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In partial fulfilment of the requirements in Economics 100.1 Macroeconomics (TF 2:00-4:30) The CHINA MODEL
Submitted to: Prof. Anna Marie Talam Date Due: October 15, 2013
Alicaya|Beniga 10/15/13
So what is really the China Model? The first aspect of the model upholds some liberal economic policies. One is opening up most of the countrys economy to foreign and domestic investment. This means that potential investors not only from China bust also from other countries could now establish their fully-owned firms without much restrictions. Next is that the country is refocusing on labour flexibility as well as having low tax and regulatory burdens. The country is even lenient when it comes to tax evasions from these taxpayers. Payments for regulatory policies are also kept at a minimum by the authority. Last of these liberal economic policies are creating first class infrastructures. These are created by combining government spending and private sector spending. If the relationship is good, so will the results of the creation of these infrastructures. The other aspect of the China Model as explained in the article is its ruling party. This is the unique characteristic that distinguishes the countrys system from others. The CPC or the Communist Party of China holds leadership in this model and all politically related activities are watched and controlled by the CPC.
The article also explains the history of how the China Model came to be. When Mao Ze Dongs communist ways fell short of the economic expectations of the country, Deng Xiaoping improvised and altered some of the problematic aspects and turned the political system into authoritarian regime with the focus on the increase of the living standards and the positive growth of the Chinas economy. This new system upholds the economic improvements while at the same time strengthening the power and the authority. Countries not only from the Asian neighbours but also from the West have taken into consideration this type of system because of how much it transformed the economy of China as a country.
While many countries desire to know more about this China Model, critiques question the country on how sustainable this model could be. The article referred to two books recently published about the answer to this question. One author Hutton from the UK Alicaya|Beniga 10/15/13
The article summarizes the China is leading in terms of growth economically but not in the aspect of political freedom; while countries that practice both economic and political freedom are performing below standards. This implies that China is well-aware that its focus is to make the people happy in the economic side first and foremost. While others think that democracy is the first step to economic growth, China is thinking the other way around.
II. TERMINOLOGIES 1.) CPC- Communist Party of China- ruling political party of the Peoples Republic of China, leading both its political and social activities. 2.) Kai fang- Chinese term meaning opening up the doors and let in foreign capital, technology and management skills. 3.) Liberal Economic Policy- ideological belief that in organizing the economy, decisions are better done by individuals itself rather than collective 4.) Authoritarian- is form of government characterized by an absolute obedience of the citizens to an authority. 5.) Trade- is the exchange of goods and commodities between countries. 6.) Cash Economy- a kind of economy where payments are usually paid for in cash, thus taxes are not declared; with little use of Internet Banking or even of credit cards or mortgages. 7.) Tariff- is a tax imposed either on the goods exported or imported. 8.) Capital Account- is a part of the balance of payments recording a nation's outflow and inflow of financial securities. Alicaya|Beniga 10/15/13
9.) Foreign Reserves- an amount of foreign currency owned or held by the government. 10.) Inward Investment- is the injection of money from external or foreign entity in order to buy and purchase the goods of the local economy. 11.) Outward Investment- is the injection of money of local or domestic entity to foreign country in order to expand its operation 12.) Kleptocracy- a form of government wherein officials take advantage of the peoples resources for their personal gain. 13.) Houkou System- is a system of household registration required by the law in the Peoples Republic of China. 14.) Tax Evasion- is an illegal non-payment or underpayment of tax. 15.) Political Repression- is preventing an individual or group people in taking part of the political aspect of the society, thus individuals are discriminated due to political reasons. 16.) Economic Freedom- is a condition wherein people act freely in pursuit of their economic livelihood and greater prosperity. 17.) Communism- is a theoretical economic system which suggests collective ownership of property. 18.) Commerce- is an activity that relate to buying and selling of goods and services. 19.) Diplomacy- is the art or practice of conducting international relations, as in negotiating alliances, treaties, and agreements. 20.) Imperialism- is a practice wherein a country increases its power through enlarging its territory.
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Bibliography
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