Venture Capital in China: Past, Present, and Future

In 1953, was when China became a planned economy, based after the planning system of the Soviet Union. A planned economy is where the government controls everything. Soon after many peasants risked their lives to sign an agreement in 1978, Deng Xiaoping (the CCP leader during the time) who supported them started a nationwide reform. China would then begin to move away from a planned economy and towards a market economy (Lan Li, Chinese economy slides).

Our research over the past five years into the battles between multinationals and local Chinese companies reveals that while market dominance by local champions is far from universal, it’s becoming ever more frequent. In industries as different as beer brewing, mobile-phone manufacturing and laundry-detergent production, Chinese companies — often seeming to appear from nowhere — are forcing multinationals to rethink their strategies and their hopes for explosive growth in the China market.

Most importantly, the reestablishment of the hukou system in the early sixties, preceding the failure of Mao’s Great Leap Forward plan, affected factories in China heavily. By law, every worker in the city needed a hukou, an urban residence permit, in order to be allowed to work. This created a huge conflict between China’s urban and rural citizens as it was made extremely difficult for people from rural areas to get hukous, which of course everyone wanted (Naughton, pg. 118). Because of this, the urban and rural areas started to develop in very different ways since city folk had primary access to food, even during the nationwide famine. However, even with the societal uproar, the Chinese government did not make

When Deng Xiaoping took control of China, he recognized that the economy was collapsing, and that his people were worried about class, especially how quickly the upper-class was growing, so he came up with a plan. He was going to open up the country to foreign investors, “But Deng himself undermined the process with his famous call to let ‘some get rich first’ . In practice this meant giving priority to the coast...Private enterprise

Furthermore, the argument that china experienced opportunity costs as a result of the urban state-centric growth model remains convincing, as the Chinese economy and society deteriorated as a result of these reforms. Some of the greatest costs endured were stagnant household income, increased illiteracy and collapse of health care systems which Huang clearly rests the blame on the1990s reforms. On the other hand, I feel that Huang does not explore the nature of why the Chinese government employed economic reforms that shifted more focus on urban areas. The decentralized policies pursued in the 1980s led to a decrease in government revenue and periods of increased inflation, which caused major urban demonstrations. The reforms of the 1990s were a reaction to consequences of the 1980s, the Chinese government-almost- had to employ these new reforms in order to mitigate demonstrators, solve the economic problems brought on by the 1980s and legitimize its power. Huang place too much focus on the leadership change post-Tiananmen as reason for increased urban shift. In addition, I am not fully convinced after reading Huang’s Capitalism with Chinese characteristics that China could have continued the course of the 1980s, as a country’s economy grows it is expected that there will be a shift

In How Asia Works- Success and Failure in the World’s Most Dynamic Region, Joe Studwell explores the East Asian developmental successes of Japan, Korea, Taiwan, and China by challenging the prominent theory of developmental economics. He uses the same theory to examine the lagging behind of Malaysia, Indonesia, Thailand, and the Philippines. Studwell evaluates the performance of these economies by a recipe he has concocted in which he explains as, “an historical review of east Asian economic development shows that the recipe for success has been as simple as one, two, three: household farming, export-oriented manufacturing, and closely controlled finance that supports these two sectors (Studwell 267).” The first stage requires land reforms

(Garrett, 398) These statistics indicate both that China is seen as an economically stable, profitable country and that China’s economic growth must be noticeably boosted by all that foreign investment. Increasing economic ties between China and other countries has resulted in a few other economic boons for the country. One of these benefits is the ‘hundreds of thousands’ of students that China exports to reap the economic rewards of having an increasing number of educated workers and possible technological innovations learned abroad. (Economy, 12) As appealing as these gains may be, China has had to balance the ups of globalization with the increasing risks brought on by interconnected trade and finance. As its productive capacity and investment opportunities increased, the country became increasingly dependant on exports and foreign run enterprises. In fact, “Nearly 40% of China's gross domestic product (GDP) is based on exports and more than 50% of those exports are generated by foreign companies operating in China.” (Garrett, 398) Garrett furthers that any reversal of China’s current state, either through decreased demand for Chinese exports or through Chinese crackdowns on foreign owned businesses, would devastate the national economy and destabilize the government. China has become dependant on foreign trade and continued investment in Chinese industries. It comes as no surprise that it has adjusted its governmental policies to be more appealing for investors

communist country. Reasonably, Chinese government was seeking to inject a fresh blood in order to reliving paralyzed economies. Hence, capitalists was selected to

China has been an enigma for centuries, always one of the world 's most impressive civilizations and cultures known for "outpacing the rest of the world in the arts and sciences" (CIA, 2000; p. ch), often by differences measured not in months or years, but in centuries. China 's fall to communism and the strict dictatorship of Mao Zedong is well documented, as is the economic experimentation instituted by Deng Xiaoping after Mao 's death in 1978.

The significant economic growth of China happened after China adopted Economic Reform and Opening-up Policy in 1978 (see Appendix 1). Under this policy, China opened its door to the foreign investment and began to emerge in the global market. Its economic system has since then been transformed from socialist economy into a capitalist economy (Szamosszegi and Kyle, 2011, p.4; Paltiel. 2009). If the period between the founding of the People’s Republic of China in 1949 and the Reform in 1978 can be regarded as the first industrialisation process towards heavy industry monitored by central planning, then the

Most of the people believe the U.S. have the best economic system and the most mature market in today’s world, it should be the best market environment for most of the new business or new entrepreneurs; however, in the recent years some Asian markets are also developing rapidly, the most outstanding one is the Chinese market. With the Chinese government’s strong internal motivation and aggressive import and export policy I believe it is truly the best market for new entrepreneurs.

With the economic development of China rapidly increasing, China has gradually attracted the attention from the worldwide publicity, state media reports, and it has become one of the important players in the international sphere. In general, economic development and growth has become one of the most significant factors for China’s successes. Historically, there are three main periods since the founding of China, which are after the establishment of the country, the period of the opening policy, and the contemporary period. Each historical period has significant influences for China’s development. Hence, I will illustrate how China’s economics developed so fast from the past to modern, and how its economics affected Chinese society and its own market.

In this essay we look in-depth on how government strategies and economic policy play a crucial role in the success of High Performance Asian Economies (HPAEs) during 1960 to 1990 (World Bank 1993).There are eight countries within HPAEs: South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, Indonesia and Japan. Its economic development has significantly rise that it was name ‘East Asia Miracle’ (World Bank, 1993).

According to World Bank (2010), China’s gross domestic production (GDP) reached as much as $5,930,529,470,799 in 2010, when for the first time China ranked the second in the world following the United States and surpassed Japan, and has been maintain the ranking in the following years with larger gap outperforming Japan. Moreover, the annual growth rate of China’s GDP has averaged over 9 percent in the last 3 decades (World Bank, 2010), with no other country having achieved such rapid developmental success as China in the world (Turin, 2010). As the country with the largest population in the world, China has lifted 300 million of its citizen out of poverty (Ramo, 2004), attributed to 67% of the total reduction of global poverty during the last 25 years” (People’s Daily, 2008; Turin, 2010), and people living at less than $1 a day has sharply declined to 13.4% in 2003 and further to 8% in 2009 from 60% in 1980 (Sahoo, Dash & Nataraj, 2010). China’s dramatic rapid economic growth has been a miracle of in the world. Reflecting the notion that as one of the most significant emerging economies, the world centre may be shifted to China, thus a couple of research studies have turned their attention from western advanced economies’ to China, trying to find out a model that can perfectly explain such growth, Some scholars contribute China’s success to the incentives of Asian Flying Geese Model. Hemphill & White (2013) claim

Since the Chinese economic reform beginning in 1978, China has witnessed an economic miracle. China’s annual GDP growth has been around 9.5% - 11.5% per year from 1978 to 2013, and GDP per capita has grown to RMB 41,908 in 2013 from RMB 381 in 1978 (National Bureau of Statistics of China, 2014). The opening up of Chinese economy to foreign investments, loosening regulations, and boost of private sectors etc., have all contributed to this economic miracle. China not only supported the growth of the East Asian Tigers, but also was widely considered as the world engine thereafter.