A study on how the Chinese economy grew and changed its political landscape to fulfil its industrial and economic potential as the global superpower we know today.
Introduction on how China established itself as a worldwide industrial superpower
The growth of China started in 1949 with a large and extensive program of political reform from its leader Mao Zedong as he changed the political outlook of the country from a communist country to the People’s Republic of China (PRC). The party immediately after being elected completely changed the economic and political landscape of China. They understood the importance of being industrialised and having an established national defence and preventing foreign interventions as well as increasing the qualities of life of its growing population. The new leaders of the free Chinese state adapted a policy of ‘walking on two legs’ policy that took advantage of their ability to grow the agricultural sector and industrialise their primary industries into a secondary industry and be able to fully realise their industrial potential with the use of their natural resources and abundance of spare workers and productive potential.
After several failed attempts to industrialise China’s large agricultural industry they eventually in 1957 they successfully created a policy of ‘going all out to achieve more, faster, better and economic results in socialist construction’. The aim of 5 year policy was to move forward its frankly ancient and inefficient farming techniques into an advanced system of economic construction on all fronts that centred from industrialisation of its agricultural landscape. The simultaneous development of agricultural and industry from the implementation of foreign technology and economic reform from 1958 to 1961 lead to mass mobilization in the summer of 1958. In the next three years to 1961 hundreds of millions of people changed their outlook on farming and brought the Chinese agricultural sector through an unseen before amount of exhibited energy and enthusiasm into a new more efficient sector that can increase its output and efficiency massively through simple steps. Simple due to the size of the Chinese agricultural landscape they was able to group together over 100 million peasants into a policy of water conservation and working to build dams and reservoirs that one day would aid in limiting the negative effects of disease causing insects that has plagued the productive capacity of the sector previously. Another limiting factor that has caused this inefficiency in the agricultural sector has been a lack of modern machinery that has been around in countries such as the UK and USA for a number of years now. Even though these steps may seem to be very basic and obvious from an onlooker’s point of view in the previously communist political landscape of China these were new ideas that were previously unheard of under the communist regime. The key success of this change in the attitude of its rural population was the lack of state funding that was needed to change their productive techniques. In the summer of 1958 Chou En Lai the first Premier of the People’s Republic of China said that Steel production increased from 5.35 million tonnes in 1957 to 11.8 million tons in 1958. Grain and cotton production doubled from 1957’s output and over 480 million acres of arable land were added. This added an extra 90% of irrigated land to future year’s harvests.
The success of China’s agricultural success can be compared with the British’s revolution the 18th Century as they moved from agricultural primary industries to secondary industries including the production of machinery and steel. Mao called for a key priority of producing steel and making China a world leader in the production and output of steel in the coming years and decades. This focus on steel was rewarded as production increased from 11 million tons in 1958 to 18.7 million tons in 1960, an increase of around 58% over the time frame.
However, as the Five Year Plan came to an end for China we were starting to see the cracks and through natural disasters the success of the five year plan as a whole was limited due to a natural disaster that was the worst in decades. In 1959 drought affected one third of the farming land and lead to the agricultural sector going into meltdown due to this drought and the lack of state funding that was set aside for a disaster such as this one happening and taking away the Chinese potential to produce on a mass scale like that of the years 1957 and 1958.
China under the leadership of Deng Xiaoping
After years of a long struggle with deciding the best political landscape of China after the failure of the Chou En Lai regime which ended in 1959 after a country wide drought which stagnated the agricultural reforms from Chou and left the country unsure of what to do and which direction to go in a hope to raise the quality of life’s of its growing population and try and achieve its targets of becoming a successful economy and home for its people. From the ruins rose a man named Deng Xiaoping. Deng was a man whose steady rise through the political hierarchy in China was one that started back in the late 1930’s when he was involved in the local government of the Jiangxi Province Ruijin County. His steady but constant rise eventually at the age of 74 leads him to be the top job in the political landscape of China. He understood that the best way to grow the Chinese economy was to engage and build relationships with other modernised economies and countries. His first priority was growing relations with Europe; this was done by a trip to France in 1975. After Europe he mended the relationship with Japan in 1978 which helped win the support of the Japanese political and business leaders. This growing in the popularity of the new Chinese leader led to a profitable trip to the US in 1978. Due to his fear of the growing aggressiveness from the Soviet Union he made an alley with President Carter after their withdrawal from the largely unsuccessful in the American eye Vietnam War. Through allowing foreign nations into China he was able to aid economic growth through trade agreements and a growing level of skill in the workforce that whilst under Communist regime was not allowed and according to Deng stagnated the growth of the Chinese economy before his rise to power. This priority to grow the economy was dependent upon the stability of the political landscape and maintaining relations with the people of China was peaceful and prosperous. In 1989 this relationship came to a holt when he sent unarmed troops into the country’s capital to maintain peace. Unfortunately, during these events several hundred people were killed and did ultimately lead to the fall of Deng from the top of the Chinese political landscape in late 1992. Although Deng lot his position on a negative note the policies he had implemented and relationships with foreign nations still stood strong and his previous economic policies did lay the foundations for the Chinese economy we can see today and since Deng’s leadership has been the most prosperous economy over the time frame and has made China the largest economy to date.
Taking the final leap to a global superpower
China’s final step in becoming the country it is today was through turning its abundance of natural resources into the production of labour intensive consumer goods across the large rural areas of China that at the time hadn’t realised its full potential. Through the modernisation of the industrial foundation set by Deng previously China became the world’s largest producer and exporter of textiles, the largest producer and importer of cotton and the largest producer and exporter of furniture and toys during the period. It’s village output increased by 28% per year. From 1998 onwards China embarked on a process of mass production and increasing its productive capacity to be able to supply the growing demand for its cheap production of textiles and other commodities. From 1998 onwards road infrastructure of China increased by 2.6 million miles and 70000 miles of express highways was built. This growth in infrastructure was fundamental to being able to get the products made in the factories to the end destination of Europe or the Americas or closer to home countries such as Japan and India which along with China was flexing its industrial muscles alongside China. From the lack of workers’ rights in China at the time factories were able to pay the Chinese workers a lower rate than that of the established economies such as USA or England. This competitive advantage China was able to exploit was due to its mass availability of workers that due to moving into production of secondary goods as detailed previously including the production of textiles possibly of which you are wearing now has been produced in China’s factories and industrial towns since its full potential was put to use. Without the formation of international relationships from Deng Xiaoping’s rule this international trade would not have been so easily available to Chinese business owners and the Chinese government would not be reaping the rewards of the expansion of the Chinese’s industrial landscape.
As you can see in the graph below the modern way to increase the wealth of a country is to move from primary industries such as agricultural to secondary industries such as the production of goods such as textiles of the production of modern machinery that was considerably cheaper than other countries were able to produce at the time due to an increase in regulation in the more developed economies worldwide. The transition from agricultural to machinery has been necessary in China for many years now and has similar characteristics to that of the British revolution in the 18th century.
This graph shows how the Chinese have lowered its dependence of the agricultural sector and is now reliant on Industry and Services for most of their country’s GDP. From an outside point of view this may seem like a basic transition from agriculture to industry but due to China’s previous lack of an education system and communist regime. China was in essence a closed of nation to the rest of the world and anyone outside ideas was treated with caution by the Chinese government and its people. After transitioning to the free republic of China outsiders and their expertise were now welcome into China and was able to implement foreign techniques into the Chinese industrial landscape that lead the way to the China we know today as a major exporter of goods and services across the globe.
Maintaining the growth in its industrial landscape over the globe and maintaining output through global economic struggles and times of hardship
Research has shown that only 10% of the world is industrialized as of 2016 now if China with its population of around 1.386bn people if China can successfully finish its industrialisation an additional 20% of the globe will be industrialised and entering modern times. From China’s industrial sector growing so rapidly it has trickled down effects on other nations and their ability to buy and produce other goods and services. Nations such as Latin America, Africa and other Asian countries are enjoying China’s industrial growth for themselves. China’s use of mass production techniques has been able to mostly satisfy the worlds growing demand for raw materials, energy and capital flows, only 35 years ago China’s per capita income was one third of sub-Saharan Africa but now China is the world’s largest manufacturing country and produces nearly 50% of the worlds industrial
goods and 800% the amount of crude steel that the US produces currently.
As you can see in the graph China has experienced major increases in its manufacturing output over the last 35 or so years and even if this increase as extended slows down like expected the Chinese government will its manufacturing sector will still be way ahead of another nation including that of the USA. China’s strength is shown best by when the global recession hit in 2008 and 2009 the manufacturing output of the nation didn’t decrease in value and still was around 1500 US billion dollars. The other countries in this graph could only dream of that happening in their industrial landscape over that time period. The global recession hit every nation across the globe and for China to maintain its industrial output throughout this time period and now be back on the rise once again shows the strength in its industrial landscape and the government’s ability to be able to make the goods the factories are producing satisfy demand globally.
Without going into greater depth about the Chinese economic policy and the tactics sometimes described as unfair and not in conjunction with a competitive market system it is hard to fully understand how its manged to do this for such a long time without its currency increasing in such a value that it is unaffordable for its customers to still buy from. But, through the availability of workers and lack of legal regulation currently in place in China, it has been able to quickly become a global superpower and have its products and services shipped globally on a daily basis.
Written by Joshua Clay │Independent analyst
by Vee Venski