I am curremtly studying A-level economics and have chosen to study the chinese economy in detail. I would very much appreciate it if you could answer a few questions which will help me in my research.

1) Are there or have their been any problems with China's attempts at development? 2) What things do you think china should do to acheive a faster rate of development?

Thank-you for your time.

-- Tara Quinn (joanlangan@ireland.com), August 09, 2001

Answers

Dear Tara:

Sorry to keep you waiting. I'm in the middle of moving house (and country), so things are a bit hectic. Your questions are broad and fundamental, which means they would be good subjects for a very large book.

The problems China has faced in attempting economic development range from those encountered during the period of a Stalinist centrally planned economy (1953-1979) to those currently being met with in the long process of "transition" from a planned to a market economy.

As well as intrinsically economic problems, the high rate of economic growth engendered by opening the economy to the outside world and allowing greater scope for local, including, private sector, business has also widened the gap between rich and poor, exacerbating social tensions.

For the Chinese economy to grow faster than it has (or to achieve in practice what its false GDP figures suggest has already happened), the government needs to liberalise its economy. State owned enterprises have to be culled, leaving a few relatively efficient and profitable world class firms. At the same time, the government has to provide (or get others to provide) the services hitherto performed by the state owned enterprises, such as health, education, social welfare and housing. The banking sector has to rid itself of bad debt and act like a commercial banking sector in any other country, not just as a conduit for subsidising dud companies. And the environmental damage caused by reckless industrialisation has to be tackled if agriculture is to survive.

-- Ken Davies (kendavies@francemail.com), August 24, 2001.