The question is not new, even, to be honest, quite old, but for some people who are not particularly interested in economics, it may arise. What are the reasons for success Chinese economy and why such development has not been achieved in Russia?
[Article updated 26/6/2019]
Foreword
This article, like all articles on the Econ Dude blog, is not a scientific source of truth. This is just my personal and subjective opinion, my analytics and my view on this issue. Of course, I try to collect sources, analyze the issue in detail and write in an interesting way, but such a huge topic as the reasons for China's success in terms of economy, in fact, cannot be covered in one article.They will laugh.
With the introduction finished, we proceed to the analysis.
Only the lazy did not talk about the economic miracle of China
On this moment China's GDP is about $ 11 trillion, China is the second largest economy in the world, after the United States.
China's economic growth
Third, if we consider the European Union as an integral economy, but I would not think so, since its integrity after Britain left slightly violated and can be also violated by other countries at any time.China's GDP growth has been 8-11% and more for many years, starting to slow down only slightly only in last years... Although, curiously, the United States is growing faster than China. I wrote about this separately:
It should be noted that GDP per capita is not the same thing as income of the population. GDP is, as it were, the value of all assets per person, although this is a rather rough definition, but it makes no sense for us to go deeper now.
The fact of China's success in recent decades is rarely controversial, and this despite the fact that China is formally a communist - socialist country. This is what breaks many patterns, and that is why I would like to compare China with Russia and the USSR a little. How did China manage to achieve such success and what was the reason for the rapid growth of the Chinese economy?
The success story of the Chinese economy
History is informative for Russians as well, since we have an example of "how it could be" hanging right next to us. After Mao's death in 1978, reforms began in China - Reform and openness policy... And the key person in this whole story was Deng Xiaoping, about which everyone must know, how - how he almost single-handedly brought China out of oblivion and turned it into a world leader.Often history is not changed by the people as a whole, but by very specific personalities.
can move mountains and change history, both for the better and for the worse. Therefore, it is not always fair to blame something on lazy people or some general processes that no one can control. The right person at the right time and in the right place can change history. Remember Jobs, Geyts, Trump, Elon Musk, Napoleon, Peter the Great and many others.
Good. Let's take a look at the specific steps and actions that have made China successful. There weren't many steps.
Reducing the role of the state in the economy
The first steps were to reduce the role of government in the economy. Paradoxical for a supposedly communist / socialist country. This is not the first example when one can see a direct correlation between economic growth and the general prosperity of the people after the decrease in the role of the state in the economy.The correlation is straightforward, even at the tax level.
... This also includes all licenses, barriers to business, checks, registrations and everything else. Any bureaucracy harms the economy, and the scrapping of this bureaucracy gives the economy a second wind. Officials add nothing to GDP.
As soon as you cut taxes, like the same Trump recently, you leave more money business and people, and this is a plus for the country.
Joint ventures with foreigners
The state began to encourage the amalgamation of local firms with foreign ones. The main problem of China then was the backwardness of technology and knowledge from the West; two things were urgently needed: money and technology.I worked there for a while.
This Russian economic game simulates everything quite well. Why, in the game, did the political players figure out to make a special place for profitable production - Uzbekistan, by zeroing duties and reducing taxes to 5%? And all the players guessed it was there to transfer all game production, but in reality, it turns out that someone does not understand what harm can be from high duties and taxes.
At least one region should be in a privileged country, where taxes and duties are low. There are a lot of such special economic zones in China, and no one will suddenly cancel this policy tomorrow, so they are investing there.
Low tax example from the game
Why, even in the game, ordinary people successfully modeled and use it, sometimes even young people understand everything perfectly.
Well, in reality, someone does not understand this.
What other restrictions are there on economic activity:
- Taxes;
- Duties;
- Licensing;
- Checks;
- Problematic labor legislation;
- Crime;
- Lack of stability and predictability in government.
There is no need to talk about predictability, stability and predictability of Russia. Russia is famous in the international arena for the fact that absolutely no one in the world is able to calculate the next step of the Russian Federation.
Maybe this is good for something, but not for the economy.
Crime is also a very serious factor.
If there is even the slightest crime, even the smallest, then this is a huge negative factor for investment in the country. And what can we say about countries where crime is at the highest level. Where it is sometimes difficult to distinguish an official from a bandit and it is not clear who came to you to demand something from you.
Respect for private property also goes into this point. In China, corruption is the death penalty, but in Russia what is done with corrupt officials?
Are you getting promoted?
There are also curious things, for example. It is known that excess and heavy alcohol consumption increases crime, reduces the ability to work, etc. In China, of course, they also thump, but by Russian standards, this is a childish level. True, there are exceptions, for example they drink a lot in South Korea, even more Russians, you will be surprised, but with the economy everything is ok.
Export orientation
I wrote about this here:Disadvantages of the Chinese system
The world is lucky to have a people like the Chinese.A billion people with zero ambitions and minimal ambitions, who do not know how and do not like to fight. The Chinese have been bullied for centuries. The British scoffed in the Opium Wars, the Mongols scoffed, the Japanese scoffed. The Russians scoffed many times, biting off together with all the pieces at the time Russian Empire... For centuries, China was pressed, used and squeezed out, the people there are so downtrodden and submissive, but you can do anything with it, which was done.
But the people are now waking up a national consciousness that has never died to the end. For all their downtroddenness and outward modesty, such a population and such a sample, of course, also gives rise to geniuses.
Appetites are growing.
China has long since changed and the West is penetrating deeper and deeper.
Now many Chinese women in cities are so proud and arrogant that even Russians and Ukrainians can learn from them what TP should be. The people fell in love with money very much and there was no communism left there.
However, all these tons of productions have greatly, very much dirtied the atmosphere, this is a huge and real problem.
In cities, there is already stupidly nothing to breathe, everyone is wearing masks.
Due to the one-child policy, the population is aging, the world money is also not endless, and they have all been in China for a long time. World investors are the smartest-ass people in the world, they are very nervous and they have a lot of paranoia.
If something suddenly happens tomorrow, for example, the Chinese government throws out something (chances, of course, are small, since they do not like multi-moves and forks), or for example, there are data on a slowdown in growth, then trillions of dollars will be taken out of China in the same way as they were carried there, in a matter of days. Capitalists are not interested in anything other than the rate of capital growth in this world.
Now there is an increase of 7% and they have long begun to slowly pour the loot into other places. You can increasingly notice clothes and food made in Vietnam, Turkey and even Russia. The space has become smaller, all the fat pieces have already been sawed off and eaten, the competition is growing. And if 10-30 years ago foreign markets were ready to digest billions of tons of cheap and bad Chinese products, foreign markets are also not bottomless, they are filling, and people increasingly prefer quality and many are ready to pay for quality. And "made in China" is, as you know, a guarantee of price, but not quality.
Quality assurance is Germany, whose economy has been doing great for many years.
Look at the dollar-yuan exchange rate over 10 years.
Now it is $ 1 = 6.8 yuan. See what's going on?
China strengthened its currency until 2013, now weakening is taking place again. This is a signal that there may be problems with exports, although the trade balance does not seem to be falling. The exchange rate strongly affects the balance of trade, and the fact that China loves to play with the exchange rate, the same Trump said a billion times. (China, china, china)
If export earnings fall, you are simply weakening the currency. What Russia did after the fall in oil prices to balance the budget.
Since 2013, the yuan has been weakening, which is a bad sign for the economy. They are trying to rebuild it to meet domestic demand and in many ways they succeed, but even now, and indeed never, the Chinese could not be real leaders in terms of innovation, the United States always beat them as the core of political and economic system USA is better. China can catch up and be one step behind the leader, but as you know, the Chinese adapt and copy, they rarely come up with something really new, although of course they come up with something and much more than many other countries, but from the United States in this regard they are falling behind. Although after writing this I wanted to check my considerations.
Verification refuted me:
2014, China is the first in the number of scientific patent applications.
However, under grants (approval of the application, as I understand it) USA is in the lead. As you can see in the top, Japan and South Korea are countries with a fate similar to China and a leap in development, but Korea and Japan are still very different from China.
Seoul is targeted by thousands of cannons from the north with nuclear warheads.
They don't have much fun there.
But in Japan, everything is pretty normal, except for the gigantic state. debt and the risk of flooding and destruction from the next volcanic eruption, plate shift or whatever, but overall, Japan and Korea are way better than China.
Russia, even with relatively weak support for science, manages to keep the sixth place in the world in terms of the number of patents, which inspires some hope, but of course it's sad, since one can only imagine what would have happened in Russia if at least sometime in history, the state gave normal money for science, or if there was a large private business in the Russian Federation that would support this science.
Science in China, by the way, is strongly supported by business.
Another problem for China is the entire core of their ideology and government. Yes, most of the Chinese do not give a shit about the authorities, they are used to living in a gigantic system of suppression, they have much more experience than the Russians and they are not fools, but the government has complete control and can stumble and lose everything at one point. China has wise leadership at the highest level, China is ruled by geniuses after Mao, that is why they managed to outplay everyone, however, everyone makes mistakes.
Some ships in some wrong seas?
Any desires to return some islands?
Tibet? Chinese firewall? Executions?
And a bunch of all sorts of horrors that are being done in China have been pushing smart Chinese out of the country for decades. The scale of the brain drain is colossal, and Russia never dreamed of it. All smart Chinese have been in the USA, Europe and Canada for a long time.
They will never come back, and they take away not only their brains, but usually - a lot of money. Half of Canada is snapped up by the Chinese, half of the west coast of the United States belongs to the Chinese. But do not think that this is buying Chinese capital in the sense of the Chinese government.
It is bought by some Chinese people who raised it in China, this loot has nothing to do with China. It's like buying an apartment in Miami, you know by whom. The same situation occurs in China, but only hundreds of times larger.
Russia with its (and mine, on this blog) the constant shyzoy about the thieves' and bad government - these are flowers, compared to China. There, too, everything rots from the inside and a lot is rotten. I have friends Russians who went to China to study, we talked. What nasty things he told you not to tell you. The man returned home.
If you think that there is censorship in Russia, write something bad about their power on the Chinese Internet and we'll see how quickly you start having problems. The problems are quiet, and then no media will cry for you, just no one will know about it. I would never have been able to create such a blog in China and write such things, for example, speaking about the shortcomings of China in comparison with the United States.
Although it is still possible to raise a lot of money in China, although not everything is straight there, it's awful, and the country is still actively developing and is already a world leader, there are also problems there. I just wrote the last paragraph for this, so that you don’t think that China is ideal. Do not interfere with the heap of the economy and power of China, and ordinary Chinese. You do not interfere in a bunch, for example, the authorities of Russia / Ukraine and the people of these countries?
If, for example, the Russian authorities have 80 yards of dollars in US Treasury bonds (UPD, not anymore, Hurrah!) and a country like rich, to common people it doesn't apply in any way. For the average Chinese, China is far from ideal. They are still poor, the competition is huge, there is work, but normal work few. Although incomes are growing, in Russia people still have more money and assets, each individual person.
The censorship there is cruel, the living conditions are filthy, the ecology is bad.
I would look at those who greatly admire China, how they would like to be born Chinese in our time. Oh, I would look.
All the loot in China is the loot of foreigners who can withdraw it at any time, or the loot of the government, which is not so kind and fluffy. And in general, if they do not do something about the environment in urgent order, there will be stupid nothing to breathe.
If someone thinks that the United States will start a war with China, then it is obvious that such a war is not beneficial to anyone. Their economies are highly dependent on each other, and even considering how Trump scolded China, they will not let him stupidly fight him, and he himself does strange things, leaving various partnerships that were previously created clearly against China.
The United States is addicted to cheap Chinese goods as if on drugs, and without the United States, China will very quickly come to a complete end.
All alleged US / China frictions are fanned by the media, this is a political game.
By the way, it is rather curious that sanctions against the Russian Federation are also a political game for the United States, and there was a way to protect oneself from this. How?
It was necessary to launch as much American dough into the country as possible, this is a clear guarantee that the United States will then not be able to do anything with the Russian Federation in economic terms, if it were 5-10% of the trade turnover.
That is, guaranteed protection from the United States is the presence of large quantities of American money in the country. American money has the most powerful (most powerful) in the lobby world and that would be the perfect defense. This is exactly what China did, tying itself to the United States with thin threads, it may not even be realized.
That's all. The article is already a little out of date and I'm in for some mistakes. I returned to this article several times later and improved it, but did not completely rewrite it. Anyway, I'm glad if you were interested in reading.
You can find my other articles on economics in a special section.
According to the latest official information, the growth of the Chinese economy has developed so rapidly that today everyone unanimously declares with confidence that it is China's economy that has become the second in the whole world! The question of what explains the rapid growth of the Chinese economy is not too difficult in modern world, because, after analyzing the market prices and purchasing power parity of this country, it immediately becomes clear that China must necessarily lead in the world ranking.
How to explain the rapid growth of the Chinese economy?
The world's economic development experts argue that China's economic growth rate has increased so much in recent times that even exchange rates, especially the dollar, cannot in any way affect the fluctuation of the Chinese economy in leading positions in the world. Some of them are of the opinion that in the near future this country will even be able to surpass Japan's GDP in terms of financial indicators.
Most recently, the director of the State currency board China announced that it was his country that became the owner of the second economy in the world. But, despite this, he noted that the Chinese government is ready for the fact that subsequently the economic situation in the country grows, China will have to experience some slowdown in such a rapid development trend. national economy.
But, despite the speech of the representative of the Chinese government, it is still impossible to say with certainty and confidence that the country will be able to overtake the economy of Japan, which has been holding a leading position in the world for four decades. Today, it is becoming clear that purchasing power parity is a clear indicator that China, in fact, ranks second among the world's economies. The reason why it has not yet been officially said that this particular country is one of the leaders of the world economy is that at the moment economic indicators China is constantly underreported.
Rapid growth: China's economy
To date, in the comparative table, China's GDP has almost reached Japan's GDP in terms of its indicators: $ 4.900 trillion versus $ 5.080 trillion. As for the Chinese economists, they say that in order for their country to finally be able to bypass Japan in the world ranking of economic development, it is necessary to remove the main obstacle, which is the yen.
According to the United Nations report, it is China, together with India, that will become the territories in which the most rapid economic growth will take place. In addition, one should pay attention to the fact that the main reason for the rapid growth of the Chinese economy is that the country's government itself has set such a promising goal for itself. Without a doubt, Chinese officials have made clear progress towards their ultimate goal: as early as 2010, the Chinese economy became the third largest in the world. Today, the trend towards rapid and rapid growth is increasing more and more.
Thus, economic growth was 8%, as planned by the Chinese government. In the same time, industrial production increased by as much as 11%, as previously promised by the Minister of Industry of China.
Despite the fact that during constantly developing economy China was acutely threatened by a recession; it managed, nevertheless, to maintain a fairly impressive rate of growth of the national economy. The government began to improve the state of the economy with the adoption of a special stimulus package and a sharp increase in bank lending.
Today, the rapid growth of the Chinese economy is planned due to an increase in foreign trade turnover, in particular, exports by 15%. Due to the rapid economic growth of China in other countries, the unemployment rate is increasing. In addition, for the same reason, other countries are losing their influence on the world market. That is why financial experts predict that in the near future:
- China faces numerous trade disputes;
- the Chinese government will have to answer for violations of free trade rules;
- China's government will have to tackle economic overheating, which consists of rapid money inflows and growth.
Free trade violations are already known today: Beijing is forcing its American counterparts to sell books, films and music exclusively in cooperation with Chinese state-owned companies.
But, despite some problems that appear in the Chinese economy, the government is successfully managing to deal with them. So, already recently, the expected results have been observed, that is, consumers are increasing their costs. According to official information, the Chinese government plans to increase consumption by its population in order to turn the national economy into an engine of economic growth.
In addition, it should be noted that the government is currently implementing a large-scale program for state incentives GDP growth... In this way, it prepares the entire economy of the country for very strict structural reforms that can liberate the economy from the role of export and investment in it. In the future, it is planned to increase investments abroad in order to ensure sufficient profitability of their foreign exchange reserves. In addition, the government is determined to acquire securities, which are owned by commodity companies.
Video: China's GDP Growth
China, which has earned the reputation of being the cheapest assembly site in the world, this year has become a major provider of disturbing news. The fall stock market, the devaluation of the yuan, the slowdown in economic growth - these are the very Chinese news that have been shaking neighboring Asian countries since the beginning of summer, and with them Europe, the United States, and, obviously, Russia. Investors from all over the world in a panic withdrew money from risky assets. Oil, metals, almost all commodities fell in price.
The Chinese economy has grown to such an extent that the economic weather around the world depends on its condition. The devaluation of the Chinese yuan by 3-5% shook the world more than the Kazakh tenge depreciated by 30%. The fall of the Chinese national currency should have spurred the growth of exports, and then the GDP of China.
At the end of the third quarter, the growth rate of the PRC economy slowed down to 6.9%, the index business activity falls for the third month in a row, the October figure was 49.8 points. Compared to Russia's GDP, which is expected to contract by 3.9% towards the end of the year, this growth is impressive. However, given the previous golden years, this is clearly a crisis.
China has been going to such an influence on the world economy for almost 40 years, having managed to build that very socialism with a human face. The then head of the Chinese Communist Party, Deng Xiaoping, explained the beginning of capitalist reforms in fact with a phrase that became an aphorism: "It doesn't matter what color the cat is, the main thing is that it catches mice." And he balanced it with Marx: "Practice is the main criterion of truth."
Cat and mouse with socialism
Practice quickly showed that painting the cat was the right decision. If in 1980 the real GDP of the PRC was $ 338.16 billion, then in 1990 it was $ 824.12 billion, in 2000 - $ 2223.69 billion, in 2010 - $ 6039.66 billion (in 2010 prices). China made a timely bet on self-sufficiency, self-financing and abandonment of centralized price regulation, and the result was already visible in the early years.
"I remember the first impressions of both the Chinese themselves and the Russians who were in the PRC in those years: after people discovered that literally on the street it was possible to buy goods that they could not dream of until recently, to convince them of the correct path of the party was not required, "- recalls the associate professor of the department economic theory NRU HSE St. Petersburg Alexander Butukhanov.
China's GDP growth
* in 2010 prices.
On the verge of reform, China was literally on the verge of starvation. But as soon as the peasants were left to their own devices, they were allowed to work outside the collective setting, it turned out that they could feed not only themselves, but also the rest of the country's inhabitants. The agrarian sector, firstly, has solved the food problem, and secondly, it has become a kind of testing ground for market reforms, the economist notes. The problem of hunger was finally solved by the end of the 1980s.
Since the 1990s, the country has been ranked first in the world in the production of cereals, meat, cotton, rape seeds, fruits, leaf tobacco, the second in the production of tea, and is one of the ten world leaders in the production of wool, soybeans, sugar cane and jute. Using less than 9% of the world's arable land, the PRC today provides food for almost one fifth of the world's population, the largest Chinese news agency Xinhua reported at the end of 2011.
Money flowed home
The next most important milestone in the country's rise from its knees was the policy of "openness to the outside world", when investments from outside began to flow into the country. An important point, which distinguishes this stage, among other things, from Russia, is that a significant part of the cash infusions was provided by ethnic Chinese from other countries, mainly from Southeast Asia.
From 1979 to 2009, foreign investments amounted to $ 1,140 billion, of which $ 940 billion fell on direct investment. About 70% of foreign money was transferred by huaqiao (Chinese from other countries), says Alexander Butukhanov. In 1991-1995 alone, investments from Hong Kong to China amounted to $ 18 billion a year, from Taiwan - $ 16 billion. Outside mainland China and Taiwan (mainly in Malaysia, Singapore, Thailand, Indonesia and the Philippines) there are about 50 million Chinese.
Overseas Chinese and the businesses they employ or own have enormous economic potential. In early 1993, Geert Hofstede estimated it at $ 200-300 billion - higher than Australia's GDP. Since then, this figure has only increased. The largest companies, headed by foreign Chinese, are at the same time one of the most prominent foreign investors in China, according to the HSE.
Russia's GDP growth
* in 2008 prices.
Another important resource with which Russia was unlucky in the early 1990s was management technology, which went to China in parallel with money. This point is often not taken into account, focusing on the construction of factories, while the adjustment of processes between people plays a very important role, say at the HSE.
The question of combining capitalism with communist ideology is, of course, not an easy one. In fact, there are not many countries left in the world where the leading role of the Communist Party is officially declared - in Southeast Asia it is China and Vietnam. So far we do not see the prerequisites for a multi-party system. If we take the public sector, where there are many enterprises, then the role of the state is very great, in private business, of course, it is not. At the same time, foreign companies operating in China are calm about the presence of party cells at enterprises in enterprises. Party structures are even approached for discipline or productivity gains. The main argument for "it works". Interestingly, in the spring, the first bankruptcy of a state-owned company happened in China - the manufacturer of electric power equipment Baoding Tianwei defaulted on bonds worth $ 13.8 million. It is controlled by the Chinese likeness of our Rostec. That is, the Communist Party is already making it clear that it will not save just anyone, even in strategic sectors.
Alexander Butukhanov
Associate Professor, Department of Economic Theory, St. Petersburg School of Economics and Management, National Research University Higher School of Economics
Duty free growth
Another strong point of China is free economic zones. Initially, the country's authorities clearly outlined where this is possible - port territories and coastal cities, which in a matter of years have become ultra-modern, high-tech enterprises have opened in them. Shenzhen, from whose southern houses Hong Kong is visible, formally became a city just in 1979, and in 1980 - the first special in the PRC economic zone... Then 30 thousand people lived in it.
Since then, the population has grown 350 times, the 2010 census estimated the population at more than 10 million. Its contribution to China's GDP is estimated at 2.5%, 16.8% of electronics exported from China is in Shenzhen. Here, by the way, most of the Apple products are produced, in particular the iPhone and iPad. Russian officials and top managers, justifying the need to create such zones in Russia, cite Shenzhen as an example.
Today's steps in the Russian Far East are vaguely reminiscent of the Chinese approach. It is noteworthy that the first interested parties are precisely the Chinese: the north of China borders on Russia. Border cities are largely developing thanks to the proximity to China. One of the striking examples is Blagoveshchensk, bordering on the Amur River with Heihe (Heilongjiang Province).
Heihe, which officially became a city in 1980, has literally grown before our eyes, turning from a village to a trading city with high-rise buildings... Residents of the neighboring city like to photograph their illumination. However, beauty is concentrated mainly on the coast. Show-off is quite an element of the everyday culture of China.
Until the ruble fell, the Russians went to Heihe to spend their weekends. Shopping, bowling, cheap restaurants and, as a bonus, an opportunity to earn money by taking on duty-free import of consumer goods at the border. Since 1999, a visa-free entry has been in effect here - the entry point to China is available to a resident of any region of the Russian Federation with a foreign passport. In summer they travel to China by ferry, in winter - trucks and tourist buses travel on ice, in the last few years - on a pontoon ferry.
Circles on the water
Since 1995, there has been talk of building a bridge across the Amur River - the first agreement was signed by Viktor Chernomyrdin, who was then the head of the government. Protocol events, at which "everything was finally decided and the dates were set," take place almost every year, but there is no bridge yet. Another agreement was signed a month ago, and they promise to start next year. Joint private investments should amount to about 16 billion rubles.
After the fall of the ruble, Chinese tourists began to come to Blagoveshchensk more often than Russians to the neighboring coast. Jewelry, canned food and sweets went there in the trucks of merchants and in the bags of ordinary Chinese - the region began to feed China for the first time, and not vice versa, local media wrote in February. A significant part of investments in the region comes from China and Cyprus. Mainly in favor of mining. The main assets of the second largest gold producer in the Russian Federation, GK Petropavlovsk, are concentrated here.
The foreign trade turnover of the Amur Region in 2014 amounted to $ 622.8 million, of which exports amounted to $ 280.4 million, imports - $ 342.4 million, summed up in the local office of the Ministry of Foreign Affairs. It is easy to guess that the main contractor is the PRC, which accounts for 75.1% of exports and 95% of imports. The main export goods are mineral products, timber and pulp and paper products, machinery, and imported goods are also machinery and equipment, foodstuffs, agricultural raw materials.
The actual Chinese territories bordering Russia and Central Asia are another driver of China's extremely uneven economic growth, economists say. For example, the Xinjiang Uygur Autonomous Region, which stands on the border with Kazakhstan, demonstrates high rates, and Inner Mongolia is also growing, the bowels of which contain 120 types of minerals. The effect of diverging circles from rapidly developing territories has reached deep regions quite recently, says Alexander Butukhanov.
Largest consumer and supplier
If we talk about the global impact of China on Russia, then we are talking primarily about the supply of raw materials from our side. In 2013, for example, China imported 281.2 million tons of crude oil worth $ 219.63 billion (hereinafter, prices are presented mainly for 2013, since it was more stable than the crisis of 2014). However, in the first place was still electrical equipment, world supplies of which were estimated at $ 356.04 billion, in the third place - supplies of communication equipment for $ 74.04 billion.
Mineral fuels and crude oil account for over 60% of Russian exports to China. The export of the latter in 2013 amounted to 24.4 million tons, or $ 19.7 billion, - a tenth of all supplies. In 2014, volumes increased by almost a third, to 33.1 million tons, however, due to the fall in prices, the cash exhaust grew only to $ 25.8 billion. thinner.
By the way, in May RF Saudi Arabia in terms of oil production. Cooperation with China in the oil sector is so close that Russian oilmen open bank accounts in yuan. In October, Bashneft held four tenders to open accounts in the currencies of China and Hong Kong.
As a result, two 20-year accounts in the ruble equivalent of 1.812 billion are opened in the branches of Sberbank and Gazprombank, writes RBC. The company opens two more accounts for 906.2 billion rubles in Rosbank, one of them in Hong Kong dollars. Earlier such accounts were opened by Gazprom, Gazprom Neft and Rosneft.
Thus, companies, firstly, are insured against sanctions, and secondly, presumably, they are preparing for the fact that the yuan is one of the reserve world currencies. This will not happen until October 2016, but the IMF has already given a positive opinion.
Russian-Chinese trade and economic ties are still on the rise, said Pyotr Fradkov, Director General of the Russian Export Center. And it's not just about raw materials. According to the FCS for the first half of 2015, the export of non-primary goods to China amounted to $ 5.6 billion, he cites statistics.
However, there is still some imbalance - imports from China account for more than exports to it. "The Center constantly monitors the situation in order to hear exporters in time and convey their expectations to the state: the correction of such imbalances should be regulated by state level", - says the expert. And Russia has something to offer. There is an inexhaustible potential for the export of wood products - today it accounts for about 10% of total exports to China, fish products - only about 5%, chemical - about 3%, cellulose, fertilizers, machinery and power equipment.
Sources: Rosstat, Central Bank.
Russian industrial production also largely depends on China. Mechanical engineering products are a key export item to the Russian Federation. From 2002 to 2014, the share of these goods increased from 15.8 to 36.1%. The share of such goods as textile and knitted clothing, as well as footwear, during the same period fell from about 13 to 6%, however, it should be understood that total exports to the Russian Federation over these years increased from 3.5 to 53.7%.
But China's most significant global export is finished industrial products, which account for 95% of all exports. China is still the largest assembly site. Of course, Malaysia, Thailand, the Philippines and Vietnam, where the labor force is cheaper, are already beginning to claim the role of the PRC in this regard. But it is too early to put them next to China, where the population exceeds 1 billion people and the infrastructure works like clockwork.
Money is running out of space
Sooner or later, China will be displaced from the position of the main factory in the world, on the other hand, China itself begins to invest outside. One of the most recent examples is oil fields in Iran, which will be lifted by the end of the year. China is actively investing in Africa: from 2003 to 2013, investment in African infrastructure grew from $ 500 million to $ 20 billion.
In the same 2013, oil imports from Africa provided almost a quarter of China's needs. The continent's positions are close to Russia's: oil accounted for 64% of Chinese imports from Africa. Explored reserves are constantly growing here.
Large and small businesses about Chinese partners:
Our Chinese partners are very fond of gifts; we try not to go to negotiations empty-handed. But one day a real opportunity came up. We prepared good gifts for representatives of a large company, but they, embarrassed, refused. It turned out that shortly before this, the management had forbidden them to accept any gifts from partners, except for branded souvenirs. But there are gifts with which you can never go wrong - the Chinese especially value souvenirs with a national flavor. For the Chinese in general, traditions and culture are very important. For example, negotiate in Chinese. We have employees who are fluent in it. The notorious small talk is appreciated in the East more than in Europe, and the quick transition to business is perceived as excessive assertiveness. It is not difficult to show elementary courtesy: you can ask how the flight went, how the colleagues with whom you have already met are doing, how your partner is doing in a hobby. There are textbook rules: send and receive a business card with only two hands, be sure to offer tea. For the Chinese, drinking tea is a sacred ritual, a kind of wish of good health and well-being to a business partner.
Anna Kuzmina
Deputy Commercial Director of Yandex.Money
It is difficult for small business to interact with China, we do not deny, but now it is one of the most promising markets that is definitely worth working with. We have been cooperating with Chinese partners for over 5 years. Now more than 40% of all our suppliers are Chinese companies. And this is no coincidence. The so-called B-brands from China are increasingly occupying their niche in the market, the client increasingly does not want to overpay for a well-known name, because the price difference is huge, and the quality of the gadgets is almost the same. In addition, it is simply profitable for online retailers to trade with China. When we started purchasing filters and tripods from China, our margins for these groups increased by 40%. The Chinese are a calm philosophical nation with which it is extremely difficult to demand anything. If the product is cheap and bulky, it is better to include the defect in the cost price and simply dispose of it. It will be cheaper than shipping. The main problem with Chinese suppliers is a fairly high scrap rate, so you need to carefully choose a partner.
Alexey Bannikov
General manager GK "Fotosklad.ru"
You must always keep what is happening under the strictest control and monitor every little thing, right down to the font of the text on the box. If at some point the control over the project is weakened, there is a 95% probability that it will have to be redone. The Chinese may sincerely not understand what the problem is. Everything is correct for them. Every little thing needs to be discussed during negotiations. Better yet, show you how to do it. Sometimes we pointed out a mistake, the Chinese corrected it, but immediately they made another. If there is no representative on site, you will have to constantly call production, otherwise the project may die out altogether. Finding an intelligent escort manager is the ultimate happiness. For some time we successfully worked with one factory, then the deadlines began to drag on, there was no result. It turned out that the support manager had changed at the factory, and this is almost the key person in the joint project. Therefore, you need to carefully choose not so much a factory as an accompanying person from the Chinese side.
Alexey Aksenov
CEO of iRZ (wireless products for the M2M industry)
Our company in China often provides supplier sourcing services for large companies from the CIS. To us precisely because negotiations are a very delicate area. The price list for the Chinese is not a dogma, but a reason to start a conversation. Learning to talk to them correctly is difficult. Clarity, persistence and consistency are definitely not the trump cards. Emotions too. Negotiations should take place in a calm, somewhat delayed manner. The Chinese do not like long contracts, and most likely you will have to draw them up. Therefore, it is necessary to verbally clarify all the points. And do not be confused by the fact that there will be many clarifying questions, the Chinese are ready to patiently answer them. Never try to convict your partners of anything. The Chinese are immediately fenced off from such attempts with a blank wall. The likelihood that they misunderstood something, or just inattentively read the contract, is quite high, but this is a working situation for which you must always be prepared. Even worrying about a misunderstanding can be taken as a rebuke.
Timofey Kim
Director of the Group of Companies "TenderPro" for China and Central Asia
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China's technological and socio-economic progress over the past 15 years has been incredible and unimaginable. In a very short period of time, China has managed to build a powerful, highly diversified and competitive civilization.
Modern history (20-21 centuries) knows no precedents for such a grandiose leap in such a short period on a high base. There are examples of the rapid ascent of the USSR in all areas of the economy and economy since the end of the 20s of the 20th century, the rapid industrialization of the United States in the mid-20th century, the outstanding recovery rates in Germany and the USSR in the postwar period, technological saturation and external expansion of Japan from the 70s to the 90s. but China? You know, it is developing at a monstrous pace in absolutely all areas, and economies of scale are also of great importance. China's population exceeds the population of the 28 EU countries, the United States and Japan combined. In this sense, China has a certain fundamental advantage, which lies in the enormous domestic market sales.
The Chinese miracle lined up in several stages. After the collapse of the communist system in the late 1980s and in the wake of globalization, China attracted over $ 3 trillion in direct investment, more than $ 1 trillion of which is investment in the industrial structure of China by transnational corporations with the rights of establishing subsidiaries of TNCs in Chinese jurisdiction. Those. it is not buying stakes in Chinese companies and long-term direct investments in Chinese debt instruments, but direct investment foreign companies into the industrial infrastructure of China for the subsequent sale of products on the world market.
China has become the main recipient of foreign investment by global TNCs. Why is China a global factory, and not India or Africa, where labor is even cheaper?
To do business, TNCs require:
Availability of transport infrastructure (roads, airports, ports, railways);
Availability of energy infrastructure and supplies (electricity, fuel, gas);
Utilities (water supply, sewerage, sewage treatment plant, garbage disposal);
Communication and logistics (availability of access to telephone, internet, courier deliveries);
Ensuring the security of enterprises and employees (low crime rate, developed law enforcement system);
A sane legal system (guarantees of preservation of property rights to investments and assets, protection of intellectual property and opportunities for marketing products);
Educated and able-bodied population. The issues of personnel qualifications are very important, and TNCs are engaged only in advanced training and retraining within the framework of industry specifics, but not in training the base).
Low taxes;
Low intermediate costs for enterprise maintenance (rent, electricity, fuel, utility bills, communications, logistics, resource supply, construction costs, and so on);
The full cost of wages (salary level, personal income tax, social payments, insurance, and so on).
It is clear that Africa, with huge free labor resources and extremely cheap labor, will not become the new China due to the lack of the necessary infrastructure for doing business, often a complete lack of security and legal guarantees, an uneducated population without a work culture. TNCs will not at their own expense build power plants, roads, ports and send an army to guard factories, while educating the population.
China provided all this in full, providing TNCs with sterile conditions for investment and a population ready to work 12 hours a day. Depending on the region and industry for each workplace created by a TNC in China, 8 to 15 new jobs were created through the multiplier. It is clear that the industrial infrastructure must be supplied, from here transport, communications, construction, and the financial sector developed in China, and the metallurgy, mechanical engineering, building materials and electrical equipment sectors exploded to support construction.
The population from rural areas moved to cities, and the cities themselves swelled in quantity and improved in quality - there was widespread urbanization. In the early 90s in China, up to 60% of the workforce (or almost 400 million people) were employed in agriculture, fishing, now there are about 200 million, or 28%. Nearly 200 million workers have settled, directly or indirectly, in industrially developed cities and suburbs, and together with their families, this is over half a billion. The greatest migration of a people in the history of mankind in less than a quarter of a century.
The income base generated in the industrial cluster of China, located under the TNCs, returned to the Chinese economy and was multiply reinvested and multiplied. Workers in the factory, having received wages, created demand, for example, for food, clothing, household appliances, medical, cultural and recreational services and so on. This, in turn, created jobs in commerce, healthcare, leisure facilities and beyond. Positive feedbacks along unrolling spirals created more and more jobs in technology segments, gradually replacing the archaic.
But China had a fundamental vulnerability. China de facto gave sovereignty to the will of the top managers and owners of TNCs. Chinese exports were not sovereign, because at the initial stage 80% or more consisted of intermediate and final products belonging to TNCs.
As the well-being of the population grows, their efficiency and return decrease (because the more prosperous a person is, the less intensively he works in difficult working conditions, in production, in mines, in agriculture, and so on), along with this, appetites and requirements grow. ... China in this sense fell into a trap. The faster the country developed and the welfare of the population grew, the lower the potential ability to service giant exports and the lower the attractiveness of China in the eyes of international investors. Therefore, sooner or later, there will be a limit to economic growth in the formation of a "global production site".
The Chinese leadership realized this not 5 years ago or even 10 years ago, but even earlier. In the late 90s, right on the trajectory of world globalization and in addition to aggressive investment in China by TNCs, the Chinese leadership, in turn, used this unique moment to create conditions and factors for a long-term growth model based on generating domestic demand on its own.
The period from 1998 to 2009 was characterized by insane investment activity and urbanization. We built cities from scratch, developed social, cultural, industrial, transport, network infrastructure in all aspects and at all levels. We can say that China rebuilt from scratch in just 15-20 years.
Having nothing, in less than half a century, China has become probably the most modern and progressive country in the world in terms of infrastructure development and the creation of industrial clusters of all levels - from zero (coal, ore, grain, timber) and low processing to high-tech areas and ultra high tech. At the same time, both the infrastructure of the factories and the equipment are the most modern in the world, if we take the entire industry according to comprehensive estimates. The expansion is so significant that less than 2% of China's industrial fixed assets now have a lifespan of more than 25 years. Everything is very modern by industrial standards. There is nothing like this anywhere in the world.
China wasted no time. The Chinese adopted managerial and administrative experience, learned technological innovations from TNCs. Having understood how to build factories and how to manage them, the Chinese began to create their own.
Each of you knows Chinese fakes in clothes, for example, not the branded Adidas and Nike, but the Chinese Abibas and Nuke, which copy the design, composition and structure of the original fabrics and are often sewn in similar factories and in especially neglected cases in the same factories as the original on the night shift (sometimes even with a full copy of the logo and design).
So, the specificity of the first phase of China's industrial expansion on its own was imitation, copying Western brands with minimal changes. We can say that companies are clones of the originals. These products were both exported (usually to poor countries in Asia, Africa, Eastern Europe, the Middle East) under the guise of “non-names” and occupied a niche in the domestic markets. The proportion is approximately the following: 20-25% for export, the rest at home. This is what concerns the light industry.
But with mechanical engineering, not to mention high-tech, it is more complicated. Taking a modern German BMW or an American processor into the "garage", it will not work to create a copy, even after thorough reengineering. Brains, stands, laboratories and technologies are already needed here.
The transition from automatic copying to creating our own products in China went very quickly (in 7-10 years).
The period from 2009 to the present is characterized by some attenuation of irrepressible investment activity in fixed assets with a concentration on domestic demand, optimization of production chains and capacities, extensive development of technologies with main goal- the formation of our own competitive technologies and products that can effectively and without compromise replace imports (in fact, import substitution), and in the future go out for export. First to nearby Asian countries, then to Europe.
China has begun to focus more on quality rather than quantity. Increasing labor productivity, efficiency of production capacities, increasing the efficiency of using infrastructure and fixed assets, real, not imaginary, diversification of all systemically important industries that provide high added value. So that the crisis in one industry is offset by growth in others.
Since 2009, a full-fledged middle class began to crystallize in China - those who do not experience any problems in everyday operating expenses and can, WITHOUT raising credit resources, provide purchases of food, clothing, household appliances, digital equipment, pay utility bills, medicine, education, attend entertainment activities to do overhaul premises (once every 5-7 years) and travel (once a year), while even saving the cache. However, when buying real estate or a car, there may be a need for loans. There are now more than 65 million such people in China (a little less than 10% of the employed), which in absolute terms is TWO times higher than the Eurozone, where about 32-34 million people out of 151 million employed belong to the middle class and 37-40 million in the United States from 150 million employed. The middle class in China is comparable to the middle class in the United States and the Eurozone combined, and this is an outstanding achievement, considering that 20 years ago in China no more than 7 million could be classified as a middle class.
China began to focus on development human capital and technology. The authorities were quite clearly aware of the threat that TNCs could pose, since a change in market conditions (economic, financial or political) and the subsequent exit of TNCs from China could put the economy of China down, so the Chinese need their own companies and technologies.
In 2014, China invested in R&D (both fundamental and applied from the state and business) over $ 370 billion in PPP terms, overtaking the united progressive Europe from the 15 leading countries in 2013, and in 2008 made Japan. In the mid-90s, Chinese investments in science were about the same as in Russia, but now they are 10 times higher. China is still lagging behind the US (460 billion), but by 2018 (just 2 years later) China will become the most active investor in science and technology in the world! In this area, the effect of accumulating a critical mass of knowledge and experience matters. Technological breakthroughs do not occur linearly, they have a stepped formation, so there is no doubt that China is on the right track and in the long term everything will be fine with it, unlike Russia, which has chosen the path of degradation and decay.
We have not only a flawed and archaic structure of the economy of the late 19th century, but also a fundamental lag in technologies of all levels from progressive countries is gradually accumulating, which will be almost impossible to compensate in the foreseeable future without extraordinary decisions and fundamental changes in policy and scientific and technical orientation. But, as you know, in Russia there is no anti-crisis plan and there will not be - the national gates are happy with everything, they are not interested in science and technology, and even more so, transformations in the economy. This is superimposed on the critical obsolescence of fixed assets, the gradual extinction or retirement of skilled workers of training from the USSR, and there are almost no new ones (and those who appear - many leave the country for places where their talents are used).
China, on the other hand, is simultaneously moving from a model of export orientation of a non-sovereign format for TNCs to creating a highly diversified and developed economy of a new model with its own technologies at all levels, with a new generation of qualified personnel, scientists and geniuses. At the same time, the stage of imitation and copying quickly passes. The Chinese are quick to learn and create their own technology. China is actively working on the domestic market (which is very capacious), raising the middle class, in the future they will move on to external expansion and capture of sales markets.
This is only in general terms with a minimum of numbers and texture. China is mesmerizing. This is a true success story. There is a lot of exciting, enchanting data, especially in comparison with other countries. So I'll continue soon.
(3 Votes)The main factors behind the phenomenal growth of the Chinese economy are as follows.
The first factor is the effective role of the state in the economy, which actively influenced and influences the ongoing processes at all stages of the economic reform. Chinese reform theory uses the term “ complex system macroeconomic control through economic levers ”. The Chinese leaders gradually, step by step, as the need matured, built the market (institutions, competition, private property) and, in parallel, supported and modernized state-owned enterprises.
Supporters of "shock therapy", which includes four main elements: price liberalization, foreign trade liberalization and exchange rate, denationalization and privatization of state-owned enterprises, pursuing an inflation-free macroeconomic policy, believe that this is enough to quickly align the price structure to the world level and build market institutions, and then the market will itself regulate economic processes. Followers of the shock model understand that privatization of state-owned enterprises will inevitably lead to an increase in unemployment until the private sector begins to absorb surplus labor. Therefore, the shorter will be transition period, the sooner, according to supporters of "shock therapy", the stabilization of the economy will come. For example, Jeffrey Sachs argued this: "If you are going to cut off a cat's tail, it is better to do it in one fell swoop than to cut it in pieces." It is believed that, since the pain will be short-lived, political opposition to the reforms will soon fade away, and without having time to lead to the cancellation of the reforms.
Chinese gradualists argue that the aforementioned four elements of "shock therapy" do not have to be administered simultaneously and instantly. They believe that the process should take place gradually, sector by sector, stretching over many years, and at this time (before the launch of the market autopilot) the role of the state is extremely great. The “gradualist” approach can be characterized by four principles. First, price reform may be incomplete and gradual (China's parallel price system). Second, the emergence of foreign competitors in the domestic market should be gradual, so as not to lead to the collapse of the national industry. Third, privatization of state-owned enterprises is not necessary at the first stage of reforms, but private property can develop not instead of the state, but together. Fourth, the transition to a market economy can be carried out without an overly tough macroeconomic policy: "monetary policy may not be tough or soft, but support the production that the country needs." Fifth, the order (priorities) of reforms is important, synchronization does not mean the simultaneity of all reforms, but their consistent mutual influence. In China rural reform preceded by the city, price - the reform of property and property rights. At the same time, it is impossible for certain links of the reforms to be too ahead of others, and some, on the contrary, lag behind.
Depending on the stage of formation market mechanisms the functions of the Chinese state and especially the forms of their implementation changed. Direct methods of management were replaced by indirect ones, directive planning was replaced by indicative planning and forecasting, the center of gravity of government intervention was shifted from the microeconomic level to the level of macroeconomic regulation, and, most importantly, administrative methods of regulating economic processes were replaced by market ones.
The analysis shows that the system of public administration that existed at all stages of the Chinese reforms was adequate to the tasks of the country's economic modernization, which made it possible to transform China into a modern powerful state.
The second factor is significant resources / labor force / with a constant increase in their quality and low wages (excess labor in the labor market allowed and still allows to keep wages at a low level). The physical growth of the population and the movement of labor from the labor-surplus regions to new points of growth provided in the period 1978-1988. about a third of GDP growth.
The third factor is a high share of savings and investments (over 30% of GDP), complemented by effective strategies for attracting foreign investment, primarily in high-tech industries. According to the estimates of many Chinese experts, investments also provided about a third of the GDP growth.
The fourth factor is the openness of the economy (Kaifang Zhece), based on an export-oriented development model, which implies, due to the growth of foreign exchange earnings, an increase in the technology and science intensity of the economy, the development of the latest information and communication technologies, and the introduction of modern industrial logistics schemes.
The fifth factor is a favorable territorial-natural location. Of no small importance in the success of China is geographical position its territory. In the historical process of the formation of its territory, expansion in the southern and northwestern directions gave the country access to the Pacific Ocean, on its territory there were the shortest land routes from the shores of the Pacific Ocean to European countries. China has the third largest territory in the world (after Russia and Canada).
On the territory of China there are a number of large fuel (oil, coal, gas), various ore and non-metallic mineral deposits (tungsten, lead, zinc, vanadium, titanium, tin, molybdenum, nickel), as well as building materials (gypsum, barite, phosphate ores, mica, asbestos, kaolin). In terms of potential water resources, China holds the first place in the world. However, on a per capita basis, China is not that rich. natural resources, especially water, forest and land (arable) resources.
Thus, the Chinese practice of economic growth is simple and does not contradict the theory: due to the savings of the population and foreign Chinese (huaqiao), the state equipped infrastructure and stimulated the creation of new jobs in the private sector parallel to the public sector, which supplied its products for export, and foreign exchange earnings sent to the purchase of new technologies and modernization. The level of consumption also gradually grew, which increased domestic demand and stimulated the inflow of new investments already in the face of global multinational corporations, which were eager for access to the giant Chinese market.
Thanks to a long period of persistently high GDP growth (the highest in the world) and exports (Fig. 1.5), the absolute and relative amounts of savings and investments, including foreign ones, the involvement of millions of people in industrial production and services (Table 1.1), China managed to create a modern industry, significantly expand and improve infrastructure (Box 1.1), create a variety of industrial branches previously absent in the country and thereby significantly increase the share of industry and services in GDP (table 1.1).
* Accumulation fund in national income.
** According to Chinese statistics, the primary sector is agriculture and forestry, the secondary sector is industry, energy, construction, and the tertiary sector is services, transport, education, and healthcare.
Source Yearbooks of Chinese Statistics.
This article is from the section- Success Factors of China's Economic Reforms, which is dedicated to the topic China's economic growth - factors of phenomenal growth... I hope you will appreciate it!
Interesting video about the development of China
