Wednesday, September 3, 2014

Why has china developed?

Why has china developed?
Broadly speaking, China has developed so rapidly for 2 mainreasons:

1. Mass labor & strong government.
In the 1940's the revolution, led by Mao, installed a strongcommunist political system across China. This powerful, autocraticsystem gave the government the ability to enact huge reforms acrossthe country, and mobilize hundreds of millions of workers as theywished.

The extent of this can be seen with the "Great Leap Forward"initiative from 1958-61 where huge populations were displaced, sentto the countrysides to pursue a self-reliant communist farmingeconomy cut off from international trade. While truly great inscale, the flawed strategy led to mass starvation - butnevertheless, the political framework was in place.

2. Deng Xiaoping's economic reforms.
The Chinese economy began to boom in the 1970/80s, when DengXiaoping came into power.

Following the pragmatic principle of "Black cat, white cat, itdoesn't matter so long as it catches the rat" he suggested that itdoesn't matter if a policy is communist or capitalist so long as itworks.
As a result he led huge economic reforms across China, allowingprivatization of businesses, and opening major coastal cities toforeign trade and investment - e.g. Shenzhen.

Result.
The strong government framework from the communist revolution hasenabled succeeding leaders to take china on a capitalist course ofdevelopment. By opening their mass, cheap labor force up to foreignbusinesses, China was able to attract great foreign currencyreserves, capture technological and management skills, and build astrong economy of their own.

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