China's Economic Growth

China’s Remarkable Growth

Background to China’s Growth

Agricultural Reform

• Decollectivizing agriculture • Emphasized Household-responsibility system • Divide the land of the people’s communes into private plots. Farmers can keep the land’s output after paying a share to the state. • Increased agricultural production. • Increased the living standards of millions of farmers and stimulated rural industry.  “It’s all about the rural household.” (Deborah Davis : Professor of Sociology, Yale University)

Reforms in specific sectors

Agriculture, Industry, Trade and foreign investment, Services, Government finances • After three decades of reform, China’s economy experienced one of the world’s biggest booms. Agriculture and light industry have largely been privatized, while the state still retains control over some heavy industries. Despite the dominance of state ownership in finance, telecommunications, petroleum and other important sectors of the economy, private entrepreneurs continue to expand into sectors formerly reserved for public enterprise. Prices have also been liberalized.

High Investment

• • • • • China showed a high saving rate (roughly 40% throughout the reform period) making funds available for domestic investment. No equal access to Capital : State-owned vs. Private firms Special economic zones for foreign investment : Relatively free from the bureaucratic regulations and interventions Reduced tariffs, trade barriers and regulations. Joined the WTO(World Trade Organization) The service sector was considerably liberalized and foreign investment was allowed. Foreign investment helped to greatly increase quality, knowledge and standards, especially in heavy industry. “Foreign investment thrives despite lack of legal protections.” (Wilbur Ross : Chairman and CEO, WL Ross & Company)

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Labour

China was a supreme example of a labor-surplus economy when economic reform began. • Export-led growth was emphasized through...