China’s 40 Years of Economic Reform and Development by Xinli Zheng

Author:Xinli Zheng
Language: eng
Format: epub
ISBN: 9789811327278
Publisher: Springer Singapore

When analyzing the contradictions of capitalism, Marx and Engels pointed out that the contradiction between the socialization of production and the private ownership of production is the basic contradiction of the capitalist society. When reflected in the fields of production and circulation, this basic contradiction is the contradiction between the unlimited expansion of production capacity and the social demand people can afford, which will inevitably lead to periodic economic crises. One of the major differences between the socialist market economy and the capitalism economy is that the political power is in the hands of the broad working people. The government represents the benefits of the people, and the purpose for production is to meet the rising demand of people’s material and cultural life. Therefore, China is completely capable of adjusting the income levels of people, or their ability to consume, to the development level of productivity, and steer production to adapt to market demand through implementing reasonable policies for the distribution of national income. Thus, China can fundamentally resolve the contradiction between the development of productivity and the demand people can afford, and avoid the crisis of overproduction. In particular, the level of per capita income and the level of consumption in China are both relatively low, so there remains huge potential for consumption demand. If the country can maintain reasonable consumption growth by adjusting consumption and income policies, China can provide huge driving forces for continuous economic growth, and create essential conditions for the continuous, rapid, and sound development of the economy.

When expanding the field of consumption and improving consumption levels, China should focus on meeting the requirements of the people to improve the level of their housing and transportation under the premise of improving food, clothing, and other daily necessities. It can be said that since reform and opening up, China has maintained long-term and rapid development of agriculture, textile, and other light industries mainly by satisfying the requirements of people’s food, clothing, and other daily necessities. But in the next two decades, industries aimed at satisfying the requirements of people’s living and traveling, including industries such as urban housing and transportation, as well as other relevant industries, will gain opportunities for rapid development and become new economic growth points. Compared with the spending on food, clothing, and other necessities, the spending on commodities and services in housing and transportation will increase to the tens of thousands in yuan from thousands of yuan, which means that the proportion of consumption and services for housing and transportation will gradually surpass the proportion of the consumption for food, clothing, and other daily necessities. Therefore, the consumption and services for housing and transportation will have a greater and more lasting pull effect on economic growth. In developed countries where the per capita GDP exceeds US$10,000, industries related to the improvement of living and traveling are major industries driving economic growth. Some countries even put more than half of their investments into housing and infrastructure. To support the expansion of consumption for

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