Essay Question #5: From Naughton, as well as through some of our other materials, you have been presented a basic picture of China’s economic foundation. What were some of the main economic accomplishments of the Republican era (1900-1949)? What were some of the era’s greatest problems? Likewise, what were some accomplishments and failures of the Mao era (1949-1976)? After recounting these main points give try to explain WHY certain things went right and others things went wrong in each era. Which era do you think contributed more overall to China’s long term development, how so, and why? Version 1: Republican Era Good • increased industrialization • economy actually did well • CCP instigated peasant uprisings to stop corrupt landlords Bad • war with Japan • Japanese took over lots of China • Civil war between CCP and GMD Mao Era Good • literacy rose • life expectancy rose • more rights for women • first five year plan: industrial growth • land reform seemed to work well Bad • Great Leap Forward: Fail, lots of people died • Cultural revolution: lots of good things destroyed Version 2:1900-1949: Economic accomplishments: • Highly commercialized pre-modern economy in the countryside • Highly competitive markets for most products • High-productivity traditional agriculture • Microenterprises in the countryside • Resources and labor moved efficiently to the use with the highest rate of return • After Qing dynasty, modern industrial development began, modern transportation and communication links opened up new possibilities for other sectors, modern factory production grew at 8%-9% • Modern industry in the Treaty Ports Problems: • Economic activity was fragmented into small-scale businesses with little capital • Increased burden on resources that were relatively fixed • Grinding poverty • Significant disparities in income • High rents • Inflation Reasons: • a sophisticated agriculture technology • Massive application of human labor to small plots of farmland • Dense population and transport networks in the countryside • Most nonagricultural production was also small-scale and done by rural households • A fluid and flexible allocation of resources • Inexorable population growth • After the war, the Nationalist government turned to printing money to finance operations 1949-1976 Accomplishment: • Poured resources into capital-intensive factories producing metals • Most investment went to industry, and of industrial investment, more than 80% was in heavy industry • In 1955-1956, “High Tide of Socialism”: transformation to public ownership • After GLP, free markets were reopened to provide an additional channel for peasants to supply food to cities and soak up purchasing powerProblems: • Neglected labor-intensive sectors suitable to China’s vast population • Consumption was squeezed • factory products were expensive and farm products were cheap • No modern tax system • In 70s, industrial growth was once again outpacing agriculture growth by too wide a margin • consumption was neglected • Services actually declined from 29% of GDP to 24% of GDP because of a declining contribution from commerce. • Relative shrinkage of the retail, no real competition on consumer markets, little quality improvement and few new products introduced Reasons: • “Big Push industrialization”: gave overwhelming priority to channeling the maximum feasible investment into heavy industry • Command economy: market forces were severely curtailed and government planners allocated resources directly through their own commands • A massive socialist industrial complex through direct government control • Heavy-industry-priority strategy: focused on industries in the upper and middle stages of the industrial economy • Government owned the factories and controlled the price system • First Five-Year Plan • The single-minded pursuit of industrial development meant that consumption was neglected • The government was hostile toward the marketplace and independent businessmen. • Employment creation was relatively low because services were neglected The Republican Era(1900-1949) contributed more overall to China’s long term development: • As China began to open up, familiarity with the traditional household-based economic system provided a robust potential to adapt to new economic opportunities • Small-scale household businesses sprang up throughout China to meet the market needs that had been neglected under socialism• Highly commercialized countryside had flourished • Traditional economic centers revived • Lower Yangtze macroregion began to reclaim its traditional economic primacy • Entrepreneurial and competitive behaviors that had been nourished by the traditional economy Version 3: The Republican Era • Collapse of Qing in 1911 led to a period of growth, however initially stilted by warlords and fragmentation • Nation unified in 1927 by the Nationalist party o Invested in education and agricultural expansion o Created new crop strains • Peace until the Japanese invasion in 1937 • Increased literacy • Began to be somewhat open to foreign ideas and influence o Students studying abroad o Foreigners began to take residence in China • Industrialization had begun, but had not had a deep effect on China’s foundation o Treaty Port Industrialization in China proper  Focused on light, consumer goods, produced in major port cities including Shanghai  Essentially stopped importing textiles by 1930 as they were creating their own  Skills diffused across the nation, especially in Shanghai o Manchurian Industrialization  Japanese government carried out essentially all industrialization  Southern Manchurian railroad and other transportation improvements  Focused on heavy industries (ore, iron, etc.) and railroads  Produced raw materials for Japanese domestic industries  Imported Japanese to take over skilled positions, so did not affect China’s development of skills in Manchuria • Positive growth in agriculture, handicrafts, and traditional transport • Problems during this time o Japanese influence in Manchuria did not help propel China forward, but rather simply acted as resources for the Japanese (puppet state of Manchukuo) o Civil War (1937-1949) 