Question

In: Economics

B. During the Cultural Revolution (1966-76), what was Mao’s attitude toward Foreign Direct Investment, private farming...

B. During the Cultural Revolution (1966-76), what was Mao’s attitude toward Foreign Direct Investment, private farming and self-employment?

Solutions

Expert Solution

The Cultural Revolution was a sociopolitical movement in China, launched by Mao Zedong from 1966 until 1976. It stated that it want to preserve 'true' Communist ideology in the country by purging remnants of capitalist and traditional elements from Chinese society, and to re-impose Maoist thought as the dominant ideology within the Party. The movement paralyzed China politically and negatively affected the country's economy and society to a significant degree.

To understand the impact of this revolution, let's consider each one by one:

FDI: During the Cultural Revolution, much economic activity was halted. The revolution led to a quasi-closed economy with anti-foreign policies, which meant not only limited new FDI into China, but also expropriation of the assets of significant, extant foreign invested entities (FIEs), such as the Hong Kong and Shanghai Bank and Jardine Mathieson.

At the end of cultural revolution, Deng Xiaoping in 1978 declared of the “Open Door Policy”

Private Farming:

In the process of rural reorganization, some collectively owned means of production ended up in the hands of former village leaders.The same process has transferred many state and collectively owned enterprises to private ownership by a system based on cronyism. The Cultural Revolution was to empower ordinary villagers to participate in village politics.Village leaders’ authority was greatly curbed as a result of the empowerment of ordinary villagers during this period, and local government became more legitimate in the eyes of people than during the Great Leap Forward. The central, provincial, regional, county, and commune governments gave a great amount of attention to agriculture, rural areas, and farmers. Many farmers were selected to participate in all levels of government. Officials were urged to work with farmers, and the urban population was urged to support the rural people. So for the farmers the government cared the most during the Cultural Revolution. People who studied rural China postulated that the increase of grain yields was due to change from collective to private farming.

Self Employment: During the Cultural Revolution the self employment was miniscule, less than one-tenth of ! percent of urban employment. There was a significant repression of the private economic activity furing that time.


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