Current usage of Economic Development in People's Republic of China

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 4, Pages: 814-817

J. Environ. Treat. Tech.

ISSN: 2309-1185

Journal weblink: http://www.jett.dormaj.com

Current usage of Economic Development in

People's Republic of China

Rano Isakovna Mardanova *, Gulnaz Nazarova , Atabek Bafayev , Bezhod Hakberdiev ,

Zhasur Karimkulov⁵

Tashkent Financial Institute, Department “Business and entrepreneurship”, Senior lecturer (PhD Germany)

Tashkent Financial Institute, Senior lecturer of “Business and entrepreneurship” department

Tashkent Financial Institute, Doctoral student of “Business and entrepreneurship” department

Tashkent Financial Institute, Doctoral student of “Insurance” department

Tashkent Financial Institute, Pro-rector for Research. PhD in Economics

Received: 24/04/2019

Accepted: 05/10/2019

Published: 30/02/2020

Abstract

The article studies the formation and development of investment activity in People’s Republic of China (PRC). Special focus will

be on the main factors that contributed to the rapid and effective implementation of the investment potential in the country. The subject

of the article is the investment activity of the PRC, including measures related to increasing the attractiveness of the Chinese economy

in attracting and increasing the investment power of the country. The object of the article is to study the formation and development of

investment activity of China. We used theoretical methods of scientific research, for instance - analysis and generalization, which

solved the main tasks: analysis of the current state of investment activity of China; study of ways to attract foreign capital into the

economy of China and its outflow from China; identification of factors that contribute to the rapid and, most importantly, effective

development of investment activity of China. The article analyzes the current state and characteristics of China's investment activity,

examines the main ways and means of attracting foreign capital to the PRC economy and its outflow, and identifies the factors that

contribute to the rapid and, most importantly, effective development of China's investment activity.

Keywords: Efficiency, Demand, Supply, Investments, Direct Investments, Capital Investment, Income, Profit, Gross Domestic

Product, Economic Growth, Market, Market Demand, Joint Stock Company, Free Trade, Stock Markets, Stock Exchange

That is why, upon the initiative of Deng Xiaoping since the

Introduction

late 80's, China began to carry out economic reforms aimed at

the gradual transition of the market economy (5). As a result,

PRC has now reached one of the leading places in the world in

terms of Gross Domestic Product, and the standard of living

has significantly increased. In these circumstances, the

This year is the 40 since the beginning of economic

reform in China, which has radically changed the country's

social and economic development. The inefficient social and

economic policy of Mao Zedong led the country to non-

fulfillment of the main social and economic problems facing

the society. Such an economic policy did not allow catching

up on the level of socio-economic development of the country,

did not ensure the growth of population living standards. In

978, the Gross Domestic Product of the country was only

64.5 billion Yuan, about $58 billion (8). At the current rate,

the national income was only 343 yuan per capita, the average

income of peasants was only 134 yuan per person in a year

Chinese leadership has resolutely embarked on

comprehensive economic reform, which consists in the

transition from a planned to a market economy while

maintaining the main advantages of a planned economy. An

important characteristic feature of the economic reform was

the usage of the production potential that was founded in the

0-70s. These are large enterprises of heavy and military

industry, fuel and energy complex, transport, that is, the

backbone of the public sector, ensuring the viability of China's

economic potential in the years of economic reforms.

We mark that the economic efficiency of the reforms was

influenced by the reduction of the Central government's

influence on business and the increase in the importance of

(

approximately $21 per person) (8). The 82% of the country's

population lived in rural areas. China's foreign trade amounted

to only $20.6 billion, and the main export items were minerals,

agricultural products and consumer goods.

Corresponding author: Rano Isakovna Mardanova, Tashkent Financial Institute, Department “Business and entrepreneurship”, Senior

lecturer (PhD Germany); rmardanova@gmail.com.

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 4, Pages: 814-817

private capital. The government left only the main sectors of

the economy, and entrusted everything else to small

businesses. The Chinese government provided assistance to

the business sector in matters of tax benefits, especially those

who hired people with health problems and the unemployed.

In addition, the government introduced a new provision in the

tax collection system in mid-2013. Nowadays, entrepreneurs

with an income per month of not more than twenty thousand

Yuan, 100% exempt from taxes on both value and profit,

which contributes to significant business assistance. Thus, the

development of entrepreneurship in the country and stimulated

economic growth, and created 70% of patent products, 85% of

innovative technical achievements, 84% of all newly produced

products, more than 57.5% of taxes to the budget and 71, 2%

of exports (8). As a result, the total value of goods and services

produced exceeded more than three trillion in 2007. This

brought China to a leading position in the world, leaving

behind the British, French, Italians and Canadians, North

Korea's GDP reached 2.7 trillion dollars and more than 2,000

dollars per capita.

But immediately after accession to the WTO, the volume of

foreign trade increased from $509, 6 billion in 2001 to about

$4,000 billion in 2017, that is, 8 times more (8). Nowadays,

the developed countries of the world are seriously afraid of

Chinese expansion, and it is no coincidence that the United

States has now launched a trade war with the PRC, the first to

announce an increase in customs duties on various goods from

China.

More than that, China realized that it could not carry out

socio-economic reforms by isolating itself from the outside

world. China began to consider openness to the economy as

the main state development strategy, linked domestic

economic reforms with external openness. The country based

on the principles of openness began to actively unite in the

international community, expanding the scale of external

openness, seeking mutual benefits and mutual winnings,

improving the high efficiency and openness of the economic

system. China removed a number of investment restrictions

and reduced duties on cars, airplanes and ships, that China

exercised and continues to exercise significant lightweight

access to the Chinese market, the service sector, and also

protects the legitimate rights of foreign investors registered in

China, the process of expanding access to foreign investors in

China’s financial markets. Foreign businessmen were allowed

to have a 51% share in shares of joint ventures, restrictions on

investments in Chinese banks and financial companies

managing financial assets would be lifted, and after three years

foreign investors would be allowed to have up to 51% shares

in joint ventures in life insurance and after five years, these

restrictions will be lifted (2). This suggests that China supports

globalization in a period of growing protectionism and

develops free trade through a significant reduction in customs

tariffs on cars and removes import tariffs on other types of

products, encourages technological exchange between

Chinese and foreign enterprises. The high degree of openness

to the foreign market contributes to the rapid emergence of

new industrial products in the consumer market, which remove

high demand (3). The wide and effective use of direct imports

of foreign advanced technology provides an opportunity to

save on initial research and development process, quickly

introduce modern technical advances, which contributes to the

abrupt progress in technology and production structure of the

economy. Acquisition of advanced foreign technology and

technology, as well as the simultaneous use of its own

scientific achievements contributes to the rapid development

of innovative production in the country. Along with this, there

is an increase in the scale of economic efficiency, which means

that as a result of the progress in the technical equipment of

enterprises, small and economically inefficient enterprises are

leaching out of the cement, coal, petrochemical industry into

large concerns. Thus, new types of production, which are

based on new equipment, will develop at a high rate, which

leads to the sustainable development of the national economy.

It is impossible not to reveal the achievements of China in

the field of agriculture. Purposeful agrarian policy of China

contributed to the increase in production in a short time, due to

which it was possible to avoid threats in the field of food. In

addition, a positive trend towards improving the efficiency of

agriculture is associated with significant funding in agrarian

science and technology, the introduction of advanced

Comparing the results of the socio-economic development

of China and India, which were at the same level in the early

80s, China is already 5 times ahead of India (1; 7). Russian

economy 25 years ago was larger in scale than the Chinese,

and now the volume is only 1/7 of the Chinese. The Chinese

model of a gradual transition to a market economy over 40

years led to an average annual GDP growth rate of 9.5% per

year, GDP grew 225 times — 82.7 trillion Yuan in 2017, and

China took 1 place in the world in terms of purchasing power

parity and in 2 place in the world at the exchange rate (8).

Every year, China’s share in global GDP growth is 30%. The

volume of foreign trade amounted to 4 trillion US dollars and

exported ranked 1st in the world. The standard of living of the

population, per capita GDP of China, was about $8,800. These

economic indicators of the socio-economic development of

China testify to the success of China in the world. The world

economy from time to time falls into a strip of various financial

and economic crises, but the Chinese economy is moving

forward. In the monetary and financial sphere, China is

becoming one of the main players on the international financial

market, and the Chinese currency, the Yuan, has entered the

IMF's mandatory reserve basket along with the US dollar, the

euro, the British pound and the Japanese yen. In the socio-

economic sphere, China has also achieved great success. Most

of the population (58%) became urban residents, while in 1978

urbanization was only 18%. The standard of living of the

population in the city and the countryside has noticeably

increased not only in comparison with 1978 (2; 4). For many

years, the Western media talked about difficulties in the

Chinese economy, predicted the collapse of China. In 1982

were scheduled for 2000. indicators of the growth of gross

output of industry and agriculture by 4 times compared with

1980, a significant part of economists and politicians did not

believe these forecasts, but the PRC was able to achieve these

indicators already in 1995 five years ahead of schedule.

Shortly before the PRC's accession to the WTO, many Western

experts were confident that China’s entry into the WTO would

lead to China’s economic collapse, since the poor quality of

Chinese products would not allow it to compete with similar

products not only in the global market, but also in its market.

Journal of Environmental Treatment Techniques

2019, Volume 7, Issue 4, Pages: 814-817

technologies in production. With the increase in production

costs, the price of products increases significantly, which

further affects the population consuming such goods.

Therefore, the attraction of foreign investors in the field of

agriculture, increased the importance of this area, created the

conditions for the development of agrarian science and the

further introduction of innovations in production.

fundamental turn in the foreign economic activity of the PRC

leadership, aimed at cooperation with the countries of Central

and Western Asia, Eastern Europe and Russia located between

China and Western Europe, which once again proves its

openness to the outside world. Previously, China focused on

the development of the eastern regions of the country, on the

economies of developed countries - the USA, Japan, the

Republic of Korea and the ASEAN countries, and now on the

development of the western and internal regions of China, on

developing countries to the west of China and countries with

economies in transition, where there is a huge market, a place

for investment and trade and economic objects. In other words,

with the help of such projects, China is building a path to

Europe (3; 6). The project is aimed at the development of

economically backward regions of China through the creation

in these territories of large infrastructure projects that can

quickly raise the level of social and economic development of

these territories. Every year, more and more China pays

attention to innovation, as an important direction of sustainable

development. All this testifies to the fact that the PRC does not

stop there. Having achieved considerable heights in

development, the country sets itself ever new, more ambitious

tasks. China reaffirmed its commitment to adhere to reform

and openness, as well as expand openness, which has become

and is becoming a significant support for the development of

globalization and free trade. China as the second world

economy has become one of the pillars of the global world.

China promotes liberal trade and broad cooperation

consistently eastern version of globalization. It will continue

to accelerate construction in all aspects of public life, with an

emphasis on improving people's well-being, laying a solid

foundation for people's well-being on the principles of social

harmony. China, as a country that has recently emerged from

the category of developing states, is well aware of many of the

problems of its neighbors, who are also striving to reach a new

level of socio-economic development. The Chinese economy

is a bright, classic example for developing countries. Its

economy proves that the openness of the economy is the key

to the development of the country's welfare. Another important

thing to note is that in an era of globalization, financial crises

occur more often. To be less dependent on global financial

crises, it is necessary to have a positive balance of payments in

foreign trade, which is ensured by creating and expanding the

openness of the economy, which China seeks. In economic

theory, it has long been proven that the openness of the

economy, the expansion of technical innovations is the source

of achieving socio-economic stability. The expedient

application of economic theory, of all the principles of

economics in practice on the part of China serves as a vivid

example for all those countries that are also striving to improve

the welfare of their country.

Currently there is a tendency to increase efficiency in the

field of agricultural production. Due to the increasing

influence of the authorities on the development of agriculture,

the use of new technologies in agricultural production, the

establishment of fixed prices for agricultural products,

financing in agricultural production, the attraction of external

loans for this sphere, increased soil productivity through the

construction of auxiliary facilities, tillage household The

volumes of grain production increased, a fixed price was set

for producers whose level exceeded the average world level.

Also within the framework of the program, 19 new projects

were launched and launched since 2002, which are aimed at

creating and introducing new technologies for growing crops.

The level of effectiveness of scientific advances in this area

has risen to 42% by now versus 20% taken into account at the

end of the 20th century. Political banks have been created - a

specialized structure for exercising control over agricultural

activities. One of these banks pursued a strict agricultural

control policy, namely, in the area of agricultural procurement

(

9). Efficiency in agriculture is proved by another fact, that

with a share of 22% of the world’s population, the country has

only 7% of the world’s arable land. Sown areas in this country

amount to about 130 million hectares, an average of only 100

acres of sown areas per capita in China (9). As part of ongoing

programs to improve the agro-industrial complex

(

agribusiness), 19 projects have been developed and launched

to create and introduce new technologies in the cultivation of

agriculture (9).

China is continuously expanding new areas of market

openness. Rapid development of innovation in the economy

occurs due to the openness of the market, development and

reform. An active socio-economic policy adheres to openness

to international capital and advanced technologies, while

creating a fair, favorable investment environment. In addition,

it expands the channels, improves the quality, and accelerates

the process of attracting technology, thereby directing foreign

investment in the most key sectors and regions. He attaches

great importance to foreign investments, the key to which is

cooperation with foreign countries. It is important to achieve

the main goal as the introduction of high-tech products

throughout China. The development of innovation activities in

China continues to create the necessary conditions for

attracting an increasing number of foreign entrepreneurs who

will find new motivation for successful economic activity in

the country. Various enterprises are attracted attracting foreign

investment, expanding cooperation with foreign partners.

China supports and develops cooperation in the field of

projects that contribute to improving people's welfare. For

example, the implementation of the project “One Belt and One

Road” will provide benefits not only to Chinese enterprises,

but also including the territories along which this route passes,

attracting a large amount of additional investment and creating

new jobs for those living in these territories. This means a

References

1. Gelbars VG. Economy of the People's Republic of China: Course

of lecture. Moscow. 2010.

2. Korsun VA. Chinese world order: The transformation of the

external world. Moscow. 2011.

Karelina EA. Socio-economic development of China: forecast and

prospects. Economics. 2015:97-101.

Osipov VS. Gaps intra-industry and inter-industry relations in the

agri-food sector. West. Moscow State Institute. 2013:74-78