Is China’s integration to the international markets a threat for western economies? An outlook in terms of political economy of transition from labor-intensity to capital-intensity

Abstract

Introduction In the People’s Republic of China (PRC), where the communist regime was effectively implemented from its foundation to 1978, gradually liberalization reforms were implemented in order to keep up with the changing world conjuncture. Prior to reforms, the PRC had lower Gross Domestic Product (GDP) figures than the surrounding countries. The poverty level in the country came to the point which is not easily explained to the world. Deng Xiaoping, who came to power after the death of Mao Zedong, initiated reforms aiming at accelerating economic growth rate of the country. Although many steps have been taken for the liberalization and openness of the system, state control over the economy has not been completely abolished. The planned economy and the market economy were carried out together and a significant growth was achieved in a short time. Although the Chinese Communist Party (CCP) is in the country’s administration, the new mixed economy is being carried out and this mixed model has been called the socialist market economy in the literature. Under the state-controlled market economy model, huge growth values are achieved, while per capita GDP figures are still low due to the high population density. Deflation has been observed in some years after the reforms and consequently deflation had negative effects on consumption-based economic growth of the country. The success of the PRC in macro-economic figures attracted the close attention of western countries, especially the USA. Consequently, many international relations theories and scenarios about China have…. © Peter Lang GmbH Internationaler Verlag der Wissenschaften Berlin 2019.