Economic Reforms of Deng Xiaoping

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To what extent have the economic reforms of Deng Xiaoping changed the form of Communism that previously existed in China?

The economic reforms introduced by Deng Xiaoping during his term as leader of the Chinese Communist Party from 1977 to 1992 has meant that China is an economic power in the world today. Prior to Deng’s term the Chinese economy was centrally planned, meaning that all economic activity was controlled by the government and all companies were owned by the State. Deng’s economic reform policies of allowing private ownership of business, embracing a more free market system, and opening the economy to international trade and investment were in large contrast to the policies of his predecessor Chairman Mao Zedong. Deng’s economic reforms transformed Communism in China from its pure form under Mao to a form of communism with many economic characteristics of a market economy typically found in Western nations. Deng Xiaoping’s believed that if the Chinese people were allowed to start up business and own land they would be encouraged to work hard to generate wealth for themselves and that this would be good for China. Under Mao’s rule, the standard of living for the masses generally improved and equality began to emerge in China. Many of its people however still suffered extreme poverty, and particularly those in rural areas. Deng Xiaoping believed that to grow further economically China would have to break out of Mao’s Communist mould of state control and that the nation's natural entrepreneurial spirit had to be encouraged, rather than inhibited. Deng Xiaoping also felt that the capitalist nature of some of these changes had to be openly accepted, whatever the political fallout. The reforms replaced central planning with market forces, broke down the collective farms and got rid of state-run enterprises. Deng Xiaoping allowed people to once again own land and he also gave permission for entrepreneurs to start up businesses. One of the most successful reforms allowed business owners to use their profits to enhance their business after they met their state-set quotas. Enterprises and factories were allowed to keep profits, use merit pay and offer bonuses and other incentives, all of which greatly boosted productivity. Deng’s advocacy of private ownership greatly gave the individual more freedom, power and direction in guiding his/her future. Deng believed that people work harder when it’s for their own benefit rather than for the nation, so his new brand of Communism payed more attention to this idea. During Mao’s regime, the country focused on bolstering and serving the community, whilst restricting individual growth and prosperity. Deng advocated a more capitalist economic ideology, whilst continuing to have elements of a socialist like regulating lending to private companies who still often find it difficult to obtain credit or a loan for their ventures. Deng’s reforms of the laws of private ownership of business in China were a big departure from the Communist policies of Mao, however these policy changes played a large part in making China an economic force in the global community. Deng Xiaoping believed that it was necessary for China to embrace a more free market system so that it could prosper economically. He lifted price controls, protectionist policies, and many other regulations on business. He also launched Special Economic Zones in areas such as Shenzhen, which were free-trade enclaves that demonstrated the wealth generating potential of a liberalised economy. China became divided into two economic zones: the vast rural interior, which remained largely untouched by this economic revolution, and the coastal zones, which are centres of economic development. SEZs are subject to special economic policies and flexible governmental policies, which allows SEZs to utilize an economic system that does not exist in the rest of mainland China. Some of the special economic policy measures...
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