Sudden Decline of China

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SUDDEN DECLINE OF CHINA´S GROWTH After Second World War, the communist party started the installation of a planned economy in China, led by Mao Zedong. In order to transform rapidly the country from an agrarian economy to a communist society through fast industrialization and collectivization of the lands, the communist party led an economical and social campaign from 1958 to 1961 called the Great Leap Forward. The collectivization and prohibition of private farming led to The Great Chinese Famine which killed more than thirty million Chinese from starvation, but also from persecution of the party against those who weren´t abiding by the rules and also 1 to 3 million people committed suicide. The Great Leap Forward has met economic…show more content…
At the end of this first stage most of industries still remained state-owned. The second stage happened in the late 80´s and the early 90´s, Xiaoping continued policies beyond the initial reforms. The government control over businesses decreased more and more and some small scale privatization of state enterprises becoming unviable started to happen. Internally, the government power was decentralized to local leader, left free to experience newer way to stimulate economic growth and take in charge the privatization of the state sector. In 1989, Xiaoping opened the Shanghai Stock Exchange again 40 years after Mao´s shut down. After 1992, the privatization of the state owned industries took a faster pace and the private sector surpassed the public one in terms of GPD. The private sector which was considered as a “complement” is now considered as an “important component” of the Socialist Market Economy. The country is liberalized with important decrease of protectionist policies, regulations and the lifting of price controls. State owned monopolies in sectors such as banking and petroleum remained. Although the economy grew quickly during this period, the country has been experiencing many losses because of an inefficient state owned sector that had to be compensated with state revenues. Corruption and inflation led to discontents and the pressure of conservative elder prevented from major reforms that would
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