Milestones of the Chinese economy in the 100th anniversary of the Communist Party of China

Chinese President Xi Jinping celebrated the 100th anniversary of the founding of the Communist Party of China with the participation of 70,000 people in Tiananmen Square in the capital, Beijing. Founded in 1921, the party established the People’s Republic of China on October 1, 1949, under the leadership of Mao Zedong.

Having the world’s most populous country with a population of approximately 1 billion 400 million, China is the second largest economy in the world after the USA, with a gross domestic product of $14.3 trillion. What steps has China, with a per capita income of 10.2 thousand dollars, taken in its economic, commercial and population policies since its establishment?

Answering Bloomberg HT’s questions, experts evaluated China’s rapid economic growth and its relations with Turkey.

“Economic development accelerated after 1978”

Xi’an Jiaotong University of Liverpool Lecturer and Head of Financial Mathematics Department Assoc. Dr. Ahmet Göncü described the economic and sociocultural transformation of the Chinese Communist Party over the years as follows:

“In the 100-year history of the Chinese Communist Party, until 1949, when the state was founded under the leadership of Mao Zedong, it was mostly spent with internal struggles.

The acceleration in China’s economic development took place towards the end of 1978, under the leadership of Deng Xiaoping, with moves towards opening up and transitioning to a socialist market economy.

China’s average growth rate from 1978 to 2017 continued at a high rate of 9.5 percent. Economically, after Deng Xiaoping, under the leadership of Jiang Zemin and Hu Jintao, China in general continued to expand abroad and integrate into world markets. China’s entry into the World Trade Organization in 2001 also helped it open up and take an increasing share of world trade. In 2003, the introduction of private property into the constitution for the first time was a turning point for the socialist economy.

“One Road One Belt” project

With the coming to power of Xi Jinping in 2013, the well-known project “One Belt One Road” was launched. With this project, China established new logistics lines, ensured its own supply security and implemented a strategy for the US’s containment policies. The Chinese communist party benefited from the market economy in accordance with its own strategies and at the pace it determined, but in cases where it did not suit China’s interests, it adhered to the statist and planned economy principles, not the market economy.

In recent years, Chinese state and private sector firms have increasingly directed their foreign exchange savings to purchases abroad. In this way, Chinese companies can increase their share in foreign markets and become more competitive. However, competition has been more difficult for foreign companies that want to enter the Chinese market. While China’s policies that prioritized its own companies were not a problem for Western countries in the years when China did not produce much high technology, China’s increasing market share in high-tech products and entering into a geopolitical struggle in cross-border regions created a threat perception for Western countries.

“The Cultural Revolution caused unhealed wounds”

The ‘Chinese Socialist Revolution’ led by Mao faced serious problems especially in the years when the state was newly established. During 1966 and the next decade, the ‘Chinese Cultural Revolution’ left many wounds in society that did not heal.

Increasing violence and hunger in Chinese society has revealed effects that change everything, from people’s perspective to life. The understanding of obedience and discipline, which exists in the traditional culture of China, is also reflected in the education system. Obedience to authority and discipline have been more important than individual questioning and individuality in society.

“Integration into global markets has brought prosperity”

Changing world conditions have created the need for China to open up more, however, a capitalist economic policy in the Western sense has never been implemented in China’s policies of opening up during the development process. Rather, it would be more accurate to say that “economic policies were pragmatic and appropriate to the current conditions”. Particularly, China’s entry into the World Trade Organization and its increasing integration into global markets have provided China with significant growth and prosperity.

Technology priority

In addition, China applied the principles of market economy in line with its own national interests and as necessary. However, while implementing this, he always prioritized his own national technological and industrial development with a planned and strategic approach. In line with the goals it set, it was a priority for Chinese companies to acquire technological “know-how” and become self-sufficient in critical sectors. In short, China has provided the development of domestic industry and technological accumulation in all sectors that it considers critical, with incentives, government guidance and expenditures within the framework of domestic and national technological development strategy. Both central and local governments play an important role in supporting Chinese firms. In this way, domestic companies that can produce at very high capacities and accumulate foreign currency have become competitive on a global scale, and at the same time, they have increased and made significant investments abroad.

“Population growth rate is slowing down in China”

“The Chinese government recently switched from a two-child policy to a three-child policy, and now couples can have three children. The main reason for this policy change is that the population growth rate has already slowed down considerably and the pressure on the social security system. However, China is implementing a very detailed strategy to reduce the impact of the slowdown in population growth on economic development. China not only sells goods to world markets, but also makes infrastructure investments in many countries, buys energy and telecommunications companies, and Chinese companies set up production facilities abroad. Thus, China not only wants to ensure global supply security by making its production in different countries, but also secures its geopolitical interests.

On the other hand, the ongoing digital revolution, artificial intelligence and robotics move in China is a change that can actually be a solution to the change in the workforce. The rise in labor costs and the decreasing labor force in China have brought along the focus of China on branding and high-tech products from sectors with low added value.”

Garanti BBVA Shanghai Chief Representative Noyan Rona is a former diplomat and businessperson who has been living in China since 1983. Rona, who has the Golden Magnolia Award, the highest honor given by China to a foreigner, and has been assigned in many important areas throughout the country, evaluated China’s economic transformation and its relations with Turkey.

“Reforms started in agriculture”

China’s success today begins in 1978. Because Deng Xiaoping, who came to power at that time since 1978, initiated a great policy of reform and opening up and implemented policies that laid the groundwork for all we have come to in China today. China has achieved an average of 9.6 percent growth over the past 40 years. Annual growth rates of 10 percent, 15 percent, and even 17 percent in some regions were achieved in some years. Its great success was seen in almost every field.

First, the reforms began in agriculture. China had a peasant population of 850 million at that time, and it was very important for that population to be fed and to reach a certain standard of living. In this respect, the reforms also concentrated on agriculture. Expanding into other areas achieved the success it is today.

The first important factor in the expansion of the reforms was the increase in exports and production based on cheap labor. The second factor is China’s move to attract large amounts of foreign investment and its increasing emphasis on research programs have reached these days. I think there is no other country in the world that has grown and prospered so fast in 40 years.

50th anniversary of Turkey-China relations

“This year marks the 50th anniversary of Turkey-China diplomatic relations. The establishment of diplomatic relations between the two countries dates back to August 2, 1971. From 1971 to 1982, we do not observe much movement in Turkey-China relations. In those years, there were only more fundamental developments such as the establishment of diplomatic relations and the opening of embassies.

Especially after 1986, there was a rapid development in the economic and commercial relations between Turkey and China. We know that at that time, the trade volume reached 300 million dollars. Interestingly at the beginning, Turkey had a trade surplus with China for several years. At that time, we were selling large quantities of iron and steel products to China. With China’s rapid development and new products obtained with cheap labor, we became an importer and we are still in that situation.

“Turkey’s exports to China are stuck in a narrow product range”

Our exports are stuck in some closed and narrow product range. We couldn’t diversify it. For this reason, our exports to China are not increasing as we would like. In recent years, both the increase in product quality and efforts to diversify in Turkey have yielded some positive results, but they have not had the expected effect in closing the gap.

With China’s accession to the World Trade Organization in 2001, its relations with Turkey have improved further in the last 20 years. Following the rise of China to the level of being the second largest economy in the world, China’s investment interest in Turkey has also started to increase. As a country, they took part in investments and tenders and provided their own financing. Now, we see that the new Chinese private sector is interested in the Turkish market, as well as making investments that provide employment.

China’s financial investments in Turkey

Basically, we expect more China to invest in the financial sector in Turkey. You know, two banks came to Turkey, but we want China to be more involved in treasury bills and stocks. In this context, various agreements are made between central banks. China Development Bank has such investments in Turkey.

Also, the Chinese are very cautious people. They do not invest in big risky businesses without trying for a long time. If you notice, the Chinese have invested in telecommunications in Turkey in recent years. One of them comes and looks around, if it goes well the others will come. Therefore, investors come from the same sector, not from different sectors. In that regard, it is important to know what the Chinese expect and want in order to understand China.”

About giuliafrontoni

Leave a Reply

Your email address will not be published. Required fields are marked *