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  • July 2021 commemorates a century of the official founding of The Chinese Communist Party.

  • In these 100 years, China's economy has monumentally transformed.

  • The party had a goal set that by the time we reach 100 years old, we're going to

  • alleviate poverty in China.

  • And more than 800 million people have been lifted out of poverty since China began to open

  • and reform its economy in 1978.

  • But the journey to where it is today wasn't without controversy and failed policies.

  • So how did China grow into the world's second biggest economy, and what's next for the nation's

  • sole governing party?

  • To help bring the party's 100-year history to life, I called up CNBC's China correspondent

  • Evelyn Cheng in Beijing.

  • Thank you for joining in. There's really no one better to have this discussion with.

  • Glad to be here. Hope I can be of some help.

  • Now I know, like 100 years is a long time.

  • So, because we're CNBC and cover business news and in the interest of time,

  • let's focus on the economic story today.

  • Sounds good.

  • While the People's Republic of China was founded in 1949, the Chinese Communist Party was created

  • 28 years before that in 1921.

  • There was a whole upheaval globally and 1946 so Chinese young people at that time were

  • very heavily influenced by Marxist thinking, by the workers' movement.

  • In 1945, Mao Zedong emerged as the leader of the party.

  • After defeating the Kuomintang in the Chinese civil war, the People's Republic of China

  • was established in October 1949.

  • In the early years, Mao launched various socio-political and economic campaigns, notably the Great

  • Leap Forward in 1958 and the Cultural Revolution in 1966, which devastated China's economy.

  • You had efforts to implement local industrialization through the 'Great Leap Forward'.

  • That involved villages, setting up furnaces in their backyards and having very localised

  • production, but with things like machinery, I think that ran into a lot of problems, which

  • was in famine, and reportedly tens of millions of people died because of that.

  • And there were also a lot of waste and poor quality of production.

  • China then embarked on a series of market reforms, including a new 'Open Door' policy

  • in 1978, which was the country's first opening to foreign investment.

  • Essentially, the major jobs and industries were all dominated and led by state-owned

  • enterprises, and then in 1978 and into the 80s and 90s, there was more of an effort to

  • allow private companies to develop in the Chinese economy.

  • Now that you have a market that's not dominated by the state, you want competition, and particularly

  • some of the goods and the technical know-how that foreign companies can bring.

  • This liberalization coincided with a program to advance China's economy, called the Four Modernization Plan.

  • The Four Modernization Plan, you can still see tenets of that today because you have

  • emphasis on agriculture, industry, national defense and science and technology.

  • So, it set up these four pillars of economic development that China would really rely on

  • to come into the 21st century.

  • The 1990s onwards, it was a very eventful time for China's economy.

  • First, you had, allowing more foreign companies into the market.

  • Many of these other major American companies, European companies coming in, and bringing

  • a little bit more competition and professionalization to this market.

  • At the same time, you also had the establishment of China's stock market, stock exchanges,

  • early innings, I would say, of regulation.

  • But it was a start, and that interaction with foreign businesses, and interaction on a political

  • level, led to more support for China in joining the World Trade Organization in 2001.

  • That helped boost their manufacturers into global supply chains.

  • Evelyn now brings us to the Chinese Communist Party's most recent chapter.

  • In 2012, President Xi Jinping came into power, and has arguably become the country's most

  • influential leader since Mao.

  • He's even been written into the party's constitution.

  • Early in his presidency, he announced the country's most high-profile economic project

  • to date: the Belt & Road Initiative.

  • The general understanding of the Belt and Road Initiative is China's effort under

  • President Xi Jinping to increase its influence globally.

  • China's also in a region that has been less economically developed versus other parts of the world.

  • A lot of state-owned enterprises are the ones who are actually taking the contracts to build

  • these bridges, hospitals or agricultural trade projects that are happening as a part of the

  • Belt and Road initiative.

  • It's just building up the regional pie, larger, in a way that China can benefit,

  • and it builds up potentially some goodwill with these other countries.

  • The details of many of these projects are usually opaque and come with strings attached.

  • You know, a lot can happen in between.

  • We've already seen Australia pulling out of Belt and Road deals in April this year.

  • What other challenges are there?

  • The G-7 has also announced recently their own infrastructure plan.

  • And you have governments, which had signed on to the Belt and Road Initiative, and then

  • now they're not quite happy with how some things played out in terms of debt or other

  • issues.

  • You're working with governments of developing countries and they have their own institutions

  • that are still trying to battle the coronavirus pandemic right now, their own social issues.

  • The very fact that they did not have their own ability to develop some of these projects

  • perhaps highlight some of the risks.

  • Then when you're talking about developed countries and their international relations

  • with China, that's an entirely different matter.

  • Right, especially now when companies that are actually caught in the middle face a lot

  • more compliance issues if you're thinking about either existing or potential sanctions

  • that could be applied from either the U.S. or EU or China, and it just makes things a

  • lot more complex.

  • Since the reforms in 1978, China's annual GDP growth has gained steadily through the decades,

  • with the exception of 2020 due to Covid-19.

  • But while most big economies are still recovering, the IMF predicts that China's economy will

  • expand by 8.4% in 2021.

  • China's fast recovery from the Coronavirus pandemic largely relied on its ability to

  • lock down cities very quickly.

  • By the second quarter, China could reopen, and it was reopening while the rest of the world

  • was still closed, and that created a lot of demand for Chinese exports, which also

  • helped the economy grow.

  • So by the end of the year, China was able to grow by 2.3% and keep that momentum going.

  • China's five-year plans also play a big role in shaping the country's future,

  • for many aspects of economic and social development.

  • The latest one encompasses sustainability targets, among others, as it aims to achieve

  • carbon neutrality before 2060.

  • We're now in the 14th five-year plan, which just started this year.

  • And there's a big emphasis on self-reliance in technology, because of the sanctions put

  • on some Chinese tech giants.

  • And then also, efforts to respond to the potential crisis from China's ageing population.

  • China sees how it could become more influential globally because innovation and creativity,

  • new products, new software, new technology was actually developed in the country, and

  • of course, there would be a lot of ownership and benefits that come with that.

  • Are there any challenges that you foresee?

  • The coronavirus has given that bit of a setback, and we're still waiting on a bigger pickup

  • on consumer spending.

  • The economy is still going to rely on other drivers of growth, such as industries, and

  • manufacturing, which, in the grand longer-term plan that Chinese authorities have, is not

  • something they want to see.

  • They actually want to rely more on consumption and private individual spending to boost economic growth.

  • Despite its challenges, China remains one of the world's biggest economic powers,

  • second only to the United States.

  • The two countries have been each other's major trading partner on a single-country

  • basis for years.

  • However, in the past year, China has been steadily increasing its trade with ASEAN and the EU.

  • China is also part of the RCEP, a trade agreement between 15 Asia-Pacific nations,

  • accounting for about 30% of the world's population.

  • We have emerging economies, all surrounding China and growing, and being able to trade

  • more with each other.

  • And so, analysts have said, RCEP is the largest trade pact.

  • And these countries will now need to think about, am I going to work more with China,

  • or do I need to work more with the U.S. and the EU, because there's going to be more and

  • more opportunity that might be tied with China than previously.

  • What is the future for China's economy under the Chinese Communist Party?

  • Under the government right now, they have this cohesion that's allowing the country

  • to do things at a grand scale.

  • People in China also emphasise to me that it's important for China to be unified,

  • that once China is unified, then they're able to do much greater things,

  • I mean, 1.4 billion people.

  • Having come 100 years since its founding, they've achieved their first goal of alleviating

  • poverty, but they're certainly not settled with that alone.

  • They have higher ambitions to build up a moderately prosperous society and go even further beyond that.

  • China isn't the only country with a state capitalism model, but it is one of the most

  • prominent examples.

  • While this model hasn't been without controversy, its competitiveness on the world stage has

  • made the international community take note.

  • Anything else you wanted to share? Maybe you plans for next weekend.

  • Next weekend? I don't know. I'll go to see an art show.

  • It's all back to normal, right, in Beijing?

  • Yeah, it's back to its over-achieving self.

July 2021 commemorates a century of the official founding of The Chinese Communist Party.

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