Discuss the Commonalities and Differences Between Communist Economy Essay

Discuss the Commonalities and Differences Between Communist Economy 1976 and Social Market Economy after 1976 in China - Essay Example Under this system government approved the private ownership of means of production. As means of production are handled by the government before 1976, there was always the intervention of government in whatever is done. But with the emergence of socialist market economy, the role of the government shrank into making laws. Under communist economy people were reluctant to work as they were deprived of owning property and the developments that the country received under such a system was too little. When people were allowed to have private property, the made the best use of the resources and this period witnessed the thriving of the Chinese economy. In the communist economy, it was the government that controlled the market mechanism but under social market economy the market forces such as supply and demand took the place of government. When the communist economy tried to bring everything under the control of the government without any consideration to its citizen, the social market econ omy envisages at the formation of a welfare state in which individuals are given priority in all the aspects. Communist economy was upheld only by a simple majority of China, but social market economy has been welcomed by all category of the society. 3. How did China become an industrialised economy with in the last four decades? An economy becomes industrialised only when an agrarian society turns into industrial society with social change and economic development. The endeavour China made to reach its destination of a developed economy has been in its culmination for the last couple of decades. In all the areas, the performance of China was spectacular. The first and foremost factor that can be attributed to the success of China in this arena is the rapid expansion of international trade. International trade was accelerated as a result of gradual and incremental trade reforms and opening up of the economy for international trade. As a result, the Foreign Direct Investment increase d. China being a vast country had resources in abundant. Moreover the labour also was cheaper as compared to other developing countries. The decision to use the resources properly helped the development of domestic industries. China’s factory outputs vary from cotton textiles to railway locomotives, jet planes and computers. As the largest economy in terms of population, there is greater demand for commodities in China. In one hand it is a good market for foreign companies and on the other a good supplier as well. The amount china spend in the area of education is huge. The well educated works being more productive contribute towards the industrialisation of the country. The amount China invests for research and development is really note worthy. Advanced technologies help it to produce commodities cost efficiently. Chinese products has got good demand world wide as these products are competent to the products of other industrialised countries. However, it is the decision of the government to open up the economy for foreign countries that helped the fast industrialization. 4. Write a critical note on China’s SOE reforms. The state owned enterprises in China were capable of producing a wide range of consumer goods domestically. The commodities so produced were capable of satisfying the local demands sufficiently. However it had more drawbacks than these advantages. The persons who were at the top of the party were the ones who controlled these enterprises. Since most of them were