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Dealing with China

An Insider Unmasks the New Economic Superpower

By Henry M. Paulson
13-minute read
Audio available
Dealing with China: An Insider Unmasks the New Economic Superpower by Henry M. Paulson

Dealing With China reveals China’s journey to becoming the economic superpower it is today. These blinks explain the advantages and disadvantages of this rapid growth, and offer insights into how the US and China should work together to face today’s global challenges.

  • Anyone interested in the rise of China on the international stage
  • Politics buffs keen to learn more about US foreign policy

Henry M. Paulson, Jr. is a former United States Secretary of the Treasury. He brings many years of experience in dealing with China, first as CEO of investment bank Goldman Sachs and later as Secretary of the Treasury during the presidency of George W. Bush. He is Chairman of the Paulson Institute, an independent think tank that promotes sustainable growth in the United States and China.

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Dealing with China

An Insider Unmasks the New Economic Superpower

By Henry M. Paulson
  • Read in 13 minutes
  • Audio & text available
  • Contains 8 key ideas
Upgrade to Premium Read or listen now
Dealing with China: An Insider Unmasks the New Economic Superpower by Henry M. Paulson
Synopsis

Dealing With China reveals China’s journey to becoming the economic superpower it is today. These blinks explain the advantages and disadvantages of this rapid growth, and offer insights into how the US and China should work together to face today’s global challenges.

Key idea 1 of 8

China’s unrivalled economic growth is the result of sweeping reforms.

If you’d have speculated in the late 1970s that China’s economy would grow to be one of the largest in the world, very few would have believed you. Yet today, it’s the reality. So what’s the secret behind China’s unexpected and unparalleled growth?

It all started with the introduction of western economic ideas. After Chairman Mao Zedong’s death in 1976, Deng Xiaoping came to power and over the next two years, he developed several new economic initiatives. The purpose of these initiatives? To open China up to the global marketplace.

The results of these initiatives were extraordinary. Within a few years, hundreds of millions of Chinese had already been lifted out of poverty. By the early 1980s, China’s GDP was increasing by 10% per year, on average.

At the core of this explosion in economic activity was one particular policy: providing state-owned enterprises, or SOEs, with more authority. Although they were still required to meet planned quotas set by the central government, SOEs were now allowed to sell their goods and services on the open market with flexible pricing.

Another crucial aspect of Xiaoping’s economic plan was the creation of special economic zones (SEZs). These served to kindle the dormant Chinese entrepreneurial spirit by granting foreign and Chinese companies lower tax rates, loosening import and export restrictions and providing easier access to foreign investment. Lenovo and the beverage company Hangzhou Wahaha Group were both founded in this period.

SEZs worked as economic laboratories where China could experiment with economic practices already common in the west, such as competition for construction contracts or incentive pay for workers.

Prior to these initiatives, bright and business-minded people could rarely put their abilities to good use in the jobs they were handed. But the reforms led to the creation of more companies, as it had become possible to start your own. Soon young entrepreneurs were popping up like mushrooms!

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