Chinese Economic Reform Research Paper

In 1953, was when China became a planned economy, based after the planning system of the Soviet Union. A planned economy is where the government controls everything. Soon after many peasants risked their lives to sign an agreement in 1978, Deng Xiaoping (the CCP leader during the time) who supported them started a nationwide reform. China would then begin to move away from a planned economy and towards a market economy (Lan Li, Chinese economy slides).

China’s economic position has changed greatly, particularly over the last 50 years. Mao Zedong, leader of China at the time, introduced a new method for improving China, often referred to as the 5 year plans. These plans, as the name may suggest, were used for five years, and had a main focus attached.

In 1949 china was under the expression of a communist state. The regime of china was set up in similarity to the regime of Vladimir Lenin in the Soviet Union. Mao Zedong was part of the communist party. He followed the vision of Karl Marx, by envisioning a society under his regime that all shared equal prosperity and communism. In order to bring this vision to reality, he wanted to eliminate all capitalism and its emphasis on property rights, profits, and free-market competition. In the 1950’s in the rural of china, Mao banned free markets, which involved peasants selling farm products. However the trade of capitalism still existed through the private enterprise of remnants. Mao was dissatisfied with the outcomes towards an economy of Marxism. So he strived for a stronger approach by coming up with the Great Leap Forward. However, after the intense economic development that china had suffered from the great leap forward, it left millions of individuals throughout china suffering from the masses and deaths from the collapse of the food system. Because of the major consequences that were suffered from this approach it was unable to be left unnoticed. So, in 1960 after Moa Zedong declined all responsibility towards the disaster from the Great Leap Forward, Lui Shao-chi and Deng Xiaoping were left to rectify and administer the crisis. However, their attempt to repair the economic damages towards china, only led to the reverse of Mao’s earlier policies. That were

In October 1949, the People’s Republic of China (PRC) was established and led by Mao Zedong. China’s new communist leaders turned their backs on China’s traditional output (based on individual and small scale household production) economy and set out to create a massive socialist industrial government inspired by the Soviet Union. This idea introduced a model, which prioritize industrialization known as the “Big Push Model”. China started prioritizing investments into the heavy industry, which would reshape the Chinese economy and create a Command economy. Mao’s economic policies seemed be working in the

In 1919, Mao Zedong helped to establish the city of Changsha by attracting a variety of organizations. One organization was to bring the students, the merchants and the workers together in demonstrations aimed at making the government to oppose Japan. Mao Zedong’s five Year Plan was an attempt by him to boost China’s industry and become more powerful. When Zedong came to power, China was way behind the industrial nations of the planet. “He set ambitious goals for the production of iron and steel, coal, cement, and electrical power. Thousands of factories were to be built and an army of workers was mobilized to staff them.” (80). His plan worked in most cases, but also killed millions of peasants in the process. Chairman Mao also had another plan. This one was said to transform the way hundreds of millions of peasants lived and worked. Mr. Zedong urged all the peasants to give up farming and join cooperatives. Cooperatives were large farms that Zedong believed produce crops more efficiently than private farms. His slogan for this was “More, Better, Faster,” . This plan was one of his many plans that actually worked, at least for a

China has reached a milestone in terms of achieving its centenarian goal of making China a prosperous nation once again. One of the ways that it has done this is by having steady economic growth even in the midst of an economic crisis. Not only has China’s economy grown, but its standard of living has also improved, it has achieved this by spending 70 percent of its fiscal revenue towards improving people’s standard of living. China has also pushed more anti-corruption reforms and has made efforts towards widening its economy by setting up freer trade.

During the 1950s and 1960s, the Maoist government in China implemented a socialistic economy wherein the state controlled nearly every aspect of national and economic development. The process of making the Chinese economy public took the better part of the decade, but resulted in an explosive rate of expansion. Both the nation’s industrial and agricultural sectors grew exponentially until finally reaching a tapering off point during the late 1960s.

To capture the benefits of globalisation, the communist government has moved its focus from domestic to trade oriented. China has become the second largest economy in the world. Since 1980s, it has gone from being the 12th largest economy in the world to the second largest. This indicates that its economy has been growing with an average rate of 10 per cent per year for the last three

The Chinese government has embraced a series of strategic policies to address the challenge of economic globalization. These strategies started in 1978 after Chairman Mao’s self-sufficient economy plan. China began employing several reform strategies to enhance growth. This included stimulating the agricultural sector to allow them to sell a percentage on the free trade market yet hold a competitive position. In addition to this citizens were given money incentives and tax breaks in order to start new businesses and allocated regions were created to encourage high levels of investment, increase exports and increase technology levels.

This moved gradually increased agricultural production, increased the living standards of hundreds of millions of farmers and stimulated the rural industry (Brandt, 2008). Reforms were also put in place in the urban industry to increase the waning productivity. A dual price system was also introduced, wherein state-owned industries were allowed to sell any production above the plan quota, and commodities were sold at both plan and market prices, which then allowed citizens to avoid the shortages of the Maoist era. Private businesses were also allowed to operate for the first time since the Communist takeover, and they gradually began to make up a greater percentage of industrial output (Brandt, 2008). Price flexibility was also increased, in turn, expanding the service sector (Brandt, 2008). During this time period, China was also opened to foreign investment for the first time since the Kuomintang era. It was during this time that Deng created a series of special economic zones for foreign investment that were relatively free of the bureaucratic regulations and interventions that had hampered economic growth for so long until this time. These regions became the engines of growth for the national economy (Brandt, 2008).

China is a growing country; its population is about 1.4 billion, and as of 2014, the Chinese economy is the world’s second largest (in terms of nominal GDP,) totaling approximately US$10.380 trillion, with a growth rate of 7.4%, and the GDP per capita is US$3,619.4. From last century to this century, China has had significant improvements in their economic development. China had been in three major crises during the last century: the 20th century. The Fall of Qing Dynasty, World War II, and Civil War in China, all of them struck China in a destructive way. From the end of the 20th century, China was in a fast-developing mode.

After many years of repression and control of the Chinese people by the central government, the Reform Era came about to bring change and hopefully better the lives of everyone. However, the Reform Era did not impact every Chinese person in the same manner, as there were great discrepancies between those whom lived in the city and those whom lived in the countryside. For people whom lived in the city, the privatization of the housing industry had a large impact, while the decollectivization of agriculture impacted those in the countryside. Yet, no matter their geographic location within the country, the benefits and costs every citizen underwent through during the changes of the Reform Era are apparent.

The goals of Deng Xiaoping’s economic reform were the ‘Four Modernizations’. This Four Modernization refers to the reform of agriculture, industry, national defense, and science technology. These reforms were to solve the problems of motivating workers and farmers to produce a larger surplus and to eliminate economic imbalances that were common in command economies.

Mao believed the new policy would be so successful in stimulating output and surplus resources that the government would see a net gain in surplus captured from the countryside. Mao saw that this surplus that could be invested in heavy industry, mining, and infrastructure among other things. This optimism about the potential increases in productivity of rural laborers also encouraged the central government to massively relocate labor from agriculture to industry. It would not appear that Mao nor any of his top aides asked themselves one most important questions: What happens if the productivity estimations are wrong?

In accordance to this, China went on a construction binge. Whole factories were purchased from abroad while others were built with local resources. By 1978, the frenzy for new projects reached a level that reminded some people of the Great Leap Forward. In an effort to promote agricultural production, the government released many of the restrictions on the 'spontaneous capitalist tendencies' of the peasantry. (173) In the late 1980's, the government decided to expand the scope of private marketing. The next step was to increase the amount land assigned to the peasants. The peasants were now not responsible to the government for the use they made to the private plots. They simply could grow what they wished, for the sale to the government or to private markets. This led to furious rebuilding and inflow of foreign investments. All this enabled China to remake itself into Asian's hub of finance, trade and culture.