中國竹簾 The bamboo Curtain. Key Indicators Quarterly GDP Growth Source: Asian Development Bank.

中國竹簾The bamboo Curtain

Key IndicatorsKey Indicators

Quarterly GDP GrowthQuarterly GDP Growth

Source: Asian Development Bank

Contributions to Growth Contributions to Growth (Supply)(Supply)


Retail SalesRetail Sales


Trade IndicatorsTrade Indicators


Renminbi vs USDRenminbi vs USD Flexible exchange Flexible exchange

rate since 2005 up rate since 2005 up to 2008 with a total to 2008 with a total valuation of 20%valuation of 20%

One USD buys 6.8 One USD buys 6.8 RenminbisRenminbis

PBC pegged the PBC pegged the Renminbi to a Renminbi to a basket of basket of currencies used by currencies used by major trade major trade partnerspartners

Bank LendingBank Lending


InflationInflation


Property PricesProperty Prices


Fiscal IndicatorsFiscal Indicators


GDP GrowthGDP Growth


China in 1949China in 1949

3 legal activity 3 legal activity sectors sectors – StateState– PrivatePrivate– AgricultureAgriculture

1949-19581949-1958

High GDP growth rateHigh GDP growth rate Investment in infrastructures and Investment in infrastructures and

heavy industryheavy industry Central planning mechanisms Central planning mechanisms

reinforcementreinforcement Chinese economy is modeled Chinese economy is modeled

according to the Soviet modelaccording to the Soviet model

Great Leap ForwardGreat Leap Forward Industrialization of Industrialization of

the Chinese economy the Chinese economy and agriculture and agriculture collectivizationcollectivization

98% of the population 98% of the population lived in Agriculture lived in Agriculture Communes Communes

Backyard furnace Backyard furnace were built to increase were built to increase steel productionsteel production

Great Leap ForwardGreat Leap Forward

Fields were abandonedFields were abandoned Bad agricultural years due to natural Bad agricultural years due to natural

causes such as flooding or droughtcauses such as flooding or drought Between 14 and 43 million people Between 14 and 43 million people

starved to deathstarved to death Substandard steel productionSubstandard steel production

Great Leap ForwardGreat Leap Forward

«This economic «This economic disaster was 30% disaster was 30% due to natural due to natural causes and 70% causes and 70% due to human due to human error» error» – Liu Shaoqi, PRC Liu Shaoqi, PRC

PresidentPresident

Looking for a new economic Looking for a new economic modelmodel

Beijing breaks relations with Soviet Beijing breaks relations with Soviet Union and tries to develop its own Union and tries to develop its own economic modeleconomic model

Peasants are allowed to farm 5% of Peasants are allowed to farm 5% of the land for their own use as an the land for their own use as an incentive to increase productivityincentive to increase productivity

Looking for a new economic Looking for a new economic modelmodel

In 1964, Zhou In 1964, Zhou Enlai creates the Enlai creates the four four modernizations modernizations conceptconcept– industryindustry– defensedefense– agricultureagriculture– Science and Science and

technology technology

Cultural RevolutionCultural Revolution

Results from a Results from a conflict between conflict between different groups different groups within the CCPwithin the CCP

The social and The social and political upheaval political upheaval causes a steep causes a steep decrease in the decrease in the agricultural and agricultural and industrial productionindustrial production

Cultural RevolutionCultural Revolution

The Cultural Revolution eliminates The Cultural Revolution eliminates incentives to responsibility and incentives to responsibility and economic performance by calling for economic performance by calling for ideological zeal rather then the ideological zeal rather then the development of knowledge and development of knowledge and competencecompetence

Mobilization of masses against Mobilization of masses against hierarchical structures causes social hierarchical structures causes social and economic chaosand economic chaos

Reform and OpeningReform and Opening

Deng Xiaoping Deng Xiaoping is politically is politically rehabilitated rehabilitated by Hua by Hua Gufeng, who Gufeng, who was appointed was appointed by Mao by Mao Zedong to put Zedong to put an end to the an end to the Cultural Cultural RevolutionRevolution

Reform and OpeningReform and Opening

3 visions for the future of China3 visions for the future of China– Hua Guofeng – Return to the Pre-Hua Guofeng – Return to the Pre-

Cultural Revolution economic systemCultural Revolution economic system– Chen Yun – Return to the Soviet Style Chen Yun – Return to the Soviet Style

Central Planning systemCentral Planning system– Deng Xiaoping – kick off reforms to Deng Xiaoping – kick off reforms to

correct structural problemscorrect structural problems

China in 1978China in 1978 The economic development lags behind its The economic development lags behind its

Asian neighboursAsian neighbours Stagnant capital and labour productivityStagnant capital and labour productivity Per capita output and consumption remained Per capita output and consumption remained

unchangedunchanged Enormous technological gap between China and Enormous technological gap between China and

the most developed nationsthe most developed nations State and collective property were ineffective in State and collective property were ineffective in

creating wealthcreating wealth Excessive concentration of authorityExcessive concentration of authority


Companies lacked leadershipCompanies lacked leadership Price structure was totally controlled Price structure was totally controlled

by the Central Governmentby the Central Government People’s Bank of China dominates the People’s Bank of China dominates the

financial sector which was basically financial sector which was basically used to finance state intervention in used to finance state intervention in the economy through the planthe economy through the plan

No legal framework for the economic No legal framework for the economic activityactivity

Mao Zedong failedMao Zedong failed

Mao Zedong failedMao Zedong failed

Unable to raise per capita incomeUnable to raise per capita income Unable to raise the capital stock, know Unable to raise the capital stock, know

how or capital inflowhow or capital inflow Lack of motivation for workers, peasants Lack of motivation for workers, peasants

and leadersand leaders Ineffective asset allocationIneffective asset allocation Unable to satisfy the internal demandUnable to satisfy the internal demand Unable to produce essential goods and Unable to produce essential goods and

servicesservices

New ModelNew Model

The CCP The CCP recognized that recognized that living conditions living conditions had to be had to be improved by improved by offering a greater offering a greater number of goods number of goods and servicesand services

Reform and opening policyReform and opening policy Technology transfer from abroad using economic Technology transfer from abroad using economic

cooperationcooperation Creation of a legal framework for external trade Creation of a legal framework for external trade

and foreign investmentand foreign investment Changes in property rights through Changes in property rights through

decollectivization, decentralization and easier decollectivization, decentralization and easier access to the production assetsaccess to the production assets

Move from a system in which the economy was Move from a system in which the economy was administratively regulated to a system in which is administratively regulated to a system in which is regulated by market forces under State guidanceregulated by market forces under State guidance

Increase in the management capacity in Increase in the management capacity in companies and by giving new responsibilities to companies and by giving new responsibilities to managersmanagers

Four ModernizationsFour Modernizations

««It does not It does not matter what matter what colour is the cat, colour is the cat, so long as it so long as it catches the mouse catches the mouse »»

««To be rich is To be rich is gloriousglorious »»– Deng Xiaoping, Deng Xiaoping,

Secretário-Geral do Secretário-Geral do PCCPCC

Four ModernizationsFour Modernizations

Long term plan to develop four key Long term plan to develop four key sector in the Chinese economysector in the Chinese economy– IndustryIndustry– AgricultureAgriculture– Science and technologyScience and technology– DefenseDefense

Tiannanmen 1989Tiannanmen 1989 1989 is marked by 1989 is marked by

the violent the violent suppression of the suppression of the students movement students movement in Tiananmen Squarein Tiananmen Square

Zhao Zyiang, in power Zhao Zyiang, in power at the time, was at the time, was replaced by Li Pengreplaced by Li Peng

A technocrat trained A technocrat trained by the Soviet Union by the Soviet Union replaces a reformist replaces a reformist close to Deng close to Deng XiaopingXiaoping

Tiannanmen Economic Tiannanmen Economic EffectsEffects

Creation of a new economic Creation of a new economic management system defined as management system defined as Socialist Planned Market EconomySocialist Planned Market Economy– The plan was responsible for The plan was responsible for

macroeconomic regulation while the macroeconomic regulation while the market defined asset allocationmarket defined asset allocation

– The plan had a medium and long term The plan had a medium and long term orientation and was under the orientation and was under the management of the National management of the National Development and Reform Commission Development and Reform Commission

Reforms Reforms

Between 1991 and 1995Between 1991 and 1995– State owned companiesState owned companies– Company propertyCompany property– Pricing systemPricing system– Social SecuritySocial Security– External tradeExternal trade– AgricultureAgriculture– Macroeconomic management toolsMacroeconomic management tools

ReformsReforms

In 1998, Zhu In 1998, Zhu Rongji replaces Li Rongji replaces Li Peng and Peng and increases the increases the reform’s pacereform’s pace

The objective was The objective was to globally to globally increase the increase the Chinese economic Chinese economic competitivenesscompetitiveness

ReformsReforms

By 1998, China had achieved the By 1998, China had achieved the capacity to control inflation and capacity to control inflation and economic overheating without economic overheating without jeopardizing the development pacejeopardizing the development pace

Macroeconomic management was Macroeconomic management was now made without directly interfering now made without directly interfering in production decisions, pricing in production decisions, pricing system or asset allocationsystem or asset allocation

WTOWTO

China joined WTO in China joined WTO in December 11, 2001December 11, 2001

Negotiations took Negotiations took over 15 yearsover 15 years

Joining WTO means Joining WTO means China full entry into China full entry into the world trade and the world trade and the global economythe global economy

WTOWTO Beijing commitmentsBeijing commitments

– Tariff reduction and full elimination within a pre-defined Tariff reduction and full elimination within a pre-defined time frametime frame

– Reduce barriers to agricultural products importsReduce barriers to agricultural products imports– Promote transparency in foreign tradePromote transparency in foreign trade– Liberalization of retail and domestic distribution Liberalization of retail and domestic distribution

networksnetworks– End all non-tarif restrictions to free tradeEnd all non-tarif restrictions to free trade– Eliminate state monopolies in the agriculture and Eliminate state monopolies in the agriculture and

industrial sectorindustrial sector– State owned companies forced to operate within the State owned companies forced to operate within the

market rulesmarket rules– Eliminate export subsidiesEliminate export subsidies

Five Year Plan 2006Five Year Plan 2006//20102010 The 11The 11thth Five Year Five Year

Plan was aproved Plan was aproved in march 2006 by in march 2006 by the NPC Plenum the NPC Plenum and is managed and is managed by the new by the new leadership of leadership of Presidente Presidente Hu Hu Jintao and Premier Jintao and Premier Wen JiabaoWen Jiabao

Five Year Plan 2006Five Year Plan 2006//20102010 Key Points Key Points

– Adoption of a «scientific approach to Adoption of a «scientific approach to development» seeking to build an «harmonious development» seeking to build an «harmonious socialist society»socialist society»

– Priority given to improve the living conditions of Priority given to improve the living conditions of the population and environment protectionthe population and environment protection

– Investiment in the improvement of the rural Investiment in the improvement of the rural areasareas

– Increase the competitiveness of the industrial Increase the competitiveness of the industrial sectorsector

– Development of the service industryDevelopment of the service industry– Average yearly GDP growth of 7,5%Average yearly GDP growth of 7,5%

Challenges aheadChallenges ahead

DemographyDemography InflationInflation EnvironmentEnvironment Intelectual property protectionIntelectual property protection Corruption and transparencyCorruption and transparency Integration in the world economyIntegration in the world economy

中國竹簾 The bamboo Curtain

João Francisco PintoJoão Francisco Pinto

[email protected]@macau.ctm.net

[email protected]@tdm.com.mo

中國竹簾 The bamboo Curtain. Key Indicators Quarterly GDP Growth Source: Asian Development Bank.

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Transcript of 中國竹簾 The bamboo Curtain. Key Indicators Quarterly GDP Growth Source: Asian Development Bank.