China

China

CHINESE ECONOMY

INTRODUCTION

China is the world’s seventh largest economy in terms of the nominal US$ and is the largest in terms of population size.   In PPP US$ terms, China became the world’s second largest economy in 2005.   The rapid progress experienced by China both economically and in human development is due to economic reform.   These reform decisions have gradually reduced poverty and increased income.  

China is a socialist economy governed by the Communist Party.   This government was established after the 1949 Civil War in China.   In 1958, Mao launched the 'Great Leap Forward'.   This aimed to accelerate the development of all sectors of the economy.   It began using the development theories practiced in the Soviet Union which were applied to China during the first five year plan.   The ‘Great Leap Forward’ aimed to simultaneously develop industry and agriculture by employing surplus rural labour on either vast infrastructure projects or for small-scale, farm-based industries.   However, this policy failed and did not boost national output to any great extent but instead led to widespread famine and poverty. Mao confirms his failure by telling the party Central Committee, "The chaos was on a grand scale, and I take responsibility. I am a complete outsider when it comes to economic construction, and I understand nothing about industrial planning."

Progress towards modernisation was further prevented during the 1960’s by reformers and progressives who were critical of Mao’s economic strategy.

STRATEGIES

ECONOMIC REFORM:
Peng Xiao Ping was Mao’s successor following his death in 1978.   A range of radical economic reforms were implemented by Peng Xiao between 1978 and 1997.   These reforms were designed to improve China’s economic performance while under the political control of the Chinese Communist Party.   For example, in 1979 Deng Xiao introduced a ‘one child policy’ to keep China’s population at an economic and...