DISCOVERING CHINA

NIRAJ RAI
PGDM 1st Year
Jyotirmoy School of Business
Prof. Nikhil Barat
1st Trimester Exam

BY
DISCOVERING CHINA
NIRAJ RAI

CONTENTS:
1. Executive summary

2. History and Origin in China

3. Post Civil War 1949 – Present0

4. Natural barriers isolated China from all other civilizations

5. China: Cultivating the Land

6. China: Size and Population

7. Philosophy and Religion

8. Activity and Contribution

8.1. Development in Writing

8.2. Technology

9. Objective and Goals

9.1. Economic Restructuring

9.2. Economic Development in China after Mao

9.3. Major achievement of China in the last 50 Years

10. India and China Trade relations

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11. . China India Comparison

12. Future Perspective of China

1. EXECUTIVE SUMMARY (SUMMARY OR ABSTRACT)

The aim of this report is to know about China its contribution in the fields of technology,
agriculture and world economy also the future prospects of china. The reason for choosing
China is it is the second fastest growing Economies in the world.

China and India, Asia's largest emerging economies. The two Asian giants, China and
India, with one-third of the world population, are set to enter the league of the most
powerful economies within the next two to three decades, even if their per capita incomes
will remain well below those of the developed nations.

Their output would have expanded by not less than 300-400 per cent, with their combined
share of world trade anywhere between 10 and 15 per cent. This is no doubt subject to the
two countries sustaining high rates of growth of 8-10 per cent per annum in conditions of a
supportive external environment.

 Huge market potential,

 Rich labor resources,

 Comparative advantage in labor cost

 Sound corporate governance

 Stable government and society.

Bu the question lies that how China has become such a power-

What are the drivers for the change of the economy?

Who brought the changes?

How does history affect the modern economy?

To answer all these questions we had a comparative study of China?

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CHIN
A

ANALYSIS
ACTIVITIES OBJECTIVES
HISTORY & AND GOALS
ECONOMIC
FUTURE 2
.
& ORIGIN CONTRIBUTIO DEVELOPME PERSPECTIV E
&
N NY
FORECASTING
HISTORY AND ORIGIN OF CHINA

Archaeological evidence suggests that the earliest hominids in China date from 250,000 to
2.24 million years ago. A cave in Zhoukoudian (near present-day Beijing) has fossils dated
at somewhere between 300,000 to 550,000 years. The fossils are of Peking Man, an
example of Homo erectus who used fire.

The earliest evidence of a fully modern human in China comes from Liujiang County,
Guangxi, where a cranium has been found and dated at approximately 67,000 years old.
Although much controversy persists over the dating of the Liujiang remains, a partial
skeleton from Minatogawa in Okinawa, Japan has been dated to 16,600 to 18,250 years
old, so modern humans probably reached China before that time.

Dynastic rule

Xia Dynasty

Chinese tradition names the first dynasty Xia, but it was considered mythical until
scientific excavations found early bronze-age sites at Erlitou in Henan Province in 1959.
Archaeologists have since uncovered urban sites, bronze implements, and tombs in
locations cited as Xia's in ancient historical texts, but it is impossible to verify that these
remains are of the Xia without written records from the period.

Shang Dynasty

The second dynasty, the loosely feudal Shang, settled along the Yellow River in eastern
China from the 18th to the 12th century BC. They were invaded from the west by the
Zhou, who ruled from the 12th to the 5th century BC, until their centralized authority was
slowly eroded by neighboring warlords. Many strong, independent states continually
waged war with each other in the Spring and Autumn period, only occasionally deferring to
the Zhou king.

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Qin Dynasty

The first unified Chinese state was established by the Qin Dynasty in 221 BC, when the
office of the Emperor was set up and the Chinese language was forcibly
standardized. This state did not last long, as its legalist policies soon led to widespread
rebellion.

Han Dynasty

The subsequent Han Dynasty ruled China between 206 BC and 220 AD, and created a
lasting Han cultural identity among its populace that would last to the present day. The
Han Dynasty expanded the empire's territory considerably with military campaigns
reaching Korea, Vietnam, Mongolia and Central Asia, and also helped establish the Silk
Road in Central Asia.

After Han's collapse, another period of disunion followed, including the highly chivalric
period of the Three Kingdoms. Independent Chinese states of this period also opened
diplomatic relations with Japan, introducing the Chinese writing system there. In 580 AD,
China was reunited under the Sui. However, the Sui Dynasty was short-lived after a
failure in the Goguryeo-Sui Wars (598–614) weakened it.

Tang and Song dynasties

Under the succeeding Tang and Song dynasties, Chinese technology and culture
reached its zenith. The Tang Empire was at its height of power until the middle of the
8th century, when the An Shi Rebellion destroyed the prosperity of the empire. The Song
dynasty was the first government in world history to issue paper money and the first
Chinese polity to establish a permanent standing navy. Between the 10th and 11th
centuries, the population of China doubled in size. This growth came about through
expanded rice cultivation in central and southern China, and the production of abundant
food surpluses. Within its borders, the Northern Song Dynasty had a population of some
100 million people. The Song Dynasty was a culturally rich period in for philosophy and the
arts. Landscape art and portrait painting were brought to new levels of maturity and
complexity after the Tang Dynasty, and social elites gathered to view art, share their own,
and make trades of precious artworks. Philosophers such as Cheng Yi and Chu Hsi
reinvigorated Confucianism with new commentary, infused Buddhist ideals, and
emphasized a new organization of classic texts that brought about the core doctrine of
Neo-Confucianism.

Yuan Dynasty

In 1271, the Mongol leader and fifth Khagan of the Mongol Empire Kublai Khan
established the Yuan Dynasty, with the last remnant of the Song Dynasty falling to the
Yuan in 1279. Before the Mongol invasion, Chinese dynasties reportedly had
approximately 120 million inhabitants; after the conquest was completed in 1279, the
1300 census reported roughly 60 million people.

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Ming Dynasty

A peasant named Zhu Yuanzhang overthrew the Mongols in 1368 and founded the Ming
Dynasty. Ming Dynasty thinkers such as Wang Yangming would further critique and
expand Neo-Confucianism with ideas of individualism and innate morality that would have
tremendous impact on later Japanese thought. Chosun Korea also became a nominal
vassal state of Ming China and adopted much of its Neo-Confucian bureaucratic
structure. China's capital was moved from Nanjing to Beijing during the early Ming
Dynasty. The Ming fell to the Manchus in 1644, who then established the Qing Dynasty.
When Beijing was captured by Li Zicheng's peasant rebels in 1644, the last Ming Emperor
Chongzhen committed suicide.

Qing Dynasty

The Manchu then allied with Ming Dynasty general Wu Sangui and seized control of
Beijing, which became the new capital of the Qing dynasty.

The Qing Dynasty, which lasted until 1912, was the last dynasty in China. In the 19th
century the Qing Dynasty adopted a defensive posture towards European imperialism,
even though it engaged in imperialistic expansion into Central Asia. At this time China
awoke to the significance of the rest of the world, the West in particular. As China opened
up to foreign trade and missionary activity, opium produced by British India was forced
onto Qing China. Two Opium Wars with Britain weakened the Emperor's control.

A corner tower of the Forbidden City at night; the palace was the residence for the
imperial family from the reign of the Yongle Emperor of the Ming Dynasty in the 15th
century until the fall of the Qing Dynasty in 1912.

Taiping Civil War

One result was the Taiping Civil War, which lasted from 1851 to 1862. It was led by
Hong Xiuquan, who was partly influenced by an idiosyncratic interpretation of Christianity.
Hong believed himself to be the son of God and the younger brother of Jesus. Although the
Qing forces were eventually victorious, the civil war was one of the bloodiest in human
history, costing at least 20 million lives (more than the total number of fatalities in the
First World War), with some estimates of up to two hundred million. Other costly rebellions
followed the Taiping Rebellion, such as the Punti-Hakka Clan Wars (1855–67), Nien
Rebellion (1851–1868), Muslim Rebellion (1862–77), Panthay Rebellion (1856–1873) and
the Miao Rebellion (1854–73). These rebellions resulted in an estimated loss of several
million lives each and led to disastrous results for the economy and the countryside.[19]
[20][21] The flow of British opium hastened the empire's decline. In the 19th century, the
age of colonialism was at its height and the great Chinese Diaspora began. About 35
million overseas Chinese live in Southeast Asia today. The famine in 1876-79 claimed
between 9 and 13 million lives in northern China. From 108 BC to 1911 AD, China
experienced 1,828 famines, or one per year, somewhere in the empire.

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While China was wracked by continuous war, Meiji Japan succeeded in rapidly modernizing
its military and set its sights on Korea and Manchuria. Influenced by Japan, Korea declared
independence from Qing China's suzerainty in 1894, leading to the First Sino-Japanese
War, which resulted in the Qing Dynasty's cession of both Korea and Taiwan to Japan.
Following this series of defeats, a reform plan for the empire to become a modern Meiji-
style constitutional monarchy was drafted by the Emperor Guangxu in 1898, but was
opposed and stopped by the Empress Dowager Cixi, who placed Emperor Guangxu under
house arrest in a coup d'état. Further destruction followed the ill-fated 1900 Boxer
Rebellion against westerners in Beijing. By the early 20th century, mass civil disorder had
begun, and calls for reform and revolution were heard across the country. The 38-year-old
Emperor Guangxu died under house arrest on 14 November 1908, suspiciously just a day
before Cixi's own death. With the throne empty, he was succeeded by Cixi's handpicked
heir, his two year old nephew Puyi, who became the Xuantong Emperor. Guangxu's
consort, who became the Empress Dowager Longyu, signed the abdication decree as
regent in 1912, ending two thousand years of imperial rule in China. She died, childless, in
1913.

Republic of China (1912–49)

On 1 January 1912, the Republic of China was established, heralding the end of the Qing
Dynasty. Sun Yat-sen of the Kuomintang (the KMT or Nationalist Party) was proclaimed
provisional president of the republic. However, the presidency was later given to Yuan
Shikai, a former Qing general, who had ensured the defection of the entire Beiyang Army
from the Qing Empire to the revolution. In 1915, Yuan proclaimed himself Emperor of
China but was forced to abdicate and return the state to a republic when he realized it was
an unpopular move, not only with the population but also with his own Beiyang Army and
its commanders.

After Yuan Shikai's death in 1916, China was politically fragmented, with an internationally
recognized but virtually powerless national government seated in Peking (Beijing).
Warlords in various regions exercised actual control over their respective territories. In the
late 1920s, the Kuomintang, under Chiang Kai-shek, was able to reunify the country under
its own control, moving the nation's capital to Nanking (Nanjing) and implementing
"political tutelage", an intermediate stage of political development outlined in Sun Yat-
sen's program for transforming China into a modern, democratic state. Effectively, political
tutelage meant one-party rule by the Kuomintang.

The Sino-Japanese War of 1937–1945 (part of World War II) forced an uneasy alliance
between the Nationalists and the Communists as well as causing around 20 million
Chinese civilian deaths. With the surrender of Japan in 1945, China emerged victorious but
financially drained. The continued distrust between the Nationalists and the Communists
led to the resumption of the Chinese Civil War. In 1947, constitutional rule was
established, but because of the ongoing Civil War many provisions of the ROC constitution
were never implemented on the mainland.

Territories currently administered by two states that formally use the name China:
the PRC (in purple) and the ROC (in orange).

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3.POST CIVIL WAR (1949–PRESENT)

After its victory in the Chinese Civil War, the Communist Party of China (CCP) led by Mao
Zedong gained control of most of Mainland China. On 1 October 1949, they established
the People's Republic of China as a Socialist State headed by a "Democratic Dictatorship"
with the CCP as the only legal political party, thus, laying claim as the successor state of
the ROC. The central government of the Chinese Nationalist Party led by Chiang Kai-shek
was forced to retreat to the island of Taiwan that it had occupied at the end of World War
II, and moved the ROC government there. Major armed hostilities ceased in 1950 but no
peace treaty has been signed. An estimated 36 million died during the Great Chinese
Famine of 1958–61.

Beginning in the late 1970s, the Republic of China began the implementation of full,
multi-party, representative democracy in the territories still under its control (Taiwan, and
a number of smaller islands including Quemoy and Matsu). Today, the ROC has active
political participation by all sectors of society. The main cleavage in ROC politics is the
issue of eventual political unification with the Chinese mainland vs. formal independence
of Taiwan.

After the Chinese Civil War, mainland China underwent a series of disruptive
socioeconomic movements starting in the late 1950s with the Great Leap Forward and
continuing in the 1960s with the Cultural Revolution that left much of its education system
and economy in shambles. With the death of its first generation Communist Party leaders
such as Mao Zedong and Zhou Enlai, the PRC began implementing a series of political and
economic reforms advocated by Deng Xiaoping that eventually formed the foundation for
mainland China's rapid economic development starting in the 1990s.

Post-1978 reforms on the mainland have led to some relaxation of control over many
areas of society. However, the PRC government still has almost absolute control over
politics, and it continually seeks to eradicate what it perceives as threats to the social,
political and economic stability of the country. Examples include the fight against
terrorism, jailing of political opponents and journalists, custody regulation of the press,
regulation of religion, and suppression of independence/secessionist movements. In 1989,
the student protests at Tiananmen Square were violently put to an end by the Chinese
military after 15 days of martial law. In 1997, Hong Kong was ceded to the PRC by the
United Kingdom, and in 1999, Macau was handed over by Portugal.

Today, mainland China is administered by the People's Republic of China—a one-party

state under the leadership of the Chinese Communist Party—while the island of Taiwan
and surrounding islands are administered by the Republic of China—a democratic multi-
party state. After the founding of the People's Republic in 1949, both states claimed to be
the sole legitimate ruler of all of China. After the Kuomintang retreat to Taiwan in 1949,
the Republic of China had maintained official diplomatic relations with most states around
the world, but by the 1970s, a shift had occurred in international diplomatic circles and the
People's Republic of China gained the upper hand in international diplomatic relations and
recognition count. In 1971, under resolution 2758, the representatives of Chiang Kai-shek
to the United Nations were expelled from the intergovernmental organization. With the
expulsion of the representatives, and effectively the Republic of China, the representatives
of the People's Republic of China were invited to assume China's seat on the UN Security
Council, the UN General Assembly and other United Nations councils and agencies. Later

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attempts by the Republic of China to rejoin the UN have either been blocked by the
People's Republic of China, which has veto power on the UN Security Council, or rejected
by the United Nations Secretariat or a United Nations General Assembly committee
responsible for the General Assembly's agenda.

Since the relocation of its capital to Taiwan, the Republic of China has not formally
renounced its claim to authority over all of China, nor has it changed its official maps,
which include the mainland and Mongolia. Following the introduction of full democracy,
and the electoral victory of the DPP's Chen Shui-bian in the presidential elections, the ROC
had adopted a policy of separating the state's identity from "China", while moving towards
identifying the state as "Taiwan". However, the ROC has not made any formal moves to
change the name, flag, or national anthem of the state to reflect a Taiwanese identity due
to the lack of consensus within Taiwan, pressure from the United States and the fear of
invasion or military action from the People's Republic of China against the island. The
Republic of China during the DPP years did not actively pursue its claims on mainland
China or Mongolia, however, following the electoral victory of the KMT's Ma Ying-jeou as
president, the claim to mainland China has been reasserted.[30] The People's Republic of
China claims to have succeeded the Republic of China as the sole legitimate governing
authority of all of China, which, from the official viewpoint of the People's Republic of
China, includes the island of Taiwan. Over the last 50 years, both the Republic of China
and the People's Republic of China have used diplomatic and economic means to compete
for recognition in the international arena. Because most international, intergovernmental
organizations observe the One-China policy of the People's Republic of China, the PRC has
been able to pressure organizations, such as the World Health Organization and the
International Olympic Committee, to refuse to officially recognize the Republic of China.
Due to the One-China policy, states around the world are pressured to refuse, or to cut off
diplomatic relations with the Republic of China. As a result, 23 U.N. member states
currently maintain official diplomatic relations with the Republic of China, while the vast
majority of U.N. member states maintain official diplomatic relations with the People's
Republic of China.

4. NATURAL BARRIERS ISOLATED CHINA FROM ALL OTHER

CIVILIZATIONS

China ranges from mostly plateaus and mountains in the west to lower lands in the east.
Principal rivers flow from west to east, including the Yangtze (central), the Huang He
(Yellow river, north-central), and the Amur (northeast), and sometimes toward the south
(including the Pearl River, Mekong River, and Brahmaputra), with most Chinese rivers
emptying into the Pacific Ocean.

In the east, along the shores of the Yellow Sea and the East China Sea there are extensive
and densely populated alluvial plains. On the edges of the Inner Mongolian plateau in the
north, grasslands can be seen. Southern China is dominated by hills and low mountain
ranges. In the central-east are the deltas of China's two major rivers, the Huang He and
Yangtze River. Most of China's arable lands lie along these rivers, and they were the
centers of China's major ancient civilizations. Other major rivers include the Pearl River,
Mekong, Brahmaputra and Amur. Yunnan Province is considered a part of the Greater

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Mekong Sub region, which also includes Myanmar, Laos, Thailand, Cambodia, and
Vietnam.

Main geographic features and regions of China.

In the west, the north has a great alluvial plain, and the south has a vast calcareous
tableland traversed by hill ranges of moderate elevation, and the Himalayas, containing
Earth's highest point, Mount Everest. The northwest also has high plateaus with more arid
desert landscapes such as the Taklimakan and the Gobi Desert, which has been
expanding. During many dynasties, the southwestern border of China has been the high
mountains and deep valleys of Yunnan, which separate modern China from Burma, Laos
and Vietnam.

The Paleozoic formations of China, excepting only the upper part of the Carboniferous
system, are marine, while the Mesozoic and Tertiary deposits are estuarine and
freshwater, or else of terrestrial origin. Groups of volcanic cones occur in the Great Plain of
north China. In the Liaodong and Shandong Peninsulas, there are basaltic plateaus.

The climate of China varies greatly. The northern zone (containing Beijing) has summer
daytime temperatures of more than 30 degrees Celsius and winters of Arctic severity. The
central zone (containing Shanghai) has a temperate continental climate with very hot
summers and cold winters. The southern zone (containing Guangzhou) has a subtropical
climate with very hot summers and mild winters.

Due to a prolonged drought and poor agricultural practices, dust storms have become
usual in the spring in China. Dust has blown to southern China and Taiwan, and has
reached the West Coast of the United States. Water, erosion, and pollution control have
become important issues in China's relations with other countries.

5. CHINA: CULTIVATING THE LAND

China is geographically divided into two parts. Outer China is a sparsely settled region of
high mountains, plateaus, steppes, and deserts. Agricultural China is where 95% of the
Chinese people live.

Under Communist rule, China’s agricultural land and farmers were organized in to
collective farms in an attempt to increase agricultural production.

Introduction
In 1949, China’s grain output was 113.18 million tons, and that of cotton 444,000 tons;
the agricultural foundation was fragile. Between 1950 and 1953, the Chinese government
carried out a wide-ranging land reform in the rural areas. Peasants with little or no land
were given land of their own, greatly arousing their enthusiasm for production. During the
period of the First Five-Year Plan (1953-57), the yearly gross output of agriculture

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increased by 4.5 percent, on average. This period was the first “golden time” for China’s
agricultural development.

From 1958 to 1978, China’s agriculture developed slowly. During this period, China
practiced the cooperative and people’s commune systems in rural areas successively,
which emphasized the effectiveness of centralized and unified management, but reduced
the efficiency of resource utilization and allocation. As a result, the peasants’ enthusiasm
for production was greatly dampened. In this period, the gross agricultural output value
increased by only 2.3 percent, on average, every year.

In 1978, China introduced the household contract responsibility system, linking

remuneration to output, and started to dismantle the people’s commune system,
eliminating the links between organizations of state power and economic organizations.
Contracting land out to peasants altered the distribution form of land and mobilized the
peasants* enthusiasm for production. In 1985, a second reform was carried out, which
eliminated the state monopoly of purchase and marketing of agricultural products, and
implemented the system of purchase according to contracts. The reform made the market
play a basic role in adjusting the supply and demand situation for agricultural products
and allocating resources, and aroused the peasants’ creativeness and enthusiasm for
production. Commodity production and circulation in rural areas developed at an
unprecedented scale and rate. Meanwhile, through more than ten years of adjustment, the
industrial structure in rural areas is becoming more complete with each passing day: the
proportion of primary industry has declined markedly, while the proportion of the
secondary and tertiary industries has risen. The proportion of agriculture in primary
industry has also declined markedly, while that of animal husbandry and fisheries has
grown; the proportion of cash crops in farm production has gone up, while that of grain
crops gone down. Meanwhile, the proportion of secondary industry has dropped, while that
of tertiary industry has risen.

For 21 years, the average growth rate of China’s agricultural gross output value reached
6.5 percent, the highest being 12.3 percent in 1984, which surpassed the world’s average
development level for the same period. In 1999, China’s agricultural production continued
to develop in an all-round way, and the outputs of grain, cotton and oil-bearing crops were
508.39 million tons, 3.83 million tons and 26.012 million tons, respectively, increases of
66.7, 76.7 and 400 percent over 1978; the output of meat amounted to 59.61 million tons,
or seven times that of 1978; and that of aquatic products 41.224 million tons, an increase
of 8.8 times over 1978. As a result, the chronic shortage of major agricultural products
was finally overcome. Now the annual average quantities of meat, eggs and milk per
person are 50, 17 and 6.6 kg, which are close to or surpass the world’s average. The
problem of shortages of food, which troubled Chinese peasants for hundreds of years, has
been solved at last.

The rise of township enterprises has promoted the all-round development of the
agricultural economy. In 1987, the gross output value of township enterprises exceeded
that of farming; in 1990, the township enterprises earned 13 billion US dollars from
exports, about 23.8 percent of the national gross value of foreign exchange earned from
exports. Thousands of towns are playing an important role in eliminating the differences
between urban and rural areas, and promoting the integration of urban and rural areas.

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The per capita net income of peasants increased from 134 yuan in 1978 to 2,210 yuan in
1999

CROP CULTIVATION

China’s main grain crops are rice, wheat, corn, soybeans and tuber crops. Paddy rice is the
major grain crop in China, grown mainly in the Yangtze River valley and southern China,
and on the Yunnan-Guizhou Plateau. Its output accounts for two-fifths of the total grain
output. The output of wheat accounts for slightly more than one fifth of the total output of
grain; it is planted throughout China but mainly on the North China Plain. The output of
corn, grown in the provinces of northeastern, northern and southwestern China, accounts
for one fourth of the total grain output. Soybeans are grown on the Northeast China Plain
and the plains along the Yellow and Huaihe rivers. Sweet potatoes are grown widely in
China, but mainly in the Pearl River valley, along the middle and lower reaches of the
Yangtze River, the lower reaches of the Yellow River and in the Sichuan Basin.

Cash crops include cotton, peanuts, rape, sesame, sugarcane, tea, tobacco, mulberry and
fruit. Cotton is grown mainly along the Yellow River and the middle and lower reaches of
the Yangtze River, and in the Manas River valley in Xinjiang. Peanuts are grown in
Shandong, Guangdong, Guangxi and Liaoning. Rape is produced along the middle and
lower reaches of the Yangtze River, and in the Sichuan Basin. Sugarcane is grown in
southern China. Beets are grown for the most part in Heilongjiang, Jilin and Inner Mongolia

6. CHINA: SIZE AND

POPULATION

304,059,724 POPULATION*
1,330,044,544 POPULATION*

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The population of China is more than one billion people, the largest national group in the
world. Two-thirds of the Chinese people are farmers, but only 4% of China’s land can be
cultivated

In an effort to balance the relationship between land and people, China adopted a “one-
couple, one-child” policy in the 1980’s.

*
Data from US & Chinese census as per July 2008.

CHINA'S POPULATION PROBLEM

The Chinese government has taken the enforcement of family planning and birthrate laws
to an extreme by violating the civil rights of its citizens, which has had bad effects on the
morale of its people (Whyte 161). China's population has grown to such an enormous size
that it has become a problem to both the people and government. China, the most
populous country in the world, has an estimated population of about one thousand-one
hundred-thirty three point six million (Hsu 1). Ninety-four percent of the population thrives
in the eastern half of China, which composes about forty-three percent of China's total
area (Hsu 1). The eastern half of China contains its most populous cities like Beijing,
Shanghai, and Tianjin. However these cities have a low fertility rate due to recent
bandwagons of birth control. The average density in the eastern half of China averages
around two-hundred and thirty-six people per square kilometer, whereas the density in the
west half averages around ten point six people per square kilometer (Hsu 1). Current
enforcement of Chinese laws prevents migration between provinces without proper
authorization, as the citizens in the west half of China have a desire to live in a more ur

7. CHINA: PHILOSOPHY AND RELIGION

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TRIPOD OF CHINA

CONFUCIANISM TAOISM OR LAOTSE Buddhism

CONFUCIANISM

 5 Sacred Relationships
 Wife obeys husband, Children obey parents, Younger children obey
 older children, Friend is loyal to Friend, all People obey Emperor
 Ancestor Worship

Confucius (K'ung Fu-tzu), born in the state of Lu (northern China), lived from 551 to 479 B.C. He was a brilliant
teacher, viewing education not merely as the accumulation of knowledge but as a means of self-transformation.
His legacy was a system of thought emphasizing education, proper behavior, and loyalty. His effect on Chinese
culture was immense.

The teachings of Confucius are contained in the Analects, a collection of his sayings as remembered by his
students. They were further developed by philosophers such as Mencius (Meng Tse, fl. 400 B.C.). Confucianism
is little concerned with metaphysical discussion of religion or with spiritual attainments. It instead emphasizes
moral conduct and right relationships in the human sphere.

Cultivation of virtue is a central tenet of Confucianism. Two important virtues are jen, a benevolent and
humanitarian attitude, and li, maintaining proper relationships and rituals that enhance the life of the individual,
the family, and the state. The “five relations,” between king and subject, father and son, man and wife, older and
younger brother, and friend and friend, are of utmost importance. These relationships are reinforced by
participation in rituals, including the formal procedures of court life and religious rituals such as ancestor worship.

Confucius revolutionized educational thought in China. He believed that learning was not to be focused only on
attaining the skills for a particular profession, but for growth in moral judgment and self-realization. Confucius's
standards for the proper conduct of government shaped the statecraft of China for centuries. Hundreds of temples
in honor of Confucius testify to his stature as sage and teacher.

Confucianism was far less dominant in 20th-century China, at least on an official level. The state cult of
Confucius was ended in 1911. Still, Confucian traditions and moral standards are part of the cultural essence of
China and other East Asian countries

Taoism
Founder Lao Tzu

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Tao (pronounced "Dow") can be roughly translated into English as path, or the way. It is basically indefinable. It
has to be experienced. It "refers to a power which envelops, surrounds and flows through all things, living and
non-living. The Tao regulates natural processes and nourishes balance in the Universe. It embodies the harmony
of opposites (i.e. there would be no love without hate, no light without dark, no male without female.)" 2

The founder of Taoism is believed by many religious historians to be Lao-Tse (604-531 BCE), whose life
overlapped that of Confucius (551-479 BCE). However other historians suggest that he is a synthesis of a number
of historical figures. Others suggest that he was a mythical figure. Still others suggest that he lived in the 4th
century BCE.

He was searching for a way that would avoid the constant feudal warfare and other conflicts that disrupted society
during his lifetime. The result was his book: Tao-te-Ching (a.k.a. Daodejing). Others believe that he is a mythical
character.

Taoism started as a combination of psychology and philosophy but evolved into a religious faith in 440 CE when
it was adopted as a state religion. At that time Lao-Tse became popularly venerated as a deity. Taoism, along with
Buddhism and Confucianism, became one of the three great religions of China. With the end of the Ch'ing
Dynasty in 1911, state support for Taoism ended. Much of the Taoist heritage was destroyed during the next
period of warlordism. After the Communist victory in 1949, religious freedom was severely restricted. "The new
government put monks to manual labor, confiscated temples, and plundered treasures. Several million monks
were reduced to fewer than 50,000" by 1960. 3 During the cultural revolution in China from 1966 to 1976, much
of the remaining Taoist heritage was destroyed. Some religious tolerance has been restored under Deng Xiao-ping
from 1982 to the present time.

Taoism currently has about 20 million followers, and is primarily centered in Taiwan. About 30,000 Taoists live
in North America; 1,720 in Canada (1991 census). Taoism has had a significant impact on North American
culture in areas of "acupuncture, herbalism, holistic medicine, meditation and martial arts

Taoism, native to China, has a history of more than 1,700 years. China now has over 1,500
Taoist temples and more than 25,000 Taoist priests and nuns.

Legalism

Founded by Han Fei Tzu Believed in strict, clear laws and a powerful, authoritarian
government. Favored severe punishments, and believed everyone should take
responsibility for obeying the law.
Political dissent was a high crime punishable by death.

BUDDHISM SPREAD TO CHINA FROM INDIA.

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Buddhism is a religion and philosophy based on the teachings of the Buddha. Buddhism
gradually spread from India throughout Asia to Central Asia, Sri Lanka , Tibet , Southeast
Asia, as well as to East Asian countries such as China , Korea , and Japan.With
approximately 360 million followers, Buddhism is considered a major world religion.

Buddhism arrived in China at the start of the 1st century from Central Asia by way of the
Silk Road. The year 67 saw Buddhism's official introduction to China with the coming of
the two monks Moton and Chufarlan.

Nevertheless most of the Chinese gentry were indifferent to these Central Asian travelers
and their religion. Not only was their religion unknown but much of it seemed alien and
amoral to Chinese sensibilities. Concepts such as monasticism and individual spiritual
enlightenment directly contradicted the core Confucian principles of family and emperor.
Confucianism promoted social stability, order, strong families, and practical living. Chinese
officials questioned how a monk's personal attainment of nirvana benefited the empire.
Buddhism was less antithetical to Daoism, the other major religion of China, but at its core
Daoism sought harmony with the natural world while Buddhism sought to master the inner
world.

To thrive in China , Buddhism had to transform itself into a system that could exist within
the Chinese way of life. Thus obscure Indian sutras that advocated filial piety became core
texts in China . Buddhism was made compatible with ancestor worship and participation in
China 's hierarchical system. Works were written arguing that the salvation of an individual
was a benefit to that individual's society and family and monks thus contributed to the
greater good.

It is conjectured that the shocking collapse of the Han Dynasty in 220 and the resulting
period of social upheaval and political unrest known as the Three Kingdoms period may
have helped the spread of Buddhism.

It is instructive that Buddhism propagated faster in northern China than in the south.
Social upheaval in northern China worked to break down cultural barriers between the
elite ruling families and the general populace, in contrast to the south where elite clans
and royal families firmly monopolized politics. Daoist and Confucian political ideology had
long consolidated the political status of elite clans in the south. Support of another religion
would have unknown and possibly adverse effects, for which these clans would not risk
their privileges. Furthermore pro-Buddhist policy would not be backed by the bureaucracy,
which had been staffed by members of the clans. Southern rulers were in weaker positions
to strive for their legitimacy - some were even installed by the clans. It was not until the
reign of Emperor Wu of the Liang Dynasty that saw the official support of Buddhism. But
Buddhism spread pretty well in the peasant populace, both in the north and the south.

The popularization of Buddhism in Tang Dynasty is evident in the many scripture-filled

caves and structures surviving today. The Mogao Caves near Dunhuang in Gansu
province, the Longmen Grottoes near Luoyang in Henan and the Yungang Grottoes near
Datong in Shanxi are the most renowned of the Northern, Sui and Tang Dynasties. The
Diamond Sutra of AD 868, a Buddhist scripture discovered in AD 1907 inside the Mogao
Caves , was the first dated example of block printing.

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As the first external religion and one of the three major schools of thought in China ,
Buddhism plays a very important role in China religion. It has affected and been affected
by Chinese culture, politics, literature and philosophy for almost two millenia.

Buddhism has a history of 2,000 years in China. Currently China has 13,000-some
Buddhist temples and about 200,000 Buddhist monks and nuns. Among them are 120,000
lamas and nuns, more than 1,700 Living Buddhas, and 3,000-some temples of Tibetan
Buddhism and nearly 10,000 Bhiksu and senior monks and more than 1,600 temples of
Pali Buddhism.

8. ACTIVITIES AND CONTRIBUTION

8.1. DEVELOPMENT OF WRITING

The earliest examples of Chinese writing are found on oracle bones. Shang dynasty rulers
consulted the gods through the use of oracle bones, animal bones and tortoise shells on
which priests scratched questions for the gods. The priest applied a hot poker to the
bones which cracked and then interpreted the cracks to see how the gods answered the
question.

The Chinese writing system is not alphabetic like English. It used symbols for words called
characters. Each character stands for an idea, not a sound. The characters are read
vertically in columns (down and up). The written language is not linked to the spoken
language, so people all over China could learn the same system of writing, even if they
spoke different languages.

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8.2 TECHNOLOGY
Bronze

During the Shang dynasty, Chinese artisans learned to make beautiful objects from
bronze to be used in religious ceremonies

Iron

Ancient Chinese learned how to build blast furnaces that allowed them to produce cast
iron used for weapons and agricultural tools such as the mold board plow.

Silk

Silk cloth was made by drawing the fine threads from the cocoon of a silkworm, spinning
the fiber into yarn, and weaving them into fabric.

Printing & Paper

Papermaking is known to have been traced back to China about 105 CE, when Tsai Lun, an
official attached to the Imperial court during the Han Dynasty (202 BCE-220 CE), created a
sheet of paper using mulberry and other bast fibres along with fishnets, old rags, and
hemp waste. However a recent archaeological discovery has been reported from near
Dunhuang of paper with writing on it dating from 8 BCE, while paper had been used in
China for wrapping and padding since the 2nd century BCE. Paper used as a writing
medium became widespread by the 3rd century, and by the 6th century toilet paper was
starting to be used in China as well. During the Tang Dynasty (618-907 CE) paper was
folded and sewn into square bags to preserve the flavor of tea, while the later Song
Dynasty (960-1279 CE) was the first government on Earth to issue paper-printed money.
Modern papermaking began in the early 1800s in Europe with the development of the
Fourdrinier machine, which produces a continuous roll of paper rather than individual
sheets. These machines have become very large, up to 500 feet (~150 m) in length,
producing a sheet 400 inches (~10 m) wide, and operating at speeds of over 60 mph (100

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km/h). In 1844, both Canadian inventor Charles Fenerty and German inventor F.G. Keller
had invented the machine and process for pulping wood for the use in papermaking. This
would end the nearly 2000-year use of pulped rags and start a new era for the production
of newsprint and eventually all paper out of Gunpowder Magnetic compass

Gunpowder:

Gunpowder, also called black powder, is a mixture of sulfur, charcoal, and potassium nitrate. Known in Chinese
as "Huo Yao", it is one of the Four Great Inventions of ancient China.[1] It burns rapidly, producing volumes of
hot solids and gases which can be used as a propellant in firearms and as a pyrotechnic composition in fireworks.
The term gunpowder also refers broadly to any propellant powder. Modern firearms do not use the traditional
gunpowder (black powder) described in this article, but instead use smokeless powder. Antique firearms or
replicas of antique firearms are often used with black powder substitute.

Gunpowder is classified as a low explosive because of its relatively slow decomposition rate and consequently
low brisance. Low explosives deflagrate at subsonic speeds. High explosives detonate, producing a supersonic
wave. The gases produced by burning gunpowder generate enough pressure to propel a bullet, but not enough to
destroy a gun barrel. This makes gunpowder less suitable for shattering rock or fortifications, where high
explosives such as TNT are preferred.

Chinese Mathematics:

Mathematics in China emerged independently by the 11th century BC.[1] The Chinese independently developed
very large and negative numbers, decimals, a decimal system, a binary system, algebra, geometry, trigonometry.

Magnetic Compass:

A compass is an instrument containing a freely suspended magnetic element which displays the direction of the
horizontal component of the Earth's magnetic field at the point of observation. The magnetic compass is an old
Chinese invention, probaly first made in China during the Qin dynasty (221-206 B.C.). Chinese fortune tellers
used lodestones (a mineral composed of an iron oxide which aligns itself in a north-south direction) to construct
their fortune telling boards.

Few other Contributions:

Toilet paper, early seismological detectors, matches, pound locks, the double-action piston pump, blast
furnace and cast iron, the iron plough, the multi-tube seed drill, the suspension bridge, natural gas as
fuel, the differential gear for the South Pointing Chariot, the hydraulic-powered armillary sphere, the
hydraulic-powered trip hammer, the mechanical chain drive, the mechanical belt drive, the raised-relief
map, the propeller, the crossbow, the cannon, the rocket, the multistage rocket, etc. Chinese astronomers
were among the first to record observations of a supernova. The work of the astronomer Shen Kuo
(1031–95) alone was most impressive, as he theorized that the sun and moon were spherical, corrected
the position of the polestar with his improved sighting tube, discovered the concept of true north, wrote
of planetary motions such as retrogradation, and compared the orbital paths of the planets to points on
the shape of a rotating willow leaf.

9. OBJECTIVES AND GOALS

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9.1 ECONOMIC RESTRUCTURING

The Third Plenary Session of the CPC 11th Central Committee, held in 1978, made the decision to shift
the policy stress to socialist modernization, and implement the strategic decision on reform and opening
to the outside world. The reform began in the countryside: The contracted household responsibility
system linking remuneration to output and the two-layer management system featuring the integration of
centralization and decentralization began to be implemented; centralized and assigned purchases of
agricultural and sideline products were gradually eliminated, and controls on the prices of most
agricultural and sideline products were relaxed; the adjustment of the industrial structure in rural areas,
the development of diversified operations and township enterprises mobilized the peasants’ socialist
enthusiasm for production. The Third Plenary Session of the CPC 12th Central Committee, held in 1984,
adopted the Decision on Restructuring the Economic System, which signaled the elevation of the reform
of China’s economic system to an urban-centered stage. The 14th National Congress of the CPC held in
1992 established Deng Xiaoping’s theory of building socialism with Chinese characteristics as the
guiding policy in China, and put forward the goal of China’s economic reform as establishing a socialist
market economy system. Its principal contents may be summarized as follows: Adopting a series of
macro-adjustment and control measures to carry out the reform in depth and in all aspects, public
ownership will continue to be the main form of ownership as various types of ownership are jointly
developed; the operation mechanism of state-owned enterprises will be further transformed to meet the
requirements of the market economy; the property rights and responsibilities of enterprises will be
clearly defined, the functions of the government separated from those of enterprises, and enterprises
scientifically managed; an open and unified national market system will be established, closely
integrating urban and rural markets, providing for reciprocal flows between domestic and international
markets, and promoting the optimization of resource allocation; changing the government's functions in
economic management and establishing an optimal macro-regulatory system chiefly employing indirect
means; an income distribution system based on distribution according to work will be established in
which efficiency is given precedence and fairness in distribution is taken into account; a multi-tier social
security system will be set up to accelerate the development of China’s economy. The 15th National
Congress of the CPC, held in 1997, put forward the viewpoint that the non-public- ownership sector is
an important component part of China’s socialist economy. Encouraging essential production factors,
such as capital and technology, to participate in the distribution of gains enables the reform of China’s
economic system to take bigger steps. By 1999, the reform had gone smoothly in every aspect, and
remarkable progress had been made. For instance, much work had been done to deepen the reform of the
grain circulation system, the reform of state-owned enterprises and the reform of the banking system,
and new achievements had been made. Reforms had been proposed for the housing and medical
insurance systems; and plans for the reform of the investment, banking, financial and taxation systems
were being formulated. The institutional restructuring of the State Council has been going smoothly, and
has achieved important results. Now, China’s socialist market economy system is being set up, the basic
functions of the market in resource allocation have been obviously strengthened, and the initial
framework of the macro-adjustment and control system has taken shape. Moreover, the form of
economic growth is changing from the extensive to the intensive type. By 2010, China will have
established a comparatively sound socialist market economy, which will be comparatively mature by
2020.

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9.2 ECONOMIC DEVELOPMENT IN CHINA AFTER

MAO

THE FOUR MODERNIZATIONS

Although the Four Modernizations are associated with Deng Xiaoping this program was articulated by Zhou Enlai
in 1975. The Communist Party from Lenin was committed to industrialization but Maoism took a different
attitude, that modernization was a "road to capitalistic restoration." Zhou Enlai was suffering from cancer and was
politically too weak to confront Mao's wife, Jiang Qing, on this issue. But Deng Xiaoping was more combative. In
the fall of 1975 he published three documents which were to be the basis for the Four Modernizations. The Gang
of Four labeled these documents "Three Poisonous Weeds" and made Deng the target of the "Antirightist
Deviationist Wind Campaign." In his New Year's Message of 1976 Mao warned against emphasizing material
progress. By April Deng had been dismissed for all his official posts.

By October of 1976 Mao was dead and the Gang of Four under arrest. Deng was rehabilitated and the Four
Modernizations promoted. By August 1977 Deng was reinstated and he delivered a speech to the Eleventh Party
Congrees stressing the Four Modernizations of :

• Agricuture
• Industry
• Science and Technology
• National Defense

In practical terms this meant "electricity in the rural areas, industrial automation, a new economic
outlook, and greatly enhanced defense strength.

INTRODUCTION

Along with the coming of 2000, the PRC had undergone a glorious yet tortuous course of 50 years, amid great
changes in Chinese society. Before the founding of New China in 1949, China’s highest yearly outputs of major
industrial and agricultural products were 445,000 tons of yarn, 2.79 billion meters of cloth, 61,880,000 tons of
coal, 320,000 tons of crude oil, 6 billion kwh of electric energy production, 150 million tons of grain, and 849,000
tons of cotton. Since the founding of New China, especially in the 21 years after the start of the reform and
opening to the outside world in 1978, China has made great achievements in economic construction and social
development. In 1999, the GDP was 8,205.4 billion yuan, an increase of 6.4 times over 1978, at constant prices;
the outputs of some major industrial and agricultural products, such as grain, cotton, meat, edible oil, coal, steel,
cement, cloth and TV sets, leapt from a backward position to first place in the world.

In accordance with Deng Xiaoping’s theory of building socialism with Chinese characteristics, the 13th National
Congress of the CPC, held in 1987, adopted the strategy of three stages for China’s economic construction: First,
doubling the GNP of 1980 to end shortages of food and clothing, which was basically completed at the end of the
1980s; second, quadrupling the GNP of 1980 by the end of the century, which was achieved in 1995, ahead of
schedule. Thus, the Chinese government worked out the Ninth Five-Year Plan for National Economic and Social
Development and the Long-Term Objectives for the Year 2010, which put forward new objectives: Those for the
Ninth Five-Year Plan (1996-2000) were as follows—Complete the second phase of the strategic plan for the
modernization drive in an all-round way and quadruple the per capita GNP of 1980 in 2000, when the population

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will have increased by about 300 million over that of 1980; raise the people’s living standard to that of a fairly
comfortable life, with poverty practically eradicated; and expedite the formulation of a modern enterprise system
and initially establish the basis of a socialist market economy. Third, basically realizing modernization in the mid
21st century, the GDP per capita reaching the level of the moderately developed countries, and people living a
well-off life. The objectives for the year 2010 are to double the GNP of 2000 so that the people will enjoy even
more comfortable lives, and bring a more or less complete socialist market economy into being. With the
fulfillment of these goals, China’s productive forces, overall national strength and the people’s living standards
will have gone a big step further, and the country’s social and economic aspects will have undergone historic
changes, laying a solid foundation for the realization of modernization.

9.3MAJOR ACHIEVEMENTS

During the past 50 years, China has made remarkable achievements in the fields of science and technology, as
follows:

The discovery of the Daqing Oilfield

In 1953, the leading geologist Li Siguang, based on his geomechanics theory and thorough geological
investigation, pointed out that China had abundant oil and gas resources. In the morning of September 26, 1959,
oil was extracted near Daqing City, Heilongjiang Province. Through the painstaking efforts of oil workers, it took
only three years to construct the Daqing Oilfield, which soon reached the advanced world level, with an annual
output of more than 50 million tons of crude oil. The Daqing Oilfield provided valuable experiences for the
further development of the Chinese petroleum industry.

The building of the first atomic reactor

On June 30, 1958, China built her first heavy-water reactor and circular accelerator. This atomic reactor had a
thermal power of 7,000-10,000 kw, and its circular accelerator could accelerate alpha particles, making its energy
output reach 25,000,000 EV. In December 1980, China built a high-flux atomic reactor, indicating that Chinese
nuclear technology had reached the advanced world level.

The successful testing of atom and hydrogen bombs

On October 16, 1964, China successfully detonated an atomic bomb in Lop Nor in the Xinjiang Uygur
Autonomous Region, thus becoming the third country to possess the atom bomb, following the United States and
the former Soviet Union. In June 1967, China successfully detonated its first hydrogen bomb.

The synthesis of crystalline insulin

After six years of arduous work, in cooperation with other research units, the Biochemistry Institute under the
Chinese Academy of Sciences, on September 17, 1965, synthesized crystalline bovine insulin, a bioactive protein.
China thus became a world leader in this research field.

The positron and negatron electronic collider

In October 1988, the Beijing Positron-Negatron Electronic Collider was successfully installed, not only to
develop scientific research in particle physics, energy, materials, biology, chemistry and integrated circuits, but
also to produce products for export.

Nuclear power stations

In 1970, China began to design its first nuclear power station, the Qinshan Nuclear Power Station, in Haiyan
County, Zhejiang Province. The first-stage project of this power station, with an installed capacity of 300,000 kw,
began to be constructed at the beginning of 1985. Meanwhile, construction began on the Dayawan Nuclear Power
Station, 60 km east of Shenzhen, Guangdong Province, with an installed capacity of 1,800,000 kw.

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Carrier rockets
In May 1980, China successfully launched a carrier rocket to a predetermined area in the Pacific Ocean, which
was the first time for China to launch a rocket to land in international waters from its territory. In 1982, a China-
made rocket passed its first space flight test, thus making China the fourth country to possess new-type space
microthrust rocket engines, following the United States, the former Soviet Union and Japan. In October 1982,
China successfully launched a carrier rocket from a submerged submarine, and in September 1988, from a nuclear
submarine. Chinese carrier rockets include the Long March carrier rockets and the “Storm I” carrier rocket.

SATELLITE LAUNCHING TECHNOLOGY

On April 24, 1970, the China-made “Long March I” carrier rocket successfully took the “Dongfanghong I,”
China’s first man-made satellite, into orbit. This made China the fifth country in the world able to independently
develop and launch man-made satellites, following the former Soviet Union, the United States, France and Japan.
Later, China successfully developed and launched scientific experimental satellites, retrievable satellites and
stationary communication satellites, mastering the advanced techniques of satellite retrieval and multiple satellite
launching with a single carrier rocket and synchro-positioning technology. On April 7, 1990, at the Xichang
Satellite Launching Center, the “Long March III” carrier rocket successfully launched “Asia I,” the first foreign
satellite launched by China, marking the entry of China-made satellites into the international market.

10. INDIA CHINA ECONOMY - TRADE RELATIONS

Among the most encouraging recent developments in India China Economy and India-China ties is the rapid
increase in bilateral trade. A few years ago, India Inc had a fear of being swamped by Chinese imports. Today,
India enjoys a positive balance of trade with China.In 2004, India's total trade to China crossed US $13.6 billion,
with Indian exports to China touching $ 7677.43 million and imports from china at US $ 5926.67 million. But
major industry players in India feel there is no need to give the Chinese a free ride into the domestic market so
early. This is particularly, when India and China have been directly competing across several product categories.
And that too, when both the applied and bound import tariffs are higher in India compared with China. Indian
industry's ambivalence over the proposed Indo-China FTA stems from concerns over previous FTAs signed by
the government. There's a feeling that some of these FTAs were signed in haste, and without adequate homework.
Result: There has been confusion about the country of origin issue as well as the items to be put in the early
harvest lists.
China and India established diplomatic relations on April 1, 1950. India was the
second country to establish diplomatic relations with China among the non-socialist
countries. In 1954, Chinese Premier Zhou Enlai and Indian Prime Minister Nehru
exchanged visits and jointly initiated the famous Five Principles of Peaceful Coexistence.
Indian Prime Minister, Rajiv Gandhi's visit to China in December 1988, facilitated a
warming trend in relations. The two sides issued a joint statement that stressed the need
to restore friendly relations on the basis of the Panch Sheel and noted the importance of
the first visit by an Indian prime minister to China since Nehru's 1954 visit. India China
Economy agreed to broaden bilateral ties in various areas, working to achieve a "fair and
reasonable settlement while seeking a mutually acceptable solution" to the border
dispute.

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Rajiv Gandhi signed bilateral agreements on science and technology cooperation, on civil
aviation to establish direct air links, and on cultural exchanges. The two sides also agreed
to hold annual diplomatic consultations between foreign ministers, and to set up a joint
ministerial committee on economic and scientific cooperation and a joint working group on
the boundary issue. The latter group was to be led by the Indian foreign secretary and the
Chinese vice minister of foreign affairs. As the mid-1990s approached, slow but steady
improvement in relations with China was visible. Top-level dialogue continued with the
December 1991 visit of Chinese premier Li Peng to India and the May 1992 visit to China
of Indian president Ramaswami Venkataraman.

Border trade resumed in July 1992 after a hiatus of more than thirty years, consulates reopened in Bombay (or
Mumbai in the Marathi language) and Shanghai in December 1992, and, in June 1993, the two sides agreed to
open an additional border trading post. Though, Rajiv Gandhi's visit to China in December 1988 is usually
identified as a turning point and break-through in India-China relations, it should also be noted that many
years of previous effort had a contribution to it.. In 1976, the two countries decided to restore ambassadorial-
level diplomatic ties after a gap of 15 years. The next major step was foreign minister Vajpayee's visit to China in
February 1979 -

The first high-level visit between the two countries since 1960. In 1984 India & China signed a Trade Agreement,
providing for Most Favoured Nation Treatment. In 1994 the two countries signed the agreements on avoiding
double taxation. Agreements for cooperation on health and medical science, MOUs on simplifying the procedure
for visa application and on banking cooperation between the two countries have also been signed.

The Chinese economy was decentralized in 1978 and major economic reforms were introduced which created
conditions for rapid economic growth and structural changes in China. In 1980, China's share in world trade was
less than one percent, and it started permitting foreign direct investment (FDI). In 1999, China had grown to
become the world's second largest economy after US in terms of GDP. The high growth rate of China is attributed
to high levels of trade and greater investment effort. Strong exports growth from China has helped push China's
economy to 9.1% growth rate in 2003-2004. China is the world's second largest recipient for FDI with total FDI
inflows crossing US $ 53 billion in 2003. Growth in Special Economic Zones (SEZ) has also helped China
increase its productivity.

Recently Chinese premier Wen Jiabao visited India, where he said that India and China must take their
trade to $30 billion level by 2010. Seeing the whopping growth in Sino-Indian trade, China outlined a five-point
agenda, including reducing rade barriers and enhancing multilateral cooperation to boost bilateral trade.

Chinese Premier Wen Jiabao said "We have set an objective (in the joint statement) to increase the two-way
trade volume from 13.6 billion dollar at present to 20 billion dollar by 2008.....we plan to take it to 30 billion
dollar by 2010." Addressing Indian business leaders at New Delhi on April 11, he said that the two countries
agreed for a joint feasibility study for a bilateral Free Trade Agreement.

India China Economy have also agreed to work together in energy security and at the multilateral level at the
WTO to support an "open, fair, equitable and transparent rule-based multilateral trade system", the joint statement
signed by Prime Minister Manmohan Singh and Wen said. Wen also offered to cooperate with New Delhi in its
infrastructure programme.

Indian Commerce Minister Kamal Nath said China was poised to become India's largest trade partner in the next
two-three years, next only to the US and Singapore.

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TRADE PATTERN (value in USD millions)

China's Exports to China's Imoprts from

Year
India India

2000 1560.75 1353.48

2001 1896.27 1699.97

Percent
21.5 25.6
Growth

2002 2617.73 2274.18

Percent
40.9 33.8
Growth

2003 3343.59 4251.49

Percent
22.2 87
Growth

2004 5926.67 7677.43

Percent
77.3 80.6
Growth

According to a CII study, special focus on investments and trade in services and
knowledge-based sectors, besides traditional manufacturing, must be given, in view of the
dynamic comparative advantage of India. Indian companies could enter the $615 billion
Chinese domestic market by using it as a production base.

Presently, Iron ore constitutes about 53% of India's total exports to China. Among the potential exports to China,
marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment and dairy
products are the important ones. The study said that services and knowledge trade between India and China have
significant potential for growth in areas like biotechnology, IT and ITES, health, education, tourism and financial
sector.

Value added items dominate Chinese exports to India, especially machinery, including electrical machinery,
which together constitute about 36% of exports from that country. The top 15 Chinese exports to India have
recorded growth between 29% (organic chemicals) and 219.89% (iron and steel).

11. CHINA INDIA COMPARISON

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China started their family planning policy in 1970, India in 1952

In 2001 our birth rate was nearly 3 times more than China. 27 births per 1000 as against
8.8 for China! India is adding 18 million people per year, against 9 million per year in
China. Total addition to population is a function of total births minus total deaths.

India's per capita earning is US$440 per year against US$990 per year in China
As per the World Bank, the poverty line definition is US$1 per person per day or
US$365/person/year, for underdeveloped countries like India, China etc. As per the official
data from both governments, China has 3% population below the poverty line, compared
to Indias 26 to 29%! Only better governance will help.

In agriculture our yields per acre, are well below the international norms
India could be a giant exporter of food, only if we could put our house in order to near
world class standards! China with lesser cultivable land, produces double the food grains,
at 415 million tons per year compared with India's 208 million tons per year. God has been
very kind to India with a lot of sunshine, rain, rivers, lakes, coastline and good hard
working citizens.

The governance of hamlets, villages, cities, districts, Government and Semi-Government

agencies, as facilitators, have not done enough to show the results that India is able or
capable of achieving. India would definitely rate as the No.1 country in the world, for
Potential vs Performance!

Indians score high marks on performance, outside India! This is because the Governance is
better outside. In countries where the Governance & Administration is poor, the
performance of its citizens is also low!

In Education, 99.1% of Chinese children attend school for 9 years, this ensures a
high level of literacy. In India, literacy is 50 to 60%
While IIT's, IIM's are important, the country's real growth will come because of primary and
secondary education and vocational and educational training in all districts of the country.
India can rise and shine in exports, agriculture, literacy and other areas with better
governance

12. FUTURE PERSPECTIVES OF CHINA

China will become the world's safest and largest investment economy in times to come given the following
factors:

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 Huge market potential,

 Rich labor resources,
 Comparative advantage in labor cost
 Sound corporate governance
 Stable government and society.

All these factors will further attract the inflow of foreign capital into China. In short, China's economy will grow
even faster in the future.

In the next ten years, China's economy will still increase at a rate 7% - 8%. In 2020 years, should price index
remains the same as today, GDP will amount to 38 trillion, per capita GDP will reach 26,000 yuan.

However, the level of per capita GDP is still very low in China at the moment, GDP per capita’s growth is still at
a slow rate. GDP per capita will have to be further increased in order to raise China’s standard of living so as to
bridge the present income gap between the rich and poor. Satisfaction of consumers’ needs can be the main driver
in raising China’s living standards. Domestic demand will increase as the economy grows. Therefore extensive
production of goods and services can further push and sustain the economy’s growth.

Moreover, there are abundant human resources in China, and labor cost in China is much lower than the other
industrialized countries. China's education system is also being fast developed, thus more people will achieve
higher level of education than in the past. With comparative advantage in cheap labor cost and increase of human
capital brought about by education, future for China's economy can be only even brighter.

China’s labour force will get even bigger as the China is urbanizing at a fast pace, changing from a rural and
agricultural society to an urban and industrialized society.

Through this transition, more manpower can be utilized. Urban infrastructure will be further enhanced and an
increase in urban population will bring about higher consumption level, thus driving the economy further.

The presence of such a big market, coupled by the increase in consumption power of the population brought about
by urbanization, will create greater prospects for almost every industry. Market will become more efficient and
industries will grow even faster than before. Domestic demand for goods and services will grow, creating better
opportunities for production and investment.

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