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Help Understanding China's Economy

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Answered (Not Verified) This post has 0 verified answers | 3 Replies | 1 Follower

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limitgov posted on Fri, Dec 11 2009 12:17 PM

In China, is every aspect of the market controlled by the government?

Could you open a restaurant?  Do you lease land from the government first?  Do they control whats on your menu?

Can people start businesses there?  Or does the government setup what it thinks it needs (factories, warehouses, etc)?

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Answered (Not Verified) Bogart replied on Sat, Dec 12 2009 7:24 AM
Suggested by Wanderer

Not since Mao died has the economy been tightly controlled with expected resutls: poverty, starvation, crime and chaos.

Since the death of Mao the Government of China has taken on their age old policy of benign neglect.  There still is a Communist Part and state industry presence but the amount to bribe your way around the system is less and less.

To the advantage of the people in China, there are billions of them so there is a vast amount of unused potiential brain power.  As freedom unlocks this potiential the world will see a much more prosperous China.

The only things hold China back now are remnants of the old regime and their insistence on Mercantilism as government economic policy.  Hopefull for their sake this will wither as the US becomes weaker.

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Wanderer replied on Sat, Dec 12 2009 11:42 AM

Due to the various Dengist reforms after Mao, China has largely switched from Communism to neo-Fascism/neo-Mercantilism and the economy is actually freer.

China ranked as the 29th most competitive economy, 89th on ease of doing business, 37th most globalized country in the world, they're in an 8-way tie with Mauritania, El Salvador, Romania, Brazil, Bahrain, Mexico, and the Philippines for 62nd on property rights :

Lastly, these two maps show the world and economic freedom, measured by different groups.



Periodically the tree of liberty must be watered with the blood of tyrants and patriots.

Thomas Jefferson

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Answered (Not Verified) Seph replied on Sun, Dec 13 2009 7:52 PM

I've actually owned a business in China for a period of time, so may I can be of some help.

If you're a small business, like a a family restaurant or a convenience store (which are all over the place) you generally dont have any rules or regulations placed on you whatsoever, as there is simply no ability for the government to go around to literally thousands of little shops and restaurants in each city to collect a pittance of income tax. Of course, this only applies if you're a local chinese person, not making that much money.

If you're a foreigner who wants to own a business there are some positives and negatives. Positive aspects of the process are the total lack of regulations on labour or on heath and safety....negative is the morass of regulations and bureaucratic nonsense in other aspects. For example, I know some people who tried to open a bar, but the paperwork required to open a bar was too expensive and too tiresome to obtain, so they were forced to open a bar, but register it as a cafe. This was unfortunate since the government mandates that all cafes must be closed by 10pm. 

All land is technically owned by the government, but you can obtain 100 year leases for effective ownership. Most of the time you'll be renting land form other people who have already rented it from the government.

All of this may substantially change, should you go to a 'special economic zone', like Shanghai or Hainan. I live in one of the more backwards and poor areas of China, where economic freedoms are generally at their lowest. I'm really not sure about the differences in regulation between Shanghai, and say Harbin, only that there are less of them. 

Overall, I'd still say that opening a business in China is a much better idea than opening one in America. You have a greater chance of success and the cost to start up is exponentially smaller. 

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