Chinese Development Model Anil Ray

China Profile Open-door Policy-----1978 Accession into WTO-----in Dec.2001 The special administrative regions Hong Kong (1997) Macao (1999)

China’s Political Structure Precisely: --- provinces, autonomous regions and municipalities directly under the Central Government ---cities with districts and autonomous prefectures ---counties, autonomous counties and cities ---townships, ethnic townships and towns.

China Economic Overview The World Bank's Figures China's new status is not surprising. China has been the world's leading producer of steel, copper, aluminum, cement, and coal for several years. In 2006, China surpassed Japan as the world's No. 2 auto market, with total sales of 7.2 million vehicles and production of 7.3 million. In 2009, China surpassed the United States as the World’s No.1 auto market, with total sale and production both over 13 million. In 2010, China’s car production and sales reached 18 million respectively.

Administrative reforms in Chinese Economy Transit from market economy to central planning economy from 1950-1956 6 years transition-socialist Maoist Economy (Planning Economy),1956-1978 Industrialization in 1950s jeopardized Sino-USSR relationship from 1958 Great Leap-forward Movement in 1959 3 year natural disaster 1959-1962 Culture revolution,1966-1976 Mao Zedong died in Sep.1976 and end of Mao era

Deng Xiaoping and “Opening up to the Outside World”

Deng’s reform In 1978, Deng Xiaoping created the Open Door Policy, and China began to open to the outside world. Tourism was allowed, students began to go overseas, special economic zones were established, and joint ventures with foreign firms were encouraged to bring in foreign technology, investment, managerial know-how, and market access. He emphasized that state firms and government agencies should be led by those who had some expertise, not just by those who showed the proper revolutionary fervor. He encouraged the elimination of the rural communes, and land was turned over to the rural household (for production and income, but not for real ownership).

Agricultural productivity jumped dramatically, and free markets were created to sell food. A large surplus of rural workers began to pour into other economic activities.

Progressive Opening

Economic Powerhouse Regions Three Delta Regions Bohai Sea Economical Circle Yangtze River Delta Pearl River Delta

Northeast and Northwest China Northeast China Revitalization West China Development 12 provinces participation

The Chinese governmental and bureaucracy system THE COMMUNIST PARTY OF CHINA The feature of the Chinese political system has remained fundamentally unaffected by the economic reforms, and with the Chinese Communist Party. It is obviously still a one-party system, and it can be extremely repressive when the political authority of the Chinese Communist Party is challenged.

The Dilemma Economic reform: yes Political reform: No But… Economic Calls for Reform Political reform

Chinese development Model The first component involved the dissolution of the Soviet-style system of centrally planned command economy and collective agriculture and replacing it with an economic system governed to large degree by market forces. The second component was the opening of the economy to foreign trade and foreign direct investment, and the rapid expansion of manufactured exports in the growing manufacturing sector.

The third component facilitating the rise of export-oriented manufacturing was the shift of a large part of the rural labor surplus to urban industry and services, a shift that helped keep wages low and labor-intensive manufactured exports competitive. The last component involved the massive expansion of infrastructure investment and the equally rapid expansion of urban housing investment, in effect removing the last major feature of a Soviet-type system that neglected both housing and transport infrastructure.

From this model, what Nepal can learn in three areas where fundamental changes in these institutions are required The first of these areas involves a variety of interrelated institutions like for regulatory system, that relates to government economic decision-making, the legal system, the local ownership system and inadequate decentralized sources of government revenue. These systems, as they operate today, are responsible for a large share of the widespread corruption that threatens political stability and hence economic performance.

Second area of interconnected institutions that will be discussed the relationship between urbanization, the social welfare system, and the changing Nepalese demographic structure to overcome social order and social inclusion. The third area I will label ‘technical institutions’ for lack of a better description and accountability. This involves continued modernization of the financial system, the steady improvement

China’s engagement in Nepal China’s engagement in Nepal takes a variety of forms: economic investment, trade, aid, infrastructural development, military assistance, diplomatic exchanges, as well as cultural and educational initiatives since the signing of the CPA in 2006. The Lhasa-Kathmandu Friendship Highway linking opened huge opportunities for trade and movement of China Several other projects like the Melamchi water project, telecommunication and infrastructure projects including the development of Lumbini and Pokhara as well as the Tato Pani and Kathmandu Ring Road

One Belt One Road (OBOR) for Nepal   One Belt One Road (OBOR) for Nepal Nepal is a market for Chinese goods in its own right, but more importantly it could also be a gateway to the markets of South Asia. While Nepal’s importance for stability in Tibet has underpinned China’s relations with the country since the 1950s and that remains Beijing’s predominant concern. However, this tension had been eliminated. Government of Nepal became a member of OBOR, on the meeting of 14-16 May 2017 on OBOR Summit.

Unlearn Growing Income Inequality (the Gini coefficient has reached 0.5 in China, overtaking the recognized warning level of 0.4) The three disparities in China 1. Coastal region and hinterland 2. the rich and the poor 3. the urban and the countryside. Housing Price Rapid ageing of the populations will mean pay as you go pension schemes will become unsustainable .

Conclusion The economic reform since 1978 is a great success. The prospects for continued rapid growth of the Chinese economy are excellent. The political situation is stable with successful power transition. The problems are under the control of the Chinese government. Yet China has a long way to go to become real economic powerful country in terms of per capita income.

Thank you for your attention. Questions?