Question

Growth rate of china's industrial sector since independence

Answer 1

China's economic system before the late-1990s, with state ownership of certain industries and central control over planning and the financial system, has enabled the government to mobilize whatever surplus was available and greatly increase the proportion of the national economic output devoted to investment.

Analysts estimated that investment accounted for about 25 percent of GNP in 1979, a rate surpassed by few other countries. Because of the comparatively low level of GNP, however, even this high rate of investment secured only a small amount of resources relative to the size of the country and the population. In 1978, for instance, only 16 percent of the GNP of the United Stateswent into gross investment, but this amounted to U.S. $345.6 billion, whereas the approximately 25 percent of China's GNP that was invested came to about the equivalent of U.S. $111 billion and had to serve a population 4.5 times the size of that in the United States. The limited resources available for investment prevented China from rapidly producing or importing advanced equipment. Technological development proceeded gradually, and outdated equipment continued to be used as long as possible. Consequently, many different levels of technology were in use simultaneously (see Science and technology in China). Most industries included some plants that were comparable to modern Western facilities, often based on imported equipment and designs. Equipment produced by Chinese factories were generally some years behind standard Western designs. Agriculture received a much smaller share of state investment than industry did and remained at a much lower investment average than that of technology and productivity did. Despite a significant increase in the availability of tractors, trucks, electric pumps and mechanical threshers, most agricultural activities were still performed by people or animals.

Although the central administration coordinated the economy and redistributed the resources to the regions that required them when necessary, most of the economic activity was very decentralized and there was little flow of goods and services between regions, causing those suffering areas to wait for the central administration to step in before any relief was given. For example, roughly 75 percent of the grain grown in China was consumed by the families that produced it, with the remaining 25 percent being distributed to the other regions that required it.

One of the most important sources of growth in the economy was to show the comparative advantages of each locality by expanding its transportation capacity. The transportation and communications sectors were growing and improving, but not at a fast enough pace to handle the volume of traffic that a fast growing modern economy requires, due to the scarcity of investment funds and the lack of the advanced technology needed to support such growth.

Because of the limited interaction among the regions, a vast variety of differing geographic zones were created, with a broad spectrum of incompatible technologies were in use, creating areas that greatly differed in economic activities, organizational forms, and prosperity.

Within any given city, enterprises ranged from tiny, collectively owned handicraft units, barely earning subsistence level incomes for their members, to modern, state owned factories, whose workers received steady wages along with free medical care, bonuses, and an assortment of other benefits.

The agricultural sector was diverse, accommodating well equipped, "specialized households" that supplied scarce products and services to the local markets, along with wealthy suburban villages specializing in the production of vegetables, pork, poultry, and eggs to sell in the nearby free market cities, fishing villages on the seacoast, there were also herding groups on the grasslands of Inner Mongolia and poor, struggling grain producing villages in the arid mountains of Shaanxi and Gansu provinces.

The economy had progressed in major ways since 1949, but after four to five decades, experts in China and abroad agreed that it still had a great distance yet to go.