The Rise of the Chinese Economy| Class 12 Political Science Notes

Class 12 Political Science Notes Chapter Chapter 2: Political Science is an important subject in the CBSE Class 12th exam. So students are advised to prepare accordingly to score well in Political Science.

Political Science sometimes seems complex but at the same time, It is easy to score well in Political Science. Our Class 12 Political Science Note is based on the NCERT Pattern and the latest syllabus. Take the help of our chapter-wise CBSE class 12th Political Science notes to ace the CBSE class 12 exam.

The Rise of the Chinese Economy

China has one of the fastest economies in the world. China’s economy has been booming since 1978 and it’s predicted to become the world’s largest economy by 2040.

China’s economic success has made it a key player in East Asia’s growth, giving it a lot of influence in the region.

After the communist revolution in 1949, China followed a Soviet-style model for its economy. It focused on heavy industries and limited trade with the capitalist world.

History and Background

In 1949, following Mao Zedong’s communist revolution, China opted to adopt the Soviet Model for its economic development, severing ties with capitalism. The goal was to establish a state-owned heavy industry sector using agricultural savings. However, due to a shortage of foreign exchange, China resorted to importing domestic goods.

Despite having better education and healthcare compared to many developing countries, and ensuring employment and social security for all citizens, the economy grew at a moderate pace, but not fast enough. Agricultural output was insufficient to generate an industrial surplus, resulting in stagnant industrial production and low per capita income.

The Chinese leadership ended China’s political and economic isolation by establishing diplomatic relations with the US in 1972. However, China took a unique approach to establishing a market economy by gradually opening up its economy and exporting capital and technology to enhance productivity.

Rather than opting for “shock therapy,” China implemented gradual economic reforms. It began by privatizing agriculture in 1982 and later moved towards industrial privatization in 1998. Special Economic Zones (SEZs) were established to attract foreign investors by providing exemptions from trade barriers.

The state played a important role in developing the market economy. New economic policies helped break China’s economic stagnation. Privatization of agriculture led to increased agricultural output and rural income.

Rural personal savings contributed to the rapid growth of the Chinese economy, leading to a significant expansion of rural industry. The establishment of SEZs and new trade laws resulted in a substantial increase in international trade. China surpassed the US as the most important destination for Foreign Direct Investment (FDI).

With large foreign exchange reserves, China began investing heavily abroad. Its accession to the WTO in 2001 marked a significant milestone in its globalization efforts.

How has this Development Affected China Internally?

Despite the economic reforms, not everyone in China has benefited. Unemployment has surged, affecting nearly 100 million people. Women face poor employment conditions reminiscent of 18th and 19th century Europe.

There has been a notable increase in environmental degradation and corruption, exacerbating economic disparities between rural, urban, and inland provinces.

China has emerged as a significant regional and global economic powerhouse. Its economic integration and interdependencies have bestowed considerable influence over its trading partners.

Economic considerations have helped mitigate tensions with countries like Japan, the US, ASEAN, and Russia. Following the 1997 financial crisis, China’s support for ASEAN economies has alleviated concerns surrounding its rise.

China is increasingly recognized as a global player advocating for developing economies. Its outward-looking investment and aid policies in regions like Latin America and Africa further solidify its status.

The Rise of the Chinese Economy- FAQs

What is the significance of China’s economy in the global context?

China has one of the strongest economies globally and is the fastest-growing economy since 1978. It is projected to surpass the US as the world’s largest economy by 2040.

What economic model did China adopt in 1949?

After Mao Zedong’s communist revolution, China chose to develop its economy based on the Soviet model, severing ties with capitalism.

How did China transition towards a market economy?

China gradually opened its economy and implemented reforms to boost productivity. It prioritized privatisation, particularly in agriculture and industry, and established Special Economic Zones (SEZs) to attract foreign investment.

What role did the state play in China’s economic development?

The state played a central role in setting up a market economy in China, particularly in establishing policies and infrastructure to support economic growth.

What were some of the challenges faced by China during its economic reforms?

Despite economic growth, challenges such as rising unemployment, poor working conditions, environmental degradation, and economic disparities persisted, especially between rural and urban areas.

How has China’s economic rise impacted its global relations?

China’s economic integration and influence have transformed its global relations, easing tensions with trading partners and positioning it as a key player in advocating for developing economies.