THE CHINESE DRAGON IS THIRSTY FOR OIL AND GAS
Abstract
Twenty-five years ago China (despite its theoretically high annual economic growth rates of 7-8%) was teetering on the brink of hunger strikes and sociopolitical destabilization. The country was in the need of reform, the foundation for which was laid at the December (1978) Plenum of the CPC Central Committee. The reform policy is characterized by extremely careful and unhurried dismantling of the planned-distribution system and its gradual replacement with a market system. How-ever, it is based on the well-known pragmatic maxim coined by Deng Xiaoping: “It doesn’t matter what color the cat is as long as it catches mice.” This “cat,” the so-called “socialist market,” has taken root in the local soil and, by successfully “catching mice,” has led to the rapid development of the country’s economy. In this way, the attempt to create a market economic system by retaining the communist party’s monopoly on political power has been crowned with indisputable success. Today, the PRC is a country with a mixed economy, in which the share of the state sector in the GDP does not exceed 40%.
There can be no doubt that long coexistence of two different systems has also given rise to significant losses. But the pluses of the strategy adopt-ed for reforming the economy still outweigh the minuses.
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References
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According to official data, the highest salary is 245-fold more than the lowest, and when taking into account other in-come, the difference is twice as high again. In so doing, the 50 richest people in China own a quarter of the entire property in the country, and a tenth of the population owns half of all the bank deposits.
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The term “overheating” means extreme financing of economic growth. It happens when investment, consumer and state spending are not carried out evenly, but fall on the same period and, as a rule, are accompanied by immense inflation and deval-uation of the national currency. Taking into account the size of the PRC economy, “overheating” could be followed by catastrophic “compression” with a subsequent drop in global demand and a collapse in prices for resources.
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