A nation that came into world perspective in the modern times with events such as the Opium Wars with the British of the 1800s, and the post cold War era, today has one of the fastest developing economies in the region, with a trade surplus that crossed the 43 billion dollar mark in 2001. The nation that was one the world center for both arts and sciences, prior to the 19th century, experienced disturbing events such as civil unrest at the domestic front, major famines, military defeats and foreign occupation, yet the leadership of people like Mao Zedong brought the country on the map of the world that one aspect ensured China’s sovereign status in the eyes of the world, yet it also cost millions of lives at home through repression, and strict controls on everyday life of the Chinese.
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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. 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.
The continued existence of a strong state sector does not make China socialist. In the past, many capitalist countries have had a significant sector of state-owned enterprises. Most of these have been privatized since the rise of neo liberalism. (Australian examples include the Commonwealth Bank, Telstra, Qantas.) The global financial crisis seems to have brought the privatization drive to a halt in China for the time being. There have even been some instances of private companies being replaced by state enterprises. 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.
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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