What is a Closed Economy?

A closed economy is an opposite of an open economy, and refers to an economy that has no economic connection with the outside world. In the sense of economics, it means that a country has no economic relations with foreign countries in its economic activities. If there is no international trade or international financial and labor exchanges, only domestic economic activities exist, and there is no close relationship between domestic and foreign economies. The exchanges are said to be in a closed economy.

Closed economy

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In order to break through the closed economic system, we must "change from closed to open, from adherence to conventions and reforms in all aspects." Therefore, "the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China Summarizing the experience of the past thirty years after the founding of the People's Republic of China, on this basis, we have proposed a series of current policies, mainly reform and opening up, opening up to the outside and opening up to the outside world. "

The proposal of two open policies requires that China not only open to foreign countries and the world, but also that all regions, industries, and enterprises in China must be open to other regions, industries, and enterprises. This requires the provisions of the traditional planned economic system. Carry out open reforms in all aspects, establish a vibrant and dynamic market economy system that constantly communicates material, energy and information with the outside world, and make better use of two foreign and domestic markets and two resources.

Deng Xiaoping said, "Whether it is a rural reform or an urban reform, its basic content and basic experience are open, invigorating the economy internally, and opening up more to the outside world." Only "reform" and "open", the reform has no direction. If it gets more and more closed, it means going backwards, it is a "dead end"!

"Openness" illustrates the essence of China's economic system reform. The reform of "opening to the inside" is a process of gradually releasing various closed policies that restrict productivity.

Closed economy open countryside

Eighty percent of our population is farmers. If farmers are not enthusiastic, the country will not develop. Therefore, the opening-up policy was first implemented in rural areas. The central government formulated a policy to revitalize the country and decided to carry out rural reforms, which liberated rural productivity. The rural reforms have taken effect quickly. Deng Xiaoping flatly accepted that this was our original unexpected gain, including:

First, the implementation of the household responsibility system for contracting responsibility for the joint production of the family has broken through the constraints of the original closed production relationship on people. Farmers have the autonomy of production and operation, adapting agriculture to local conditions, implementing diversified operations, increasing farmers' enthusiasm, and a substantial increase in agricultural products;

Second, township and village enterprises have emerged unexpectedly, breaking through the original single agricultural industrial structure. "Suddenly, it has emerged to engage in multiple industries, engage in commodity economy, and engage in various small businesses. This is not the central government's merit. Township and village enterprises are 100 The rate of increase of more than two tenths has continued for several years, and it is still the same today. "

Third, the surplus labor force in rural areas was transferred to township enterprises and towns, breaking through the constraints of land on farmers, and rapid urbanization in rural areas. "For a long time, 70 to 80 percent of our rural labor force has been tied to land. On average, each person in the countryside has only one or two acres of land. Most people ca nt even talk about food and clothing. One is reform and opening up, and the other is contracting. Responsibility system reduces the number of people who run agriculture. What about the rest? Ten years of experience proves that as long as the enthusiasm of the grassroots and farmers are mobilized, diversified operations are developed, and new township enterprises are developed, this problem can be solved. Enterprises hold 50 percent of the rural surplus labor. "

Closed economy household registration

With the development of the market economy, the "big pot rice" and "iron rice bowl" under the planned economy system have been broken, the labor flow has become more and more frequent, and the rural population has continuously moved to cities to seek new opportunities for survival. Becoming fashionable, there is no shortage of highly educated and highly skilled talents. Citizens have more and more freedom of choice of employment, residence and migration, and the number of migrants across the country can reach hundreds of millions each year. The rational flow of population and labor is an inevitable result of social development, which is conducive to talent exchange and labor resource market allocation. Countries and regions such as the United States, Australia, Hong Kong and other countries with rapid economic development are all countries and regions with frequent population movements in the world.

The movement of population has impacted China s 40-year-old closed hukou system, and strict urban-rural hukou barriers have also apparently loosened. In July 1998, the State Council issued the Ministry of Public Security's "Opinions on Solving Several Prominent Issues in Current Hukou Management Work", which proposed that "baby settles with the father and the mother voluntarily, relax the hukou policy to solve the problem of husband and wife separation, and go to the city "Children, citizens investing in cities, starting businesses, and citizens buying commercial housing may be allowed to settle down."

Prior to this, in order to promote the development of agricultural urbanization, small towns in many parts of the country have introduced a large number of measures to attract farmers to leave the land to change their living methods, and encourage farmers to settle in small towns. Many eligible farmers (according to information, Since the reform and opening up, about 100 million farmers have handled the "resident registration" of small towns.

In addition, in order to attract talents and funds, some large cities such as Shanghai, Shenzhen, and Guangzhou have implemented a "blue print account" policy. The qualified immigrant population may apply for a blue print account first, and after a certain period of time, they may be converted into a permanent residence account. Beijing, which has a more conservative domicile reform, has also launched a similar "job permit" policy.

The above measures have gradually closed the labor system towards openness.