China, with its official name as the People’s Republic of China, has the largest population in the world, and consequently is the world's largest energy consumer and producer, coming only second after the United States. This status alone gives China a distant position not only in the international energy arena, but at the domestic front as well. As the country is facing a growing demand of oil, even though the nation's energy requirements are primarily met through production and consumption of coal that still enjoys a dominant status in fuels. A brief view at the Chinese economy shows that it has been a mixture of both state owned enterprises and private firms, yet the role of state owned enterprises have enjoyed a dominant status, and it was only in the 1980s that the country opened up its frontiers through the creation of special economic zones. These economic zones provided investors exclusive tariffs, preferable tax reductions and other incentives, and together with the country's entry into the WTO in 2001, China today is on the road to developing and opening up its markets to foreigners. Foreign firms across the world have thus been allowed the opportunity for competing in the world's most populous nation, that it implies a huge consumer potential not only today, but for years to come. Though China has joined the WTO, and opened up its markets for foreign firms to compete in areas such as capital goods, and retail sales such as petroleum products, it is still far from the commitments made during and after the joining the WTO. Not to mention the repercussions that has already begun to appear as a result of the reduction in tariffs, and trade liberalization policies that have been promised by Chinese leaders. For example, some of the steps taken towards the country's policies of trade liberalizations included a reduction in the role of the dominant state owned enterprises (SOE), privatizing some of these SOEs, and restricting the banking sector. The immediate repercussion noticed included a growth of unemployment as the most of the SOEs were overstaffed, the rise of government expenditure as it now has to cater to the increased social benefits due to unemployment, that was previously the responsibility of the SOEs, and the overall effect on the country's GDP that is showing signs of falling from the steady growth of 8 percent in 2000.
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China at the Crossroad - Capitalism or Socialism
Before we begin a discussion on the status of the China and its plans to embark on either of the capitalist or socialist forms of systems, the common usage of the both the specific terms must be well comprehended. Contrary to the general concept and thinking that eastern countries including Russia, Poland, Hungary, and Czechoslovakia were communist countries, they were in fact capitalist countries in the descriptive sense, as proved by the capital intensive economies they were all running. This somewhat resembled the Western constitutional democracies that we see today. Thus, it is observed that the countries that we came to know as eastern block countries practiced state capitalism, as all the nation's capital was owned by the state including agricultural, industrial capital. The fact that they were run and administered by the Communist Party resulted in the totalitarian state with neither private economy nor private institutions. Whereas the western democracies, there existed the concept and practice of private ownership of both capital and market economy.
Socialism, on the other hand is an idealistic belief/system. One that is considered as a counterpart of constitutional democracy, such as seen in the countries of Japan, and India. As Socialism is an idealistic system, the practice of socialism involves a society of mature citizens all of who have are both economical and political 'haves'. Nobody in such a society id devoid of a necessity, or a decent livelihood, and it is but a natural right of every citizen, and is so practiced. (Adler, 2000)
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China, as our core topic is observed to be at the crossroad between the two, capitalism and socialism. Having embarked on a vigorous reforms program that included relaxing nation's economic policies to invite foreign investors, China has in a period of approximately 2 decades, become one of the fastest and best economies in the entire developing world. Yet, this tremendous growth and pace has now reached a stage where the leadership has to decide on the path to choose, and is at the moment at the cross road.
Some of the areas that have brought the country to reassess its future strategies and that have brought her to the cross road include decisions such as cutting civil bureaucracy by half, privatizing those state owned enterprises that are running at a loss, and ending the centuries old system of providing free housing. These decisions though aimed at uplifting the ailing and burdensome respective sectors are already facing resistance in the form of student protests, and possible repercussion is the shape of social unrest. It is this precise dilemma that the Chinese leadership wishes to avoid, and continue with these reform measures without triggering or inviting the said problems. (Miles, 1999)
The Chinese government has already begun a program of helping the ailing state enterprises, by allowing bank to lend them money, a strategy that was practically banned. In addition the state owned enterprises are also being privatized along with the housing sector, though with a slow pace, so as not to invite unrest amongst the majority of the population.
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Then there are the political implications too, such as measures calling for straightening human rights records, and furtherance of political liberalizations. Though pursuance of such measures by Chinese leadership at a stage when the economy is already at the cross road, seems secondary. Yet majority of western government’s demands for taking up such issues takes precedent over other matters, and becomes critical when huge sums are involved in the shape of foreign direct investments in China. Hence, China must appropriately decide on the course of action for its future growth, and purse a path that is more aligned towards democratic principles, instead of a future that seems to predict a state largely controlled by People's Liberation Army. ( Bryan, 2003)
References
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Adler, 'The End of the Conflict Between Capitalism and Communism', :Haves Without Have-Nots, 1991, Part One, 2000 http://www.thegreatideas.org/apd-capi.html
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Miles, James, China's reform program is now at a crossroads, 1999 <http://news.bbc.co.uk/1/hi/world/asia-pacific/312317.stm>
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Bryan, John, Understanding China: A Guide to China's Economy, History, and Political Structure
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