ECONOMICS AND TRADE IN THE PEOPLES REPUBLIC OF CHINA

In mid-1989, the popular uprising in Beijing and the government's crushing of that uprising before the television cameras of the world led the government of the Peoples Republic of China (PRC) to suspend some of its economic readjustments, and to slow down the pace of economic reform. By and large, however, the government of the PRC wanted to continue its economic interaction with the west, and, as the events of the summer of 1989 are pushed out of the public mind in the west by even more dramatic occurrences, such as the Gulf War of 1991 and the lengthening economic recession in the United States in early-1992, western commercial interests appear to have, for the most part, overcome the fears induced by the suppression of the uprising, and are once again desirous of doing business with China (De Voe, 1991, pp. 51-521).

The State of Economic Reform in China

When Chairman Mao died, and the last of the "Red Guard" influence was purged from the Chinese political environment, a government with more pragmatic economic views gained power. In 1978, this new government initiated a series of economic changes in the PRC, which were referred to as readjustments. These economic readjustments, which were continually expanded through early-1988, brought about, and continue to cause the occurrence of significant changes in the structure and the management of the Chinese domestic economy (Anderson, 1990, p. 17). Some o

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ly 1979. In the first month of the law's existence, 100 joint venture agreements with foreign business entities were signed. A Chinese must be chairman of the board of all joint ventures, and a majority of the board members must be citizens of the PRC. It is permissible, however, for the joint venture agreement to be so written that all important issues must be agreed to by two-thirds of the board members. Thus, the rights of both parties to the agreement may be fully protected. Further, China has stipulated that the investment of a foreign joint venturer will not be expropriated or otherwise confiscated. Joint venture managements are also provided the right to fire employees for cause, regardless of the current status of China's iron rice bowl policy. Profits accruing to a foreign joint venturer may be repatriated (Crane, 1990, p. 61). If profits are repatriated, however, they will be subject to an additional (over and above any Chinese income tax previously imposed) 10 percent tax. Chinese income taxes on joint ventures are in the 30-to-35 percent range. If a foreign joint venturer's profits are not repatriated, the additional tax will not be imposed. Generally speaking, joint venture terms will range from 15-years t
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Approximate Word count = 4213
Approximate Pages = 17 (250 words per page)

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