THE ROLE OF GUANGDONG PROVINCE IN IMPLEMENTING ECONOMIC REFORMS IN CHINA

Yu. M. SHIGANOVA

Graduate student

Far East Institute of the Russian Academy of Sciences

Keywords: China, Guangdong Province, economic reforms, economic growth factors, regional development

Guangdong Province, which occupies 1.9%¹ of the PRC's territory with 7.8% of its population, produces 10.9% of the national GRP*. The province accounts for 28.8% of China's exports and 23.4%of its imports.² The average annual growth rate of its economy in the period from 1979 to 2014 - 12.7%³-significantly exceeded the national average of 9.8%⁴. Using the example of this province, you can illustrate and understand the origins of the impressive success of the Chinese national economy.

Guangdong Province has a special place in the country's history. In 1987, it was granted official status as a pilot region of China, which allowed the Government to set particularly ambitious goals for it. In Chinese transcription, they sounded like this: in 20 years to catch up with 4 small Asian dragons (South Korea, Singapore, Hong Kong, Taiwan), by 2000 to increase GDP by ⁴ times from the level of 1980.5, etc.Guangdong was initially assigned the mission to play a demonstration role for the rest of the country's regions.

What was it that brought about the modernization and economic growth of Guangdong after 1978?

OBJECTIVE ADVANTAGES

In the late 1970s, China accounted for no more than 2% of the world's gross domestic product6. In terms of GDP per capita, it was ranked 2nd out of 5 groups of ⁷ countries according to the World Bank classification, along with African countries, Afghanistan, the Philippines, and Indonesia.

Guangdong was then a backward border province. The annual industrial and agricultural output per capita in 1979 was lower than the Chinese average: 523 yuan and 636 yuan, respectively ^.8 In terms of economic growth, the province ranked 25th out of 28 out of ⁹ other regions in the country.

The reasons for economic backwardness were the long-term unstable situation in China, associated with political distortions, the "cultural revolution", the struggle for power after the death of Mao Zedong, and the country's long isolation from the outside world. Understanding that further development of the country and economic recovery are impossible in a closed, isolated system, led to the transition of the Chinese government in 1978 to reform and open the country to the outside world.

The changes also affected regional policy. Coastal areas, which were not previously considered a priority due to their vulnerable geographical location from the point of view of national security and small reserves of natural resources, had the greatest potential for economic growth. Thus, the province of Guangdong also had objective factors that led to its choice as a testing ground for new economic methods proposed by the then Chinese leadership.

The province's access to the sea predetermined the relatively rapid development of the traditional coastal zones

* GRP - gross regional product, a generalized indicator of the region's economic activity that characterizes the process of producing goods and services. It is calculated by excluding the volume of its intermediate consumption from the total gross output. It is defined as the sum of newly created values of the regional economic sectors.

Map. China. Guangdong Province.

foreign trade, navigation, port infrastructure and the entire transport system. The population density here was higher than in the inner provinces, and the territories were more developed economically. All this combined to give the region certain competitive advantages for launching reforms. The remoteness of the province from the political center of the country to some extent explained its great independence in carrying out reforms.

The Chinese government hoped to link the further development of the Chinese economy with Hong Kong and Macau. Firstly, because at the time of the start of the reforms, Hong Kong was a foreign colony and one of the"Asian tigers". Secondly, because for China, Hong Kong was the only "window" to the outside world. The PRC actively interacted with it even during the years of the country's voluntary isolation. Despite the US embargo on trade with China in 1950 and the UN embargo on trade with China in 1951, ¹⁰ in the 1950s, the PRC ranked 1st in terms of exports to Hong Kong and 2nd in terms of imports from Hong Kong.¹¹

Third, the "cultural affinity"of Guangdong and Hong Kong played a role ¹², as 92% of Hong Kong's population was Chinese, ¹³ and many Chinese emigrants (Huaqiao) or their relatives who returned from Hong Kong and other countries lived in Guangdong.

It was Huaqiao and his compatriots from Hong Kong and Macau who were the first to invest on a large scale in the region's economy: since the beginning of the reforms in 1978, they accounted for more than 60% of China's foreign direct investment.¹⁴ More than 90 billion rubles. They invested ¹⁵ yuan free of charge in the construction of infrastructure and social facilities, to support the poor, in the fields of culture, education, science and technology, and disaster management.

Hong Kong is still very important in the economy of Guangdong Province. More than 40% of the province's ¹⁶ exports go to Hong Kong, which is associated with the further development of the region's economy, especially modern industries.

FIRST STEPS

The willingness of the Guangdong Provincial Government to "try" to follow the path of reform and operate in new, previously unknown and risky conditions has defined its role as a pilot ground for reform and external openness - subsequently nationwide. The provincial leadership received the support of the central authorities and increased powers in solving certain economic issues.

To attract foreign resources, special territories were allocated here - the so-called export processing zones (Shekou, Bao'an, Zhuhai), which later became special economic zones (FEZ Shenzhen, Zhuhai, Shantou), which served as a kind of "window for obtaining foreign equipment, for borrowing managerial experience, acquiring knowledge, as well as a window for foreign trade". politics" of China ¹⁷.

Within these territories, companies were subject to preferential tax rates (the corporate income tax rate in FEZs was 15% ¹⁸, outside the zones for state-owned enterprises-55%, for private enterprises-35% ¹⁹).

In the mid-1980s, two cities in Guangdong Province - Guangzhou and Zhanjiang - were included in the 14 open-sea coastal cities, where so-called open-sea cities were established.

"technical and economic development zones". The province's 16 cities and counties have become one of China's three coastal open zones - the Pearl River Delta Zone.

The allocation of special zones has brought impressive results: in the 20 years since the start of the reforms, the average annual economic growth rate of one of the first FEZs in China - the city of Shenzhen-has more than doubled that of the province as a whole.²⁰

The availability of cheap labor resources in China and the inflow of foreign capital (in 2014, China ranked 1st in the world in terms of foreign direct investment (FDI) received)²¹ have contributed to the development of low-skill and low-investment industries, including textiles, food and beverages, construction materials, electrical appliances, paper, and assembly plants. The economic success of the province is facilitated by the cluster form of production organization; currently, the number of highly specialized cities and production clusters exceeds 300,222.

The development of the province was largely promoted by the implementation of economic and administrative reforms in China aimed at creating a so-called "two-track" management system that combines market principles with command and administrative ones.

The reforms affected state-owned enterprises, banks, and the central planning system. As a "useful complement to the socialist economy"²³, the country developed a multi-layered economy.

FROM THE "EXPERIMENTAL" PROVINCE TO THE COUNTRY AS A WHOLE

Reforms in China and opening up the country to the outside world were gradual while maintaining the political structure, which allowed for a gradual transformation of the economic mechanism, accumulation of the necessary political and economic experience, obtaining high results with low social costs, creating a favorable investment climate while maintaining social stability and integrity of China.

The release of 200 million peasants (about 40% of the economically active rural population) as a result of increased labor productivity in the countryside helped to provide enterprises with labor, contributed to the development of non-agricultural activities in villages, so-called township-township enterprises (already in the first 5 years of reforms, their number in the same Guangdong province increased by one and a half times ²⁵ and the number of employees employed in them-by 27.14%, with an increase in the total income of such collectives by 172.75% ²⁶).

In China, a class of individual and private entrepreneurs has been formed in a historically short time. The growth of the labor force in this province was provided by the influx of population from neighboring provinces - Sichuan, Guangxi, Hunan, Henan, Hubei, Anhui, etc. Migrant workers account for 77.28%²⁷ of the population of Dongguan City and 70.79% of the population of Shenzhen City.

In the 1980s, Western countries faced the need to reduce production costs. This task was solved, including by transferring labor-intensive, energy-intensive production facilities to China. Approximately in the same direction, at the same time, the functions of companies from China and Hong Kong were divided. The established system of interaction between Hong Kong managers and Chinese manufacturers of finished products was called "from the facade - shop, from the yard-production" (Qiandian, Houchan). By the end of the 1990s, 90% of Hong Kong's manufacturing facilities were located on the mainland.²⁸

Gradually, China turned into a global factory of a wide variety of goods. By production volume, there are more than 200 types of industrial products ²⁹ (including steel, aluminum, cement, copper, and mineral fertilizers).-

air-conditioning units, ³⁰ refrigerated trucks, ³¹ mobile phones, computers, and color televisions), China ranks 1st in the world.

Most of the products produced in China are intended for supply to the foreign market. At the same time, the maritime provinces were integrated into the global economy as the main production centers and participants in the global market. The leader in the total volume of exports and imports in value terms for a long time remains the province of Guangdong, which accounts for 23.4% of China's total foreign trade.³²

It is known that the PRC borrowed foreign technologies and imported equipment, using the so-called catch-up development strategy, thus adopting scientific and technological achievements on the widest scale, the costs of which were borne by other countries. This increased labor productivity (¹² times over the period from 1978 to 2011,33), technical capabilities and production efficiency, as well as the country's scientific and technical potential.

AN ASSISTANT NAMED CONFUCIUS

The rapid economic growth of China, Japan, the Republic of Korea, and Singapore is also attributed to the widespread Confucian teaching in this region. The famous sociologist M. Weber believed that Eastern cultures are characterized by conservatism, lack of economic rationalism, pragmatism, individualism, and the desire for material benefits necessary for the development of capitalism.

Often, when comparing Eastern and Western culture, science, and society, researchers emphasize backwardness, tradition, and adherence to set patterns of life and behavior in the East. However, the lack of resistance to economic modernization and progress in Confucianism, respect for education, encouragement of hard work, care for future generations, modesty, frugality, consumer asceticism, nepotism, cohesion, and mutual support began to contribute to the economic growth of China and the countries of Confucian culture.

The development model of Guangdong Province over the past 37 years strongly confirms this. It was the first of China's economic centers to take the path of reform and expansion of interaction with the outside world, ensuring economic growth and instilling in the rest of China the hope of gradually turning it into a" workshop " on a global scale.

Currently, there is a "structural"³⁴ slowdown in the growth rates of the entire Chinese economy (up to 6.9% ³⁵) and Guangdong Province (up to 8% ³⁶, the average rate in 1978-2014 was 12.73%³⁷), which is both a result of the crisis phenomena in the world economy, and a consequence of accelerated industrialization, extensive use of resources long-term export orientation of the region's economy to the external market.

The region faces serious social, environmental, and economic problems: the presence of industry imbalances and excess production capacity, high levels of resource consumption and emissions, lack of qualified labor, and risks inherent in the global economy - instability of external demand, price spikes.

Compared to the other two poles of China's economic growth - the Bohai Economic Ring and the Yangtze River Delta - Guangdong is no longer the absolute economic leader. Nevertheless, in 2014 it ranked 1st in terms of GRP, exports and retail sales of consumer products among all provinces of China ³⁸.

The province continues to develop and will undoubtedly make a significant contribution to regional economic cooperation in the Asia-Pacific region, the implementation of projects to create a pilot free trade zone ³⁹ and the Maritime Silk Road of the XXI century. ⁴⁰

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¹ Guangdong tongji nianjian 2014 (Annual Statistical Compendium on prov. Guangdong in 2014) - http://www.gdstats.gov.cn/tjnj72014/directory/content.html?01 - 04 - 0

² Guangdong tongji nianjian 2014 (Annual Statistical Compendium on prov. Guangdong in 2014) - http://www.gdstats.gov.cn/tjnj/2014/directory/content.html?01 - 04 - 1

³ Calculated from data from Guangdong tongji nianjian 2014; website of the National Bureau of Statistics of the People's Republic of China -http://www.stats.gov.cn/tjzs/tjsj/tjcb/dysj/201412/t20141231_662243.html; and data from the website of the Guangdong Provincial Bureau of Statistics - http://www.gdstats.gov.cn/tjzl/tjkx/201501A20150123_196151.html

⁴ Website of the National Statistical Bureau of the People's Republic of China...

⁵ Guangdong gaige kaifang jishi 1978-2008 (History of prov. Guangdong since the beginning of the reform and opening-up policy of 1978-2008). Guangzhou, 2008, p. 247.

^{Lawrence J. Lau.} 6 Chinese Economic Growth: A Miracle or a Bubble? 7th October 2011, East Asian Institute National University of Singapore http://www.igef.cuhk.edu.hk/igef_media/people/lawrencelau/presentations/english/111007.pd f

⁷ 1979 World Bank Atlas, Population, Per Capita Product and Growth rates. The World Bank, 1979 -

http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2002/11/15/0 00178830_98101911123489/Rendered/PDF/multiOpage.pdf

^{Bo Zhiyue.} 8 Guangdong Under Wang Yang: "Mind Liberation" and Development. EAI Background Brief No. 405, 12 September 2008 - http://www.eai.nus.edu.sg/BB405.pdf

⁹ Ibidem.

^{Ivanov P. M.} 10 Hong Kong: History and Modernity. Moscow, 1990, p. 153. (Ivanov P. M. 1990. Gonkong: Istoriya i sovremennost. M.) (in Russian)

¹¹ The Economic Transformation of South China. Reform & Development in the Post - Mao Era. Edited by Thomas P.Lyons, Victor Nee. Cornell East Asia Series, 1992, p. 67.

¹² The Pearl river delta. A new workshop of the world // The Economist, 10th October 2002 - http://www.economist.com/node/1382626?story_id=1382626

¹³ Hong Kong Government CAP Website http://www.gov.hk/en/about/abouthk/facts.htm

¹⁴ Huaqiao huazhen: tisheng Zhongguo ruan shili de zhongyao ziyuan (Chinese emigrants and ethnic Chinese: the most important resource for expanding the opportunities of soft power) / / Website of the Academy of Social Sciences of the People's Republic of China, 22.09.2014 - http://www.cssn.cn/zzx/201409/t20140922_1336091.shtml

¹⁵ Ibid.

¹⁶ Guangdong tongji nianjian 2014 (Annual Statistical Compendium on prov. Guangdong in 2014)- http://www.gdstats.gov.cn/tjnj/2014/directory/content.html?06 - 07 - 1

¹⁷ Deng Xiaoping jingji tequ sixiang de fengfu neirong he shidai yi (Profound content and epochal significance of Deng Xiaoping's idea of creating special economic zones) / / Renmin ribao, 16.09.2004 - http://www.people.com.cn/GB/shizheng/1026/2787246.html

¹⁸ Guangdong sheng jingji tequ tiaolie (Guangdong Province Decree on Special Economic Zones), 15.04.1980 / / Website of the People's Government of Guangdong Province - http://www.gd.gov.cn/govpub/flfg/dffgwas/200809/t20080912_66715.htm

^{Portyakov V. Ya} 19 Ekonomicheskaya reforma v Kitae (1979 - 1999). Moscow, 2002, p. 100 (Portyakov V. Ya. 2002. Ekonomicheskaya reforma v Kitae (1979 - 1999). Moscow) (in Russian)

²⁰ Calculated according to " Shenzhen shanban nian GDP zengsu 8% tsung nar lai?" (What is the reason for the 8% GRP growth rate in Shenzhen in the first half of this year?) / / Nanfang ribao, 13.08.2014 - http://news.southcn.com/d/2014 - 08/13/content_106454584.htm; Guangdong tongji nianjian 2014 (Annual Statistical Compendium for Guangdong Province 2014) http://www.gdstats.gov.cn/tjnj/2014/directory/content.html?02 - 06

²¹ http://www.un.org/russian/news/story.asp7NewsID=23095#.Vc48grLtmko

²² Guangdong and xingcheng 300 do ge changye jijun, nan zai quanguo jiao de xiang de changye longtou qie xiangdui buzu changye jijun zhuhe ji da qie qiang (More than 300 industrial clusters have already been established in Guangdong Province, but there are not enough leading national enterprises yet. How to make industrial clusters large and strong?) / / Nanfang ribao, 19.07.2013 - http://epaper.southcn.com/nfdaily/html/2013 - 07/19/content_7208552.htm

²³ Abstracts of conversations during trips to Wuchang, Shenzhen, Zhuhai, and Shanghai II (January 18-February 21, 1992). China Internet Information Center http://russian.china.org.cn/russian/126192.htm (in Russian)

^{Portyakov V. Ya} 24 Edict. soch., p. 74.

²⁵ Guangdong gaige kaifang jishi 1978-2008.., p. 536.

²⁶ Ibid.

²⁷ Weilai renkou bilye qian sanming: Dongguan Shenzhen Zhongshan (3 cities with the largest number of migrants: Dongguan, Shenzhen, Zhongshan) / / Nanfang ribao, 30.12.2014 - http://gz.southcn.com/g/2014 - 12/30/content_115335588.htm

²⁸ Guangdong gaige kaifang jishi 1978-2008.., p. 879.

²⁹ Website of the Central People's Government of the People's Republic of China -http://www.gov.cn/guowuyuan/2015 - 07/02/content_2889196.htm

³⁰ http://www.chinareform.net/show.php7id-21348

³¹ Gongxinbu: shouji, jisuanji he caidian chanliang wen ju shijie dii (Ministry of Industry and Information Technology: first place in the world in terms of production of mobile phones, computers and color televisions) / / Renmin ribao, 05.02.2013 -http://finance.people.com.en/n/2013/0205/cl53180 - 20441785.html

³² 2014 nian shangbannian Guangdong waimao jinchukou qingquang fenxi (Analysis of the situation in the sphere of foreign trade in Guangdong province in the first half of 2014), 19.08.2014 / / Website of the Guangdong Province Statistical Bureau - http://www.gdstats.gov.cn/tjzl/tjfx/201408/t20140828_162314.html

³³ http://www.chinareform.org.cn/Economy/Macro/report/201501/t20150126_217569.htm

³⁴ Shakeyuan baogao cheng Zhongguo jingji zengzhang mianling jiauxing jiansu (Chinese Academy of Social Sciences: China's Economic Growth faces structural slowdown), Zhongxinwang (chinanews.com), 25.07.2014 - http://www.chinanews.com/gn/2014/07 - 25/6427145. shtml

³⁵ 2015 nian GDP zengzhang 6.9% Wang Baoan: jin-nian Zhongguo jingji ren jiang pingwen zengzhang (GDP growth in 2015 6.9%, Wang Baoan: China's economy will continue to grow smoothly this year). Xinhua, 20.01.2016 - http://news.xinhuanet.com/fortune/2016 - 01/20/c_128647455.htm

³⁶ 2015 nian quannian Guangdong jingji yunxing qingquang xingwen gao (Review of the economic situation in Guangdong province in 2015) / / Website of the Statistical Bureau prov. Гуандун, 22.01.2016 - http://www.gdstats.gov.cn/ydzt/jjxsxwfbh/201601/t20160122_323140.html

³⁷ Guangdong tongji nianjian 2015 (Annual Statistical Compendium for Guangdong Province, 2015), Tables 2 - 2 - http://www.gdstats.gov.cn/tjnj/2015/directory/content.html?02 - 02

³⁸ 18 Dec 2015 Guangdong: Market Profile -http://china-trade-research.hktdc.com/business-news/article/Fast-Facts/Guangdong-Market-P rofile/ff/en/1/1X000000/1X06BUOU.htm со ссылкой на Statistical Yearbook of Guangdong 2015.

³⁹ Pilot free trade zones were opened in Shanghai (in 2013), Tianjin, Guangdong and Fujian Provinces (all three in 2015).

⁴⁰ See for more details: Ostrovsky A.V. Chinese project "Economic belt of the Silk Road" / / Asia and Africa Today. 2016. N 2. (Ostrovsky A.V. 2016. Kitaiskiy proekt "Ekonomicheskiy poyas Shelkovogo puti" // Aziya i Afrika Segodnya. N 2) (in Russian)

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