abhishreshthaa
Abhijeet S
LIBERALISATION-ONE STEP AT A TIME
This liberalization strategy of the Chinese government can be broadly classified into two stages:
Stage one: Restructuring SOEs, rather than privatising them.
Stage Two: Attracting FDI.
In the first fifteen years of liberalization, China concentrated on aforesaid two areas.
Then in 1992, they substantially liberalised FDI controls. This strategy has proved successful FDI came in response to the weaknesses in the SOEs, as foreign firms didn't think the SOEs could compete with them and to add to that, the economic prospects of the country looked good.
In 1998, Chinese govt also allowed privatisation, especially of smaller SOEs. They allowed the banks to lend capital to private entrepreneurs. They also improved legal and political treatment of private entrepreneurs. Also, they began to liberalise the policies toward the domestic private sector.
Reforms focused on bringing an element of micro autonomy. These efforts set in motion a self-propelling mechanism that led to the emergence of new class of private enterprises who changed the economic scenario considerably.
This liberalization strategy of the Chinese government can be broadly classified into two stages:
Stage one: Restructuring SOEs, rather than privatising them.
Stage Two: Attracting FDI.
In the first fifteen years of liberalization, China concentrated on aforesaid two areas.
Then in 1992, they substantially liberalised FDI controls. This strategy has proved successful FDI came in response to the weaknesses in the SOEs, as foreign firms didn't think the SOEs could compete with them and to add to that, the economic prospects of the country looked good.
In 1998, Chinese govt also allowed privatisation, especially of smaller SOEs. They allowed the banks to lend capital to private entrepreneurs. They also improved legal and political treatment of private entrepreneurs. Also, they began to liberalise the policies toward the domestic private sector.
Reforms focused on bringing an element of micro autonomy. These efforts set in motion a self-propelling mechanism that led to the emergence of new class of private enterprises who changed the economic scenario considerably.