The unprecedented success of China’s economy has become one of the most important events of the last decades of 20 century in the world history of economy.
To-day People’s Republic of China is one of the countries that has the fastest developing economy, in main economic indicators it approaches to those of the developed countries, and in some economic indicators it outnumbers even the developed countries. Currently it would be wrong to say that Chinese products are of poor quality. The quality of Chinese production has significantly increased together with development of science-technical and production bases.
The production of Chinese companies often does not concede in quality, they can even compete with the products of famous brands exported from China.
Different Chinese cities are specialized in different products by improving the quality of their products to perfection. If the world famous brands were located in big cities in the past, now they take up the small cities as well.
It is noteworthy that Chinese economy changed its orientation in the late 1970s by making a transition from close, centrally planned one to market economy. The development of China was greatly contributed by the economic zones in the country operating in the privileged mode. Besides the tax privileges in the special economic zones non–tax privileges are also applied, e.g. they are exempt from payments of land, water, electricity, gas, rent fees or reduction of the mentioned fees. In the free economic zones custom duties are not paid for foreign made products, no import licenses are needed, VAT and custom payments are not charged if the product is for export out of China.
New high-technologies zones and economic cooperation border zones also contributed to the rise of economy.
Companies with foreign participation received a number of tax privileges, they were exempt from profit tax for the first two years, and the tax was paid in 50% for the coming three years. The north-western regions are exempt of income tax for 8 years. It is noteworthy that companies with 100% foreign participation can operate only in the spheres of production, recycling and collection of products.Aiming at supporting the development of high technologies the high-tech companies started either to be exempt from the income tax or take advantage of the privilege of the mentioned tax.
The above mentioned prerequisites created for the development of the country’s economy and the available cheap work stimulated the rise China’s economy. The world-famous brands transferred their production to China. To-day China is characterized with high level of foreign direct investments and according to statistical data it ranked the second in the world in 2012-213 with the inflow of foreign investments.
The economic crisis of 2009, of course hit the Chinese economy as the country’s economy is closely connected with exports. The Chinese companies began to go bankrupt, as their product was no more demanded abroad. The Chinese miracle seemed to fall in the precipice. But the Chinese found the way out this time as well by promoting the consumption inside the country.
Unlike the known policy of raising the prices during the crisis Chine chose another the slogan Crises is cheapness.
The constructions in different Chinese cities that were stopped because of crisis, gained a new start because the Central bank decreased the interest rate of mortgage loans and obliged the commercial banks to do the same. In the result the number of allocated mortgage loans exceeded the index of the previous year in 10 times. The program that was directed to the struggle against the crises also included construction of railways, new factories, cinemas and supermarkets in rural areas. It also resulted in creating jobs for the peasants.
Currently the engine of China’s economy is the inner consumption, the inner demand. By joining the WTO at the beginning of 2008 China cancelled the tax privileges of foreign countries, in the result of which companies with foreign capital started to bear the same tax burden. This change promoted the operation of local companies, because the latters used to pay higher taxes.
In China they apply 3% and 17 tax rates of VAT respectively for small and ordinary tax payers, moreover if in case of ordinary tax payers the VAT for export is refunded to the taxpayer, then in case of small tax payers no refund of VAT is available. This is a proof that the government tries to promote the operation of local companies.
One can speak about the Chinese miracle for long time, derive benefits from the war passed by this country and try to understand what the pledge of success of this country was.
I think that the history of this country can serve as a good example for our country, of course taking into account the peculiarities of our economy.
Finally there will be a time when the Republic of Armenia provides a flight progress and has its model of Armenian Miracle?