Economic Policy of the People's Republic of China

This book deals with the current economic policy of the People's Republic of China. In addition to a brief overview of economic history since its founding and discussions of economic models, an overview of both the forms of business and the Chinese labor market is provided. The book pays particular attention to the development of China's e-commerce sector. Equally significant are China's environmental issues against the backdrop of the climate crisis. Without innovations, for example in energy production and waste management, the Chinese economy will hardly be able to continue growing. Therefore, one focus of the book is on economic policy in the environmental sector. Finally, foreign policy, including the Silk Road Initiative, is examined. The aim of this book is to highlight the above developments. It is aimed at laypersons involved in the business of China as well as first-year students who want an overview of economic policy institutions and current developments. Foreword Contents Abbreviations 1: Introduction 1.1 Aim of the Book 1.2 Overview of Economic Literature 1.3 Principles of the Chinese Economy 1.4 Structure of the Book References 2: Data Validity 2.1 Static Data Collection 2.1.1 National Statistical Office 2.1.2 Civil Servants 2.2 Case Study: Unemployment Statistics 2.2.1 Specificities of the Labour Market Situation 2.2.2 Special Features of Unemployment Statistics 2.2.3 Change in Unemployment Statistics Since 2018 2.3 Conclusion References 3: Economic Development Since 1949 3.1 Start-Up Phase 1949 to 1956 3.1.1 Domestic Political Discourse 3.1.2 Economic Development and Changes in Ownership Structures 3.1.3 Administrative Measures 3.1.4 Foreign Policy Development 3.2 Period of Power Struggles from 1957 to 1976 3.2.1 Second Five-Year Plan (1958–1962) 3.2.2 Foreign Policy Development 3.2.3 Cultural Revolution 3.3 Opening Period from 1977 to 1990 3.3.1 Pragmatic Economic Policy 3.3.2 One-Child Policy 3.4 Economic Growth Since 1990 References 4: State Structure 4.1 The Communist Party of China 4.2 Xi Jinping 4.3 National People’s Congress 4.4 State Council 4.5 Administrative Divisions and Local Governments 4.6 Court Organisation 4.7 Conclusion References 5: Economic Policy Goals and Discourses 5.1 Economic Policy Objectives 5.1.1 Five-Year Plans 5.1.2 New Normal 5.1.3 Made in China 2025 5.1.4 Reform Backlog 5.2 Discussion of the China Model 5.2.1 Origin of the Term 5.2.2 Current Discourse 5.2.2.1 Justin Yifu Lin 5.2.2.2 Zhang Weiying 5.2.2.3 International Opinions 5.2.2.4 Transferability 5.2.2.5 State Capitalism as an Element of the China Model 5.2.3 Comparable Models 5.2.3.1 Singapore Model 5.2.3.2 East Asian Economic Model 5.3 Conclusion References 6: State-Owned Enterprises 6.1 Nationalisation of Enterprises 6.2 Characteristics of State-Owned Enterprises 6.2.1 Internal Structure of State-Owned Enterprises 6.2.2 Influence Mechanisms of the State 6.3 Number and Productivity of State-Owned Enterprises 6.4 Economic Efficiency of State-Owned Enterprises 6.4.1 Competitiveness 6.4.2 State Intervention 6.4.3 Social Responsibility 6.4.4 Zombie Companies 6.5 State Enterprise Reforms 6.5.1 Socialisation 6.5.2 Mergers 6.5.3 Mixed Ownership 6.5.4 Debt-Bond Transfer 6.5.5 Corporate Governance Reforms 6.6 Return to a Planned Economy 6.7 Conclusion References 7: Private Company 7.1 Emergence of Entrepreneurship 7.2 Characteristics of Private Companies 7.2.1 Importance for the Economy and the Labour Market 7.2.2 Sectoral Focus of Private Companies 7.2.3 Success of Private Companies 7.2.3.1 Networks 7.2.3.2 Interdependence Between Government and Private Enterprise 7.3 Start-Up Scene 7.3.1 Definition of Start-Up Companies 7.3.2 Presentation of the Chinese Start-Up Scene 7.3.2.1 Development of the Start-Up Scene 7.3.2.2 Scope of the Start-Up Scene 7.3.2.3 Priority Sectors 7.3.2.4 International Influences 7.3.3 Policy Guidelines 7.3.3.1 Torch Program 7.3.3.2 Mass Entrepreneurship Programme 7.3.4 Promoting the Start-Up Scene 7.3.4.1 State Support Instruments 7.3.4.2 Government and Private Support Instruments 7.3.5 Practical Example: Zhonguangcun (Beijing) 7.3.6 Special Features of the Chinese Start-Up Scene 7.4 Insolvencies of Companies 7.4.1 Bankruptcy Law 7.4.1.1 Scope of Application 7.4.1.2 Insolvency Application 7.4.1.3 Reasons for Insolvency 7.4.1.4 Insolvency Administrator 7.4.1.5 Creditors 7.4.1.6 Meeting of Creditors 7.4.1.7 Insolvency Court 7.4.1.8 Insolvency Proceedings 7.4.2 Practical Application 7.4.2.1 Taizinai 7.4.2.2 East Star Airlines 7.4.2.3 Circumvention Possibilities 7.5 Conclusion References 8: Luxury Consumption 8.1 Luxury and Luxury Goods 8.1.1 Definition and Delimitation of the Concept of Luxury 8.1.2 The Chinese Luxury Goods Market 8.1.3 The Relativity of Luxury 8.2 Luxury in the Chinese Transformation Society 8.2.1 Rapid Economic Development 8.2.1.1 The Formation of a New Society 8.2.1.2 The Attractiveness of the Chinese Luxury Market 8.2.2 Socio-Economic and Demographic Factors 8.2.2.1 Purchasing Power 8.2.2.2 China’s Elite 8.2.2.3 Middle Class 8.2.2.4 Wealth and Inequality 8.2.2.5 Demographic Development 8.2.2.6 Age Structure 8.2.2.7 Spatial Disparities 8.2.2.8 The Cultural Factor 8.2.2.9 Corruption and Trademark Counterfeiting 8.3 Conclusion References 9: Labour Market 9.1 Development of the Labour Market 9.1.1 Development from 1949 to 1976 9.1.2 Development from 1977 to 2000 9.1.3 Development After 2001 9.2 Labour Migration 9.2.1 Internal Migration Policy 9.2.2 Reform of the Hukou System 9.2.3 Standardisation of Labour Market Regulations 9.3 China at Lewis Turning Point 9.3.1 Lewis Model 9.3.2 Applicability to the People’s Republic of China 9.3.2.1 Surplus Labour and the “China Paradox” 9.3.2.2 Development of Wages 9.3.2.3 Supply and Demand in the Labour Market 9.3.2.4 Income Disparities Between Urban and Rural Areas 9.3.3 Effects 9.3.4 Government Measures 9.4 Conclusion References 10: E-commerce 10.1 General Conditions 10.2 Platform Economy 10.2.1 Policy Objective 10.2.2 Social Credit System 10.2.3 Alibaba 10.3 E-commerce in the Countryside 10.3.1 State Objectives 10.3.2 Taobao Villages 10.3.3 Examples of E-commerce Villages 10.3.3.1 Qingyanliu/Yiwu 10.3.3.2 Suichang 10.3.3.3 Jinyun 10.4 Conclusion References 11: Fiscal and Financial Policy 11.1 General Fiscal and Financial Policy 11.1.1 Tax Policy 11.1.1.1 Corporate Taxation 11.1.1.2 Income Tax 11.1.2 Public Debt 11.1.3 Institutions and Banks 11.1.4 Shadow Banks 11.1.5 Characteristics of the Financial System 11.1.5.1 Inflation 11.1.5.2 Exchange Rate 11.1.6 Stock Market 11.2 FinTech 11.2.1 Definition of FinTech 11.2.2 Market Situation 11.2.2.1 Development 11.2.2.2 Market Segments 11.2.2.3 Participants in the FinTech Market 11.2.3 Success Factors of Chinese FinTech Companies 11.2.3.1 Market Regulation in China 11.2.3.2 High Financial Demand from the Population 11.2.3.3 TPOP Replaces Cash 11.2.3.4 Influence of BAT and Banks on the FinTech Market 11.2.3.5 Market Size and Customer Characteristics 11.2.3.6 Dealing with Data Protection 11.2.3.7 Risks and Security of FinTech Applications 11.3 Crowdfunding 11.3.1 Definition of Crowdfunding 11.3.1.1 Crowdfunding Models 11.3.1.2 Types of Crowdfunding Donors 11.3.1.3 Financing Phases 11.3.2 Crowdfunding Platforms 11.3.3 Regulatory Intervention 11.3.4 China’s Peer-to-Peer Fraud Cases 11.3.4.1 The Case of E’zubao 11.3.4.2 Social Implications of the Ponzi Scheme 11.4 Conclusion References 12: Agricultural Policy and Food Supply 12.1 Validity of the Data 12.2 Food Requirements of the Chinese Population 12.2.1 Development of Eating Habits 12.2.2 Forecast of Future Food Demand 12.3 Classification of the Land Use Plan 12.4 National Agricultural Production in Terms of Imports and Exports 12.5 Self-Sufficiency Rates for the Various Agricultural Products 12.5.1 Forecast of the Further Development of Self-Sufficiency Rates 12.5.2 Future Development of Production Possibilities 12.5.2.1 Inequality in the Distribution of Water Resources 12.5.2.2 Reduction of the Area Under Cultivation 12.6 Conclusion References 13: Environmental Policy 13.1 Environmental Situation 13.2 Institutional Development 13.3 Chinese Government Policy 13.3.1 The 13th Five-Year Plan 13.3.2 Laws and Action Plans 13.3.2.1 Revised Environmental Law 13.3.2.2 Prevention of Air Pollution 13.3.2.3 Three-Year Action Plan for the Victory of the Blue Sky War 13.3.3 Implementation of Industrial Restructuring 13.3.3.1 Implementation Process 13.3.3.2 Regional Resistance 13.3.4 International Position on Climate Policy 13.3.5 Emissions Trading 13.3.6 Example of the Beijing-Tianjin-Hebei Region 13.4 Environmental Awareness 13.5 Water Resources 13.5.1 Existing Water Resources in China 13.5.2 Water Resources on the Tibetan Plateau 13.5.3 Measures Taken by the Chinese Government 13.5.3.1 Dams 13.5.3.2 The South-North Water Transfer Project (SNWDP) 13.5.3.3 Diversion of the Brahmaputra River 13.5.3.4 Desalination Plants 13.5.3.5 Wastewater Use 13.5.4 Water Conflict Between China and India 13.6 Waste Management 13.6.1 Institutions 13.6.2 Waste Disposal 13.6.2.1 Landfilling 13.6.2.2 Waste Incineration Plants 13.6.2.3 Composting 13.6.2.4 Cockroach Farms 13.6.3 Waste Import Ban 13.7 Conclusion References 14: Energy Policy 14.1 Nuclear Energy 14.1.1 Nuclear Power Plants 14.1.2 Resources 14.1.2.1 People’s Republic of China 14.1.2.2 Kazakhstan 14.1.2.3 Australia 14.1.2.4 Canada 14.1.3 Reprocessing 14.1.4 Waste Disposal 14.1.5 Safety of Nuclear Installations 14.1.5.1 Locations 14.1.5.2 Provision of Specialist Staff 14.1.5.3 Quality Assurance 14.1.6 Export of Chinese Nuclear Power Technology 14.2 Renewable Energies 14.2.1 13th Five-Year Plan 14.2.2 Hydro Energy in China 14.2.3 Wind Energy in China 14.2.4 Solar Energy 14.2.4.1 Geographical Distribution of Solar Energy Capacity 14.2.4.2 Photovoltaic Market 14.3 Conclusion References 15: Foreign Trade 15.1 Chinese Foreign Trade Policy 15.1.1 China in the WTO 15.1.1.1 Accession in 2001 15.1.1.2 Concessions and Commitments 15.1.1.3 Implementation of the Agreements 15.1.2 Is China a Market Economy? 15.1.2.1 Importance of Market Economy Status in the WTO 15.1.2.2 European Perspective 15.1.2.3 American Perspective 15.1.2.4 Chinese Perspective 15.1.2.5 Consequences 15.1.3 European-Chinese Trade Relations 15.1.3.1 EU-China Partnership and Cooperation Agreement (PCA) 15.1.3.2 EU-China 2020 15.1.3.3 European Perspective 15.1.3.4 Chinese Perspective 15.2 Trade Conflict with the USA 15.2.1 Causes and Measures 15.2.1.1 Customs Duties 15.2.1.2 Technology and Industrial Espionage 15.2.2 Consequences and Possible Future Scenarios 15.3 China as a Global Player: The New Silk Road 15.3.1 Historical Background 15.3.2 Significance and Scope 15.3.2.1 The New Silk Road 15.3.2.2 Scope of the Investment and Investors Involved 15.3.3 Policy Objectives and Targets 15.3.4 Types of Support 15.3.4.1 Loans 15.3.4.2 Construction Work 15.3.4.3 Know-How 15.3.5 Criticism 15.4 Conclusion References 16: Concluding Remarks References This book deals with the current economic policy of the People's Republic of China. In addition to a brief overview of the economic history since the founding and the economic models, an overview of both the forms of enterprises and the Chinese labor market is given. The book pays particular attention to the development of China's e-commerce sector. Equally significant are China's environmental issues against the backdrop of the climate crisis. Without innovations, for example in energy production and waste management, the Chinese economy will hardly be able to continue growing. Therefore, one focus of the book is on environmental economic policy. Finally, foreign policy, including the Silk Road Initiative, is examined. The aim of this book is to highlight the above developments. It is aimed at practitioners involved in China business as well as first-year students who want an overview of economic policy institutions and current developments. The content State structure and actors of the economy Current economic development Labour market E-commerce Food, environment and energy policy International Relations The Editor Barbara Darimont is Professor of China Economics at the East Asia Institute of the Ludwigshafen University of Applied Sciences. Before that, she worked for ten years at the Max Planck Institute for Social Law in Munich, where she set up the China Department with renowned Chinese institutions. This book is a translation of an original German edition. The translation was done with the help of artificial intelligence (machine translation by the service DeepL.com). A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation