Monday, October 6, 2008

Changes and challenges with China's 30 years reform and opening up

This autumn was a season of revelry and national pride for the Chinese. Not yet recovered from the spectacular summer Olympics in August, the whole nation had something else to celebrate as its first taikonaut waved a Chinese flag in a maiden spacewalk.

Through the live broadcast of the mission, tens of millions of Chinese saw, at around 4:40 p.m. on Sept. 27, Zhai Zhigang, strenuously open the hatch of Shenzhou-7. You could hear the wheezing sound as he floated around in the four million dollar China-made Feitian EVA suit. The 42-year-old, squarefaced taikonaut stayed in space for about 20 minutes, accomplishing China''s first extravehicular activity in space.

Zhai''s spacewalk marked incredible progress in the country''s ambitious space program. This was just the third time China launched manned spacecraft. The first manned space flight was in 2003. A second flight with two astronauts followed in 2005. The only other countries to successfully stage a spacewalk are Russia and the United States.

China''s rapid development in space, science and technology, is attributed to growing industrial strength, a booming economy and vast scientific potential, experts said.


The Shenzhou-7 story is but one example of China''s extraordinary transformation over the past three decades.

After realizing the old system of a highly centralized, planned economy and a semi-closed country did not work, the Chinese people resolutely embarked on a historic journey of reform and opening-up in the late 1970s.

The initiative was made by late Chinese leader, Deng Xiaoping as well as other senior leaders who gathered for the Third Plenum of the 11th Central Committee of the Communist Party of China in 1978.

The plenum introduced a series of important decisions on reform which represented a turning point in the history of the CPC and New China since its founding in 1949.

Since then, several events have taken place which have shaped the country.

In December 1978, 18 farmers in Xiaogang village, east China''s Anhui Province, signed a secret agreement to divide community-owned farmland into pieces for household contract.

The move was supported by late leader Deng Xiaoping, chief architect of China''s reform and opening. It was also recognized by the government, which then initiated the system of contracted responsibilities based on the household in rural areas.

On July 15, 1979, the CPC Central Committee and the State Council changed policies regarding foreign economic activities to make them more flexible. Special economic zones were also set up in the cities of Shenzhen, Zhuhai, Shantou, and Xiamen.

The construction and development of special economic zones and opening-up zones prompted the creation of a group of regional economic growth centers.

During his tour to South China in 1992, when China''s reform and opening-up drive came to a crucial juncture, Deng Xiaoping set about defining socialism as the pursuit of common prosperity. Deng delivered a series of speeches to define and clarify what was and how to build socialism in response to doubts as a result of the developing special economic zones. Some people thought the zones were a road to capitalism.

"Practice of a planned economy is not equivalent to socialism because there is also planning under capitalism; Practice of a market economy is not equivalent to capitalism because there are also markets under socialism," said Deng in one of his most repeated quotes.

Experts believe Deng''s simple but penetrating paradox paved the way for China''s switch from a planned economy to a market economy.

That economy has grown rapidly as a result of foreign trade. In 1996, China''s total foreign trade volume accounted for 35.5 percent of its GDP. Now, it accounts for nearly 70 percent of the GDP.

Twenty-three years after the launch of the opening-up policy and 52 years after the founding of People''s Republic of China, the country entered the World Trade Organization in 2001 to become its 143rd member.

"China''s negotiations for the accession to the multilateral trading system over the past 15 years have been an integral part of the process of its reform and opening up from the beginning to the end," said the then Chinese foreign trade minister Shi Guangsheng.

The Chinese government launched reforms of the exchange rate system on July 21, 2005, introducing a managed floating foreign exchange rate system after discontinuing the former foreign exchange regime pegged to the U.S. dollar.

The goal of the exchange rate reform is to build a managed, floating exchange rate mechanism based on market supply and demand. It should also maintain the yuan''s basic stability at a reasonable equilibrium, said the central bank.

China opened its financial sector to foreign banks in December, 2006. Before that, China had dropped tariffs, canceled non-tariff measures and opened up its market in accordance with the pledge it made when joining the WTO.

No comments: