Some aspects of implementation of Chinese economic policy

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Some aspects of implementation of Chinese economic policy

Karelina Е.А.,

Candidate of Economic Sciences, Associate Professor at the Department of Foreign Languages Moscow State Technological University "STANKIN" Russia, Moscow

Kirova I.V.,

Associate Professor at the Department "Economic Theories" Moscow Automobile and Road State Technical University (MADI) Russia, Moscow

Abstract

The article analyzes the problems in meeting the growing needs of China's additional attraction of raw materials and energy resources for further sustainable development of the national economy; changes in the sectoral and geographic structure of trade and economic cooperation of the country, as well as the increasing role of cross-border regional economic cooperation of China.

Key words. internal economic policy, People's Republic of China, economic development model. trade economy energy

The growth of domestic demand plays a significant role in China's economic development, the stimulation of which is considered in the country as a multidimensional and long-term task, the solution of which will depend on the effective development of the social sphere (health care, education, social guarantees, professional retraining). At the same time, in order to increase consumption, the country has implemented a number of short-term impact measures.

A number of factors have led to China's rapid economic growth, including the system of state regulation of the economy, public administration reforms, diversification of the economy, features of attracting domestic investment (public administration reforms) [1].

Since the late 1970s, China has been reorienting itself from a closed, centrally-planned system of economic management to a market-oriented economy. China's accession to the WTO in 2001 contributed to an active increase in its participation in international trade, especially between 2002 and 2008. In the Asian region, China became a leader in foreign trade back in 2004, having surpassed Japan. China overtook the United States in 2007 and Germany in 2009 to become the world export leader [2].

In 2010, China became the world's largest commodity exporter for the first time [3]. Economic reforms began with agriculture, followed by financial reform, price liberalization, an increased autonomy for state companies, an extensive banking system, the formation of stock markets, an increase in the share of the private sector and increased openness to foreign investment and trade [4].

Economic restructuring and improved use of demographic potential led to a more than 10-fold increase in China's purchasing power parity (PPP) GDP during 1978-2018. At the same time, the value of industrial and agricultural production (in dollar terms) exceeded that of the USA. China has become the world's second largest producer of services after the United States of America and the fourth largest exporter of services after the USA, the UK and Germany (according to the WTO, China's services exports were $221.1 billion in 2017, accounting for 4.9 percent of global services exports). At the same time, the income per capita in the country remains below the world average, which is a consequence of the large population [5].(Uo)

To stimulate structural changes in the economy, China is actively developing the education system, organizing training of its students at the expense of the state in foreign countries (especially Japan, the United States of America and Russia), thus encouraging the import of technology to develop advanced industries such as information and telecommunications technology, health care, biotechnology [6].

China's GDP has been growing steadily over the years, even despite the global crisis of 2008-2009 (Fig. 1).

Fig. 1. The dynamics of China's GDP at current market prices in 2008-2017, $ billion.

China's economic reform has gradually led to structural changes in the location of industry and other sectors of the economy.

Since the founding of the country, the development of industry has been given serious attention. Among other industries, mechanical engineering and metallurgy always had the highest priority. Some producers of strategic products, as well as heavy industries, remain state-owned, but the remaining ones are either public-private joint ventures with foreign capital or private enterprises [7].

An important place in the structure of modern industry in China belongs to the automotive industry. China is the clear leader in both passenger car production (22.2 million units in 2017 or 54.5% of global production) and truck production (6.8 million units in 2017 or 22% of global production). In 2017, the total production of cars in the country amounted to 29 million (29.9% of global production). Between 1975 and 2017, car production in the country increased 175 times. Already in 2010, the country had taken a leading position in the global automotive industry.

China has also made a significant breakthrough in the development of national energy.

With the adoption of a set of measures to rationalize energy consumption in the 1980s, the structure of energy consumption in the country has been significantly adjusted. A number of energy-saving measures were implemented (closing obsolete industries, attracting the latest technology and foreign enterprises to the country), which made it possible to reduce the total energy consumption in the country by 40%.

The development of transport and infrastructure in China is given significant attention, since these sectors are strategically "tied" to the national economy. Annual investment in transport and infrastructure development amounts to about 10% of the country's GDP.

At the heart of the anti-crisis package was the national economic stimulus plan adopted at the end of 2008, which provided incentives for stimulation of major industries in the amount of about $586 billion (4 trillion yuan). Special government programs were developed for industries such as automobile manufacturing, metallurgy, petrochemicals, shipbuilding, light and textile industry, development of high-tech industries and electronics manufacturing [8].

China is shifting the focus of its economic growth model from "quantitative growth" to "qualitative development," with Chinese companies investing outside the extractive sectors and increasingly directing capital to high -tech, agriculture and food production, real estate and other tertiary sectors.

In 2010, the Bank of China announced that it would continue to reform its currency in order to achieve greater volatility in its exchange rate.

The country's monetary policy is also subordinated to the task of maintaining economic growth. The People's Bank of China had seriously eased the national (§§) financial policy during the crisis, which was reflected in the reduction of the rate on bank loans (in 2014 it was 5.6%, in 2015 - 4.5%, in 2016 it amounted to 4.35% and in 2017 - to 4%, which was significantly lower than the level of other developing countries) and the mandatory reserve requirements for lending [9].

Due to the active development of foreign economic relations, it became possible to take constructive measures in terms of the development of an effective and simplified tax system, as well as the use of information technology to prevent abuses in public administration, it also became possible to combine a number of social policy initiatives into a single system (for example, paying benefits to the large number of people who lose their jobs every year in state-owned companies). These measures cumulatively helped to stimulate further intensification of foreign economic activity of the country [10].

Conclusions

The high growth rate of the country's economic potential is ensured both by a combination of market-based economic modernization and state control in the social sphere, which ensures internal development stability, and by the presence of high resource potential in China, which does not exclude the real need for resource imports at the same time. At the same time, demographic factors of socio-economic development of the country (stabilization of the high birth rate, changes in the age and sex structure towards the aging of the population etc.) impose increasing restrictions on the rate of economic growth of the country. Under the influence of these factors, GDP growth rates (including GDP per capita) will tend to stabilize more and more in the foreseeable future. This stabilization, together with the stabilization of the growth rate of labor productivity, the expected changes in the sectoral structure of GDP, the reduction in its share of investment and, conversely, growing consumption, make the question of transforming the strategy of socio-economic development of the country the most important one.

In the long term, the focus of China's socio-economic development strategy transformation will be on the following: a tenfold increase in GDP per capita, completion of diversified industrialization, comprehensive development of information and communication technology; entering a new stage of development based on a knowledge-based economy and transformation of the high-tech industry into a key industry; achieving the world average level of urbanization; completion of construction of a "socialist economy with Chinese peculiarities", creation of mature economic institutions; achievement of the level of developed countries of the world in terms of technological development [11].

References