Stages of Economic Reform in China

China is the second largest economy in the world. It has become the fastest growing economy in the world with an average rate of 10% for the last thirty years. The largest exporter and second largest importer of goods has brought China to be ranked first in the foreign exchange reserves. The country with thousands of years of history, started off and continues today as mostly an agrarian economy. Over time China's economy continues to change and prosper. Starting with the first economic change in the early twentieth century, which occurred when the GMD (the Nationalist Party) lost control due to its poor economic performance. This in turn led to their defeat by the CCP. During that time many peasants lost their farmland and this led to a peasant

China has changed in certain ways and remained the same in others from the early Golden Ages to the late 1900s. China has experienced a series of cultural and political transformations, shaping the lives of many Chinese citizens. Culturally, the country’s art and literature hardly changed for almost eight hundred years. Along with their culture, China remained politically the same from the beginning of the Golden Ages all the way until the 1800s. On the other hand, China’s government and society were restructured after new leaders took over. From a monarch to total communism, China’s society had a multitude of new ideas and policies they had to adapt to.

Located in Eastern Asia, China is a country known for being a worldwide economic superpower that has had a communist government for several years. Beginning in 1978, China, under Deng Xiaoping’s rule, began to incorporate capitalistic ideas in the government. Deng created various reforms unlike any of the policies or reforms in prior years that began to reconstruct China’s economy through modernization and by establishment of international trade.

China remains a current world super power that has been around for thousands of years. It was one of the first civilizations ever created and it has evolved into an enormous country. China is a large territory, but only 10% of the land can be farmed on. This continues to be a tremendous problem, especially with the large population that mostly lives in rural areas. In the past China was seen as a fragile nation that was still stuck in the past, although after the Four Humiliations this began to change. The Four Humiliations were a group of events that forced China to modernize due to the losses it faced. After the last of the four humiliations and the fall of the dynasty era during 1911, China began to catch up to the westernized world by modernizing their government, military, and education. The Chinese

Since the market orientated economic reforms were introduced in 1978 (Khan, Hu (1997, P103) China’s economy has seen a 10% increase in Gross Domestic Product (GDP) Per year (Vincellete, Manoel,

China has always been renowned for being successful in the domains of science and arts, however in previous decades, China has been ravaged by famines, civil discomfort and foreign outsourcing. China was consumed by this injustice until well after the Second World War when Mao Zedong introduced Communism adapted from the U.S.S.R, and created an autocratic socialist system which imposes firm constraints upon the Chinese social, political and economic system. It wasn't until the 1980's China's following leader Deng Xiaoping who focused focused on developing China into 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.

China economy experienced an incredible growth in the last few decades that made the country the 2nd largest economy in the world. When China started the program of economic reforms in 1978, it ranked 9th in nominal GDP but 35 years later it’s now ranked 2nd in the nominal GDP and been the world’s manufacturing hub. In recent years, China’s modernization propelled the tertiary sector and in 2013, it became the largest category of GDP with a share of 46.1%, while the secondary sector still accounted for a sizeable, 45% of the country’s total output. Meanwhile, the primary sector's weight in GDP has shrunk dramatically since the country opened up to the world.

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.

However, the implications of globalisation can form volatility in the international business cycle. Highly integrated economies are at greater risk of experiencing economic downturn in the business cycle. Therefore, China’s utilised process of economic liberalisation has reflected in ability to embrace globalisation and maximise the benefits of economic integration and rapid growth. As this evolutionary process continues, by 2025 China will be the world’s biggest economy (Ross Gittins: How Asia is catching up with the rich West). The Chinese ‘economic renaissance’ began in the 1970s after the government converted from socialist economy to a capitalist economy.

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.

China has been moving to a market-based economy since 1978, and a relaxation of central control over certain aspects of the community has helped it become the largest developing economy and the second largest economy in the world when measured by Purchasing Power Parity.

During Mao’s time, he strongly stressed his principles of the “Great Leap Forward” and the “Cultural Revolution”. However, due to these philosophies, China’s economic and social foundations crumbled and was severely damaged. The country was severely poor and economic production slowed. After Mao passed away, Deng Xiaoping emerged as Mao’s successor. He launched comprehensive economic reforms. These reforms aimed to decrease the role of the state in the economy and gradually introduce private forms of production in agriculture and industry. Because of these reforms, production increased by leaps and bounds and poverty was reduced dramatically. However, there was a problem that was arising. There was a lot of corruption and nepotism that was beginning to take over the economy. The gap between the wealthy and poor was growing and people began to see it as unfair.

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.

From post-1976 onwards, Deng Xiaoping and his conservative pragmatist government would bring great reform to China, which would allow her to tide over the troubles caused by the crisis in communism. Indeed, it would seem that his economic reforms were the main reason for China's survival, as opposed to political reform. Under Deng Xiaoping, action was taken to move China from a Soviet-style command economy to a more capitalist market economy. On the other hand, political reform was not as pronounced as Deng wished to retain the traditional communist style of party dictatorship.