As a matter of stark reality China is now one of the biggest markets of different foreign enterprise. Last year the world-trade grew by 50%, but 60% of these growths was Chinese. In spite of calls to impose protectionist majors against Chinese exports, such export continues and, particularly these producers are mostly European, Japanese, and Koreans. It is also a particular fact that the Chinese Communist Party has eagerly endorsed the capitalistic intrusion in the political system and economic reformation.
Particularly after the death of Mao, the capitalist’s element began to dominate the economic system and China has adopted the formal decision to allow the Chinese capitalists into the party. The critiques have opined that there are some reasons for this diametrical change which are discussed hereunder: First of all, the economic growth has allowed some capitalists to enrich themselves – but, at the same time, it has ensured the improvement in the living standards of millions.
The mass-enrichment indicates that the private investors have rendered a signal service to the country and hence the role of private capital has always been a matter of great encouragement. Secondly, the new bourgeois class is practically composed of the relatives of the bureaucrats as well as the members of the old Chinese aristocracy. The Chinese Communist Party has failed to prevent their ascendency in the Chinese political economic life.
Thirdly, after the integration of Hong-Kong into the People’s Republic of China, the Hong-Kong capitalists began to play a crucial role in the Chinese economy. This is also a reason why China is moving towards capitalism. Fourthly, last but not the least, state-control of finance and the non-convertible Chinese currency have increased the level of saving of the Chinese families. Such large scale savings have also been encouraged and increasing the private investment in productive sectors.
China’s entry in the international market has surely accentuated the capitalist trend in the economy. In 1992, Deng Xiaoping highly praised the emergence of the capitalist trend and, following him, the Communist Party of China (CPC) declared in October, 1992, that China now adopted the concept of socialist market economy. Thus, ideological battle was over and the new economic policy surprisingly increased its imports as well exports. The trade-deficit of 1992 soon twined into surplus as exports increased very rapidly by investment of a huge amount of investment, both local and foreign.
It is significant that, the scope of foreign investment began to increase in 1977-78 shortly after the defeat of the so-called ‘dang of four’. The ‘cultural revolution’ surely affected the progress of economy to a large extent and hence the Chinese statesmen realized the need of a foreign investment in order to boost up the economy. Above all the ‘ping-pong’ diplomacy introduced a ‘detente’ with America which soon developed a wide market in China. At present US is the biggest investor in Chinese economy.
The integration of Hong-Kong (previously a British port) into China has also increased the foreign capital. The majority of Hong-Kong capitals are now largely investing their finance in the Chinese economy (Leonard and Yum 379). Some other countries like Japan, Taiwan, and Korea are also investing a huge amount of capital in China. Thus, in spite of its Marxian model which discords private investments (especially foreign investments), China has liberally open its doors to the foreign investors. Foreign trade in China is primarily dominated by the state.
In the year 1979, China removed some major trade restrictions, paving the way for increases in the relativity small foreign investment and trade activity. By the late 1980s, total exports reached $41. 1 billion while the imports were $46. 4 billion, and since then, both have increased sharply. China exports crude and refined petroleum and oil, cotton fabric, silk, clothing, rice, pork, frozen shrimp, and tea. Machinery, steel products, automobiles, other metals, synthetics, agricultural chemicals, rubber and wheat form the major imports.
Most of China’s trade is with non-communist countries, including Japan, Hong Kong, Canada, the United States Germany, Taiwan, and Singapore. Development of export-industries proved to be a profitable means of the growth-model. In fact, agrarian reforms replaced the surplus workers of the moral means and they were employed in the export-leased industries. Foreign invested enterprises also created a large amount of job opportunities and it was eliminated that every 100 million Yuan of exports provided 120,000 jobs.
All these factors have played their prominent role in shifting the Communist economy of China to almost a capitalistic one. In other words, while China still claims to be a communist state, a compromise with capitalism has naturally changed its economic pattern. During the 1970s and 1980s China was classified as a part of the ‘third world’ and so she adopted a policy of strengthening her relationships with the U. S. (belonging to the ‘first world’) and other capitalist nations which belongs to ‘second world’ in order to counter the threat posed by Soviet hegemony; since Soviet Union is also regarded as a ‘first world’ nation.
In spite of her desperate attempts to uplift economic and political powers, China is still considered as a nation possessing a huge disparity of income. Hence, one of the major objectives of Chinese Government is to ensure the basic living standards for the citizens by removing the inequalities among the large population. China’s political strategic view has specific dimension. They can be described as follows: Firstly, the U. S. is China’s main competitor for establishing its influence in Asia Pacific.
Secondly, Japan is regarded as the second most powerful competitor to China after U. S. in terms of economic, technical and military aspects. Thirdly, China needs to play a major role in resolving the Korean crisis in order to improve trade relations with both South Korea and North Korea. China also needs to maintain positive diplomatic relationship with Russia. Fourthly, China wants to ensure that some of the northern countries like Vietnam, Thailand, and Cambodia and so on, adopt a policy that will not, by any means, threats her territorial integrity and economic interests.
Finally, China considers India as one of its arch rivals as the latter is one of the fastest growing economics in the world which might become a threat to China’s security and economic interests in the subsequent future. This explains partly China’s involvement to achieve nuclear status. From the economical perspective the United States and Japan are the two most important nations to China, because of their role as trade-partners and sources of capital investments. Thus, today’s China is looking forward to modify its political and strategic policies to accommodate greater economic gains.