized. At the time, China was ill-prepared for the transition, making the efforts an unmitigated, irrefutable disaster.

Nonetheless, it was a sign that change was eminent. Indeed, when Deng Xiaoping stepped up, he implemented the notion of a market economy, notably saying that “socialism does not mean shared poverty.” From the end of the 1970s, China began to open up to the world. Deng was not afraid to study western economies and appropriate their strengths, taking the pros and leaving the cons behind. With the implementation of the one-child policy, for instance, the decrease in population growth coincided with the increase in GDP per capital, something that would be predicted by applying a basic Solow Model. Ultimately, these changes catalyzed the Chinese market and increased China’s role as an exporter. During Deng’s leadership, laws such as the Law on Chinese Foreign Equity Joint Ventures made Chinese resources accessible to Foreign investors. In 1990, the Shanghai Stock market reopened for the first time in 50 years and entered the World Trade Organization in 2001. The Chinese economy was open for everyone to see.

In the current administration with President Xi Jingping, two impressions come to mind. First is the “Chinese Dream.” During my time in China, I was excited about but perplexed by the term. I applauded its simplicity, its similarity to the American Dream, and its noble vision for the future. It was a versatile slogan that people could rally behind, a unifying factor in a remarkably diverse country. I then wondered what it meant in practice; will everyone have the same dream? It seemed that in Xi’s dream, China would grow stronger as a country by improving individual situations, through sustainable development and the strengthening of the middle class. These ideas branch off quite differently from Hu’s administration, where there was a more conservative, centralized approach. The Dream introduces a spirit of taking matters into your own hands and pulling yourself up by the proverbial bootstraps with hope for a brighter future.

(Photo: wsj.com)

The second thing that struck me most strongly was the anti-corruption policies. Government corruption was high in China, since the increase in GDP during Hu’s era meant that inequality was growing. The policy crackdown served to indict those who abused the system and took bribes, thereby steadily rooting out and discouraging corruption. Over 100 000 people were indicted from the policies’ implementation in 2012 to the present. While it didn’t really impact my time in China directly, its repercussions were felt, notably at restaurants. At one memorable reunion, my family was genuinely surprised at the low cost of meals, which were many times less expensive than they had been in 2009. We were told that traditionally, these meals could be paid off as work expenses. Following the crackdown, people had been careful to separate work life from family life and so the prices went down because people were actually paying for their meals! It has even gotten to a point where people are told not to not drive their work cars for non-work related purposes. Even though there are various interpretations of this crackdown, I am startled to see these price bubbles and scared to imagine how they may collapse.

From Mao’s Marxist visions in 1949, to Deng’s Economic Reform, to Xi’s Chinese Dream, the People’s Republic of China has endured mutation after mutation and reform after reform. Even though every administration had different values and ideas in mind, each reform had a common goal: to grow and sustain China’s economy, something that continues to be realized today. Now if only a reform can happen so that they can field a proper 23-man soccer team – well, among other things.


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