Notes on the economic transformation of China

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Decollectivisation/Household Responsibility System: farmers make own production decisions + sell surplus output in free mkts once state quota met Highly successful when applied to other industries. Chinese eco outgrew central planning as production above quota dwarfed size of govt. plan. 1993 – central planning become obsolete + mkt main instrument for distributing + allocating eco resources.

Taiwan as well as other Asian NIES experiences falling export competitiveness due to a rise in labour costs and the rapid development of China. Rising labour costrs have driven the reallocation of production from Taiwan to China. After the economics reform of China in 1978, Taiwan has been playing an important role in the Chinese eco. Taiwan started investing in China in the 1980s and accelerated the pace between the late 80s and the 90s.

Both Jpan and Taiwan, which developed high skill based industries, have invester their production into China and transferred their skill and technology to China. So have TNCs i SEZs , bringing along transfer of western tech + receive management + marketing skills from MNCs. Advanvements in modern tech. require high quality manufacturing and can be economically advantageous. The proper application of technology can yield significant cost savings with respect to both tooling and production costs.

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