"The core issue is to straighten out the relationship between government and the market, allowing the market to play a decisive role in allocating resources and improving the government's role.”
“While both state firms and the private sector were important and [the state] would encourage private enterprise, the dominance of the "public sector" in the economy would be maintained.”
These ideas appear inherently contradictory. If the Chinese government plans to maintain its economic dominance, how can the private sector thrive as the article suggests? Will these half-measures result in an improved Chinese economy? Can a hybrid between free-market and government-controlled economic ideals exist effectively?
In some ways I do see this as being contradictory. Capitalism and free market is not in relation with communism, and government controlled economic ideals. However, this action to better the economy with private sectors seems to me a somewhat communist action. The article states, "Beijing will likely face stiff resistance from those who benefit from the status quo - powerful heads of state companies to local officials who can benefit, often through graft, from the current focus on land sales and infrastructure investment." This quote from the Reuters article shows that currently there are a few very powerful people involved in the state companies. This is bad for the idea of communism because in a truly communist country there is no social class. If there are a few very powerful people the government leaders will do what they can to limit social status and make people more equal. By endorsing a more market-based economy, more people who have less will benefit. Another quote from the article states, " That makes it hard for the migrant workers that Beijing wants to encourage to move and work in cities to become full-fledged urban dwellers and consumers." There is a lower class in China and this change in economy is seeking to help out the farmers and workers. In the article from The New York Times, Chinese Leader Gets More Sway on the Economy and Security, it is stated, "At the meeting, Mr. Xi and the other leaders vowed a more determined and concerted effort to act on promises of a bigger role for markets after a decade in which state power has swollen." This further shows that leaders are looking to create a more equal market in China. I think these efforts will improve the economy in China by providing more opportunities for more people.
ReplyDeleteOver the last five years, the world has witnessed great change in the economy; countries such as Greece and Spain have needed worldwide bailouts in order to keep their economy afloat which shows how government control can help the economy. In China today, the relative majority of the power of the market lays in the hands of the government. Although the Chinese economy is doing well, opening up the market to private sectors would allow more room for the economy to prosper. Having a mix of free-market and government control would enable the Chinese government to still maintain control of the population and economy, but would also allow the entrepreneurial force that is needed to foster growth in order to maintain China’s economic dominance. As seen in the United States, the government controls agriculture, the quantity of crops produced, by offering subsidies to the farmers which also ensures consistent affordable pricing of food to the population. A hybrid of the markets can exist effectively, however it has to be constantly adjusted to cater to the markets. If the government controls too much of the market, it can dampen the economy, as seen in North Korea, where an alarming rate of the people face poverty due to the communistic ways of the country. On the other hand, if the government gives up too much control it could end up like Russia, where in the 1990’s was in a free enterprise state in order to prosper the economy, but the economy flourished so greatly that the government lost all grasps on the economy but then plummeted during the Great Recession. A hybrid economy would allow room for China to pursue an even greater economic dominance, but would have to be watched carefully as to be adjusted accordingly to cater to the ever-changing world economy.
ReplyDeleteI believe that those statements are extremely contradictory and frankly, are not compatible. Jess makes a great point about how the government controls much of the agricultural sector of the economy. This is true and it does work in the United States, but China would have an extremely difficult time with this transition. The Chinese government doesn't just want to control the agriculture to keep the economy afloat and keep the prices of food inexpensive; it wants to control the entire economy. Much of the private sector in China is controlled by the government. This is not just one section, the Chinese government controls essentially all of the private sector. The state owned companies force the privately owned companies to do things that are not in their best interest. The state owned companies make decisions based on what the government tells them to do. If the government wants its businesses to lower prices, this can happen because they have government funding. The competition is just completely unfair in China because the private companies can't afford to lower prices. It is impossible for China to dominate the economy as well as leave the private sector alone. This statement is extraordinarily contradictory. China can’t be stagnant and expect change. If China wants an economy that is much freer, it actually has to do something. China needs to stop talking and act if it wants change. The economy in China will not be able to continue growing if China does not modify something. There has been enough talk in China and now it is time for action.
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