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MappingBusiness Opportunities in China

The Socialist Era (1949-1978)Capitalism and Socialism Crash Course World History #33Video 14minThe main focus of socialist governmentBIG PUSH development:All investment into rapid industrialization (factories)High level of GDP generated from investment (GLF 44%)Focus on the industries up-stream of the value Change (x to Taiwan, Hong kong downstream)At the beginning the Big Push seemed to be working3Differences between Chinese and Soviet socialismPlanning less thorough (600 commodities vs. 60000 commodities).X BUT political control much tighter.

4How did China manage to channel resources to where it waned ? Command economy!How do you get money from people and spend it on building factories?

With taxes. But what if there are NO taxes?Chinese governement used prices regulation to improve its fiscal position.5Phases of socialist economic revolutionEconomic recovery (1949-1952)First Five-Year Plan (1953-1956)Hundred Flowers (1956-1957)Great Leap Forward (1958-1960) Readjustment (1961-1963)New expansion (1964-1966) Cultural Revolution (1967-1969)A new leap (1970)Consolidation (1972-1976) The leap Outward 1978 1978 an onwards return of Deng Xiaoping and opening up

Economic recovery (1949-1952) remarkable success, control of inflation, redistribution of land, industry rehabilitated too (engineers and capitalists could stay)First Five-Year Plan (1953-1956) ironically, progress led to bolder socialists reforms, massive Soviet influence, china mixed economy till 1955 (rapid nationalization and collectivization)Hundred Flowers (1956-1957) first major economic problems after many years of growth (industrial output grew, agricultural stagnated)Great Leap Forward (1958-1960) ant rightists campaign silenced critics, establishment of communes, material incentives rejected, fake reports about status of economy, less resources to agriculture at the expense of industry, but more procurement of food, 1960 rift between Soviets and China (permanent) no aid, all of that together with poor weather led to great famine (30million deaths)Readjustment 1961-1963 set of moderate policies introduced - rural industry cut back, material incentives reintroduced, inputs into agricultureNew expansion (1964-1966) again, massive construction plans introduced by Mao (Third Front), focus on inland provinces (fear from Soviets)Cultural Revolution (1967-1969) from economic standpoint, not that significant, the fall of economy relatively moderateA new leap (1970) no reduction of agriculture, but surge in investment (reduced consumption), main difference from Soviet model autarky, decentralization, almost no material incentives, militarization of economy (after cultural revolution), no-labor mobilityConsolidation (1972-1976) the same problems again = industrial growth outpaced agricultural, more moderate direction thanks to Zhou Enlai and later Deng, but Maos influence still too strong for radical reformsThe leap Outward 1978 death of Mao 1976, new leader Hua Guofeng rely on massive investment, but no resources (no oil)1978 an onwards return of Deng Xiaoping and opening up

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Lets see the video!Investment levels

Socialist period in shortSystem that maximized flow of resources into industrialization and ignored competitive advantage of China (What is that?)But every time the system began to accelerate, it ran into fundamental problems. What problems?Results? CCP lost fait in Soviet model of communism (experimenting with market)Since Mao was already dad, the failures could have been blamed on him and Gang of four

Competitive advantage of China? Cheap and abundant labor and channeled resources in difficult undergoing (building overly ambitious industrial base).9Good things about socialist era?High investment in basic human capitals (good healthcare, education).