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The Political Economy Of China and Iran. A.P. Government. Teacher: Mr. Saliani. Jocelyne, Heather, Lelia, Lizzie, Jennifer. Historical Economy. Iran No collective farms Major exporter of oil (rentier state) Rely on imports for food Income gap of upper and lower class (duel society).
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The Political Economy Of China and Iran A.P. Government Teacher: Mr. Saliani Jocelyne, Heather, Lelia, Lizzie, Jennifer
Historical Economy Iran No collective farms Major exporter of oil (rentier state) Rely on imports for food Income gap of upper and lower class (duel society) China • Peoples Communies (collective farms) • Major exporter of textiles and toys • Rely on imports for food • Income gap of urban and rural workers
China - Economic Terms Household Responsibility System-Families can control the production of the farmland and have contracts that last for 30 years or more Township and Village Enterprises (TVEs) -Rural factories and businesses owned/ run by the local government and private businessmen (in practice, TVE’s run like privatized factories)
Similarities • Both countries make most of their profits off of the goods they export (known in Iran as rentier state) • Both countries rely on foreign trade • Both countries have a lack of equal wealth distribution
Difference Iran has economic and social problems due to their rapid increase in population. China doesn’t have this problem because of its “One Child Policy”
Value of Iran’s Foreign Trade • 2002 • China’s foreign trade • More than $620 billion • PRC -> 6th largest trading nation in the world. • Manufacturers of 60% of the world’s bikes • Importer of oil • Trade is based in East Asia & Globally. • 2003 • Foreign Trade Hit 62.6 billion dollars • Exports - 35.3 billion dollars • Imports - 27.3 billion dollars • Exports are focused on Asia, and Europe • Exporter of Oil, and other goods (i.e. cars) China Iran
Connection w/ the U.S./World • U.S. is the biggest market for Chinese exports (20+ of the total exports) • U.S. has a huge trade deficit with China -> Dependency on Chinese products China Iran • Daily • Production - 4.2 million barrels of oil • About 5 % of daily world production. • Exports 2.7 million barrels (principally to Japan, China, South Korea, Taiwan and Europe.) • The U.S. does not import oil from Iran although other nations are very reliant upon it, so if prices increase the overall demand will increase, and therefore increase the price of oil in the U.S.
Foreign Investment • 1978 - Close to Zero -> 2001 – over $700 billion • Investors include, Coca-Cola, Motorola, & G.M. • World’s largest receiver of direct foreign investment • Special Economic Zones (SEZ’s) Places set aside by the government to attract overseas investors through incentives (tax breaks, modern infrastructure less “red tape” etc…) • They are places of high growth as well as corruption and crime. • The largest SEZ is Shenzhen near Hong Kong 20 yrs, 70,000 pop. - > 70 million • 2006 - Foreign Direct Investment hits $7b • 1993 - Establishment of Free Trade-Industrial Zones in the Islamic Republic of Iran. • Only private individuals, companies and establishments of foreign origin are allowed to invest in Iran. China Iran
• Reform and globalization of economy have created a diverse and open economy in both China and Iran. • Economic change has also caused social problems in both countries - in Iran the split between the rich and the poor and China with a sharp increase in crime, prostitution, and drug use. • Iron Rice Bowl - (China) Characterized Maoist economy. Certain standard of living was offered to the people of the urban and rural labor force. Still income distribution was unfair. In the 1970s Iran was one of the most unequal countries. Reform and Globalization of Economy
• Dual society in Iran. - The modern sector, with the wealthy elite and the oil and the traditional sector with all the workers. • Iron rice bowl led to massive unemployment - 45 to 60 million workers have been laid off in recent years. • China’s health care system has been rated amongst the worst by the World Health Organization. Unlike Iran, between 1963 and 1977, the number of hospital beds doubled and medical clinics from 700 to 2,800. Reform and Globalization of Economy
• China’s economic boom has led to corruption. - In transition from command to market economy, officials are still in control of several resources and economic transitions. • Iran’s rentier state led to the state becoming independent of society, leading to society having little input on the state. • Gender inequality - In the countryside, the male is in control and dominate the economy. Over 70% of illiterate adults in China are female. Reform and Globalization of Economy
Economic Reform • China’s economy is transforming into a market-style economy, which has created anti-reform opposition. • Anti-reformists are wary of the spread of capitalist influences, including calls for democracy both within and outside China CCP leaders hope that the people of China will attribute the Country’s economic prosperity to its political stability and be satisfied with the communist party. • Efforts are being made by the current administration to engage in market reform plans. • The Iranian government is looking to diversify Iran’s oil reliant economy through foreign and domestic investment. China Iran
Economic Reform • Economic reform has created many different groups such as entrepreneurs, middle class consumers, etc. that are more likely to press for political reform in the future. • The decentralization of economic decision making has increased the autonomy of sub-national governments. China Iran • The sale of state-owned factories has been slow because of opposition from Iranian nationalists in the Majles. The majority of industries remain state-owned. • The government has increasing difficulty in providing opportunities for the younger and better-educated workforce, which has led to a growing sense of frustration among lower and middle class Iranians.
On July 1st 1997, Hong Kong became a Special Administrative Region of China. Previously a British colony, Hong Kong flourished economically and became one of the world’s greatest centers of international trade and finance despite having extremes of wealth and poverty. China pledges under the principle of one country, two systems to not impose socialism in Hong Kong for fifty years yet it still has a tight grip on Hong Kong’s political activity. Hong Kong and China
Iran- rentier state (obtains income by exporting and leasing raw materials.) China- command economy transferring to market economy (state controlled economic activity moving towards influence by global market.) Economic development- GDP Iran- 6.3% (oil) China- 7.6% (services, agriculture) Market- population Iran- 68,017,860 China- 1.306 billion Supply and Demand Iran- increase supply, decrease demand China- increase supply, increase demand Economic style
Agricultural related taxes and their shares in government finance and agricultural value - Billion Yuan current price
