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Lecture

JPA331Y Jan 17th Notes


Department
Political Science
Course Code
JPA331Y1
Professor
Lynette Ong

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-Three Gorges Dam: hydro electric dam that spans the yangtze river
-world's largest power station
-building of the dam has been very controversial
-government says: helps produce electricity, a green project, it's hydro-electric
and energy efficient than burning fuel/coal, etc
-gov says: increases shipping capacity of the yangtze river as bigger ships can
now go through, and also reduces potential of floods
-its also a way of showcasing chinese engineering
-employs a lot of people around the region
-however: attracted much oppositions, for example, the Dam flooded
acheological and cultural sites, all buried under water now. There are also
people living on the river banks, their homes would be flooded and forced to
move to other places, a forced eviction process basically.
-So when you saw beautiful houses shown to tourists, prof doubts those houses
really for the relocatees. Those houses were model hosues, probaly built to
show political leaders by local leaders. Behind the surface, the reality is much
worse probaly.
-displaced 1 million + people
-increased risks of landslides and some ecological damage
-environmentalists around world and cultural heritage defenders and civil right
defenders oppose the dam
-so there are Pros and Cons basically
Political Economy of the State-owned Enterprise (SOE) Reform
3 phases of SOE development
-TVEs are small and medium built in townships n villages, they are community-
like, but these SOE are by law owned by state and built in much bigger cities
-SOE divided to national (i.e. China Petroleum) and Provicincial SOE that aren't
as large naturally
-there are also prefectural SOE, owned by prefectural government as well as
municipal SOE
-there are also smaller SOE owned by county level cities
-so many SOE owned at various levels of government
The collectivist Pre-reform period
-the danwei system
-when we talk abotu reform in this case, refer to 1979 and 80s undertaken by
badass Deng
-the basic cell of economic life was the working unit Danwei
-now you should bne mad familiar with danwei,
-danwei served multiple functions, danwei is first of all a political institutions,
an administraitve body, that extended party and state ontorl to urban grass

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root level
-it is responsible for indoctrinating party ideals and doctrine to workers
-it is also a production unit for centrally planned economy
-its given necessary resource from budget to reach production target, and
guaranteed outlets for its products, so in pre-reform period, government told
the danwei how much to produce and gave it raw material to output, and
whatever produced is sold abck to government, and the gov would distribute to
the peole , and whatever profits or surpluses made, had to be remitted to the
government, thus it has no autonomy, it is also an economic producer, that
provided social welfare to its workers, it did not only produce goods, it also
delivered social welfare including husing, healthcare, pensions to members of
the community or to its employees, this is called "Cradle to Grave Social
Welfare System"
-it provided an iron-rice bowl for the workers, it guaranteed them life-time
employment
-#4: provided collective identity for the workers, so this cradle to grave social
welfare system in turn impeded labour mobility, if you worked for 30 years in
factory A, you lose your pension. So once a worker quits his SOE and joins
another SOE, he loses benefits thus life-time employment.
frirst post-reform period 78 - 92
-dual track pricing system,
-parraellels agricultural reform
-this dual track pricing system, means market forces allowed to work alongside
plans
-after fulfilling a state quarter, SOEs could sell excess output produces at
market prices which are usualy higher than planned prices,
-by the late 80s, shared of output marketed by firms had become rather
substantial for most industrial procuded goods and even higher for consumer
durables
-so remember the graph from barry noton a chart of growing out of the plan,
while the plan remained constant, the market grew, so the economy grew far
beyond the plan and the gap became bigger and bigger,
-so beggining in 1987, varieties of contracts introduced under "contract
responsibility system"
-Equivalent of it is the household responsibility system
-CES not as effective of Household responsibility system though, why? for
example....system provides incentive for good performance but fails to
penalize bad performance, it didnt do a great deal in improving the efficiencies
of SOE
-other reason why CES not as good as HRS: less incentive to free-ride or take
advantage of other people's labour, while in factory of few 100s and few 1000s,
the incentive for free-riding is greater.
-soft-budget constrain: you can get loans very cheaply for the enterprise, since
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