Preview

China's Economic Transition

Good Essays
Open Document
Open Document
691 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
China's Economic Transition
Economic systems doesn’t remain static as they are always in transition. They are determined by history and culture of their people. A transition economy is an economy which is changing from a centrally planned economy to a free market. Transition economies undergo economic liberalization, where market forces set prices rather than a central planning organization. In addition to this trade barriers are removed, there is a push to privatize state-owned businesses and resources, and a financial sector is created to facilitate macroeconomic stabilization and the movement of private capital. The process has been applied in China as the country prepares for the once in a decade leadership transition within the ruling Communist Party. The world’s second biggest economy has undergone a massive transformation within the last 10 year. From rapid urbanization and economic growth to social and political development, China has marked many milestones and firsts in the past decade, highlighting its significance on the global stage.

Reasons for China’s economic transition Citizens of China have been experiencing low economic growth due to government’s rigid long-range plans culminating in either vast shortages or surpluses. Furthermore, China was also falling behind Western economies which had adopted the free market economic system due to the slow technological advancements. The huge bureaucracy was inefficient causing individual workers lacking the profit incentive to do their best and increase their technological level to boost the output. Other than that, bureaucracy also caused the firms to be not profit-oriented can thus firms had no incentive to adopt innovative production methods or to produce good quality goods and services. These were some of the factors for China’s economic transition.

\

Effects of China Economic Transition
Economic Growth Riding the wave of rapid economic expansion, China’s growth engine has remained strong over the past decade.

You May Also Find These Documents Helpful

  • Best Essays

    Economics & the Rest

    • 1458 Words
    • 6 Pages

    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, Hansson, Kuijs, (2010, P 4) which is extremely impressive considering all other developing countries have experienced a 4% increase annually (Vincellete, Manoel, Hansson, Kuijs, (2010, P 4). Prior to the global financial crisis in 2005, the economic growth had averaged 9.5% over the past 2 decades (Economic Surveys: China 2005, (September 2005, P2) During the global financial crisis in 2008-2009, exports shifted from 20 percent annual growth to an annualized contraction of more than 25 percent in early 2009 (Vincellete, Manoel, Hansson, Kuijs, (2010, P 4) However, prompt and vigorous policy actions, as well as swift adjustment in the labour market, helped growth pick up by the second quarter of 2009, putting China in the lead of the global recovery (Economic Survey of China 2010: Achievements, prospects and further challenges, ( February 2, 2010) The success of the Chinese Economy recently, especially during the economic , crisis has been speculated to be the cause of the popular government owned companies. Registered private businesses grew at a rate of 30% annually from 2000 to 2009 affecting different industry sectors from oil to banking (Entrepreneurship in China: Let a million flowers boom (March 10, 2011) and has been the…

    • 1458 Words
    • 6 Pages
    Best Essays
  • Best Essays

    Nowadays, China has become the second largest economy in the world. The GDP (gross domestic product) of china was growing at 9.7% per year in average since 1978, which the year of Chinese “open door” politic founded. China also has become the biggest producer and consumer in many key agricultural and industrial markets and the largest FDI recipient among the developing countries. The performance of china in developing of economy is called “china’s economic miracle”, which be studied by many economists. However, there are also bad results with the development of economy in china such as environment disruption, corruption and income inequality, which have been seen as important issues to Chinese society and its future economic growth.…

    • 2207 Words
    • 9 Pages
    Best Essays
  • Good Essays

    In 1979, the Chinese government introduced several new programs designed to stimulate the economy. Later, the Chinese GDP annual growth rate rapidly increased from 5.3% in 1979 to over 15% in 1984. The growth rate rose and fell in the years that followed, but China has generally maintained one of the highest rates of growth globally since the 1980’s. During the same period of time that Chinese economic growth took place, economic inequality in China also increased. Currently, China has one of the highest wealth inequalities in the world.…

    • 592 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    China’s influence in the world economy was minimal until the late 1980’s but we are now seeing China being one of the most independent countries and leading the manufacturing producing market. China started with a fragile economy with minimal infrastructure from frequent revolutions and invasions in 1949. In the early 1980’s, China’s economy was still extremely weak as a result of its inward looking government system of a socialist planned economy under the Mao government. This resulted in living standards below world averages and economic growth at nearly zero. China has risen from the edge of economic obscurity to lead the world in terms of economic growth, and this is done is just over a quarter of a decade. The People’s Republic of China has transformed from a planned economy into a socialist market economy and is now the world’s second largest economy to the USA being number one, by nominal GDP at $7.3 trillion and by purchasing power parity (PPP). “Pay attention to what’s going on in China. “ – Jeff Mbanga – The Observer.…

    • 2351 Words
    • 10 Pages
    Powerful Essays
  • Powerful Essays

    China in the 20th Century

    • 3095 Words
    • 13 Pages

    years. In this research paper, I will focus on the transition of China from a Communist…

    • 3095 Words
    • 13 Pages
    Powerful Essays
  • Good Essays

    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.…

    • 1162 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    China’s development post 1978 has been partly due to Deng Xiapoing in which he took over control from Mao Zedong who established an autocratic socialist system that imposed strict guidelines over everyday life and the expense of over ten million people’s lives. During the last quarter century China’s economy has changed from a centrally planned system to a market-oriented one with a rapidly growing private sector. Speaking of reforms, China has sold minority shares in four of their largest state banks to foreign investors and made refinements in foreign exchange and bond markets in 2005. These reforms coupled with large foreign investment have helped China develop into the world’s third largest country rivaling…

    • 3231 Words
    • 13 Pages
    Powerful Essays
  • Best Essays

    As Joseph C. H. Chai said in his book “China: Transition to a Market Economy”; this economic transition can be divided in three stages. The first stage took place from 1979 to 1984. By this time China had a planned economy with just a few aspects of a market mechanism being introduced. Reforms during this period were strongly focused on the agricultural sector. Both the foreign trade and foreign investment regime were still heavily regulated (Chai, 1997).…

    • 2216 Words
    • 9 Pages
    Best Essays
  • Powerful Essays

    China's Industrialization

    • 2955 Words
    • 12 Pages

    The pace of economic change in China has been exceptionally rapid since the start of its economic reform in 1978 under the influence of Deng Xiaoping. Since then its Gross Domestic Product (GDP) has grown at an unprecedented 9.5 percent a year, making China’s the longest and most sustained growth experienced by any country within modern history. Such growth has been a result of various aspects, including a profound change within China’s economic policies, reform of the state-owned sector, and rapid growth of physical and human capitol. China also has the advantage of a good infrastructure, an educated workforce, and most importantly an extremely open economy. However, as the country’s economy rushes forward, so does the pile of social and economic contradictions threatening the future growth of China. To begin, China lacks a stable macroeconomic environment necessary for a strong medium-term growth, resultant of China’s fixed foreign exchange rate. China also runs the risk of political and social instability caused by the widening of geographic income inequalities. Environmentally speaking, the country is also the world’s largest consumer of raw materials and leads the way in emissions of carbon dioxide. This paper will address these issues with respect to their causes, the impact they have on China (and where applicable globally), as well as discussing the issues involved within resolving them.…

    • 2955 Words
    • 12 Pages
    Powerful Essays
  • Good Essays

    Deng Xiaoping

    • 924 Words
    • 4 Pages

    China after the death of Mao Zedong was a sorry state of affairs. Communist had failed to bring prosperity to the country; instead, was poor and isolated from the rest of the world. The Cultural Revolution had also been a failure, and the youths sent down during the period came to be known as the ‘changed generation’. On top of that, infighting within the Chinese Communist Party (CCP) stagnated its decision-making and threatened its authority. It was in the light of all this turmoil than Deng Xiaoping introduced the economic reforms of the 1980s, with the intention of salvaging the economy and raising the peoples’ standard of living.…

    • 924 Words
    • 4 Pages
    Good Essays
  • Good Essays

    China Economy

    • 7370 Words
    • 30 Pages

    The rapid rise of China as a major economic power within a time span of about three decades is often described by analysts as one of the greatest economic success stories in modern times. From 1979 (when economic reforms began) to 2011, China’s real gross domestic product (GDP) grew at an average annual rate of nearly 10%. From 1980 to 2011, real GDP grew 19-fold in real terms, real per capita GDP increased 14-fold, and an estimated 500 million people were raised out of extreme poverty. China is now the world’s second-largest economy and some analysts predict it could become the largest within a few years. Yet, on a per capita basis, China remains a relatively poor country.…

    • 7370 Words
    • 30 Pages
    Good Essays
  • Powerful Essays

    Since 1978 when China moved from a closed economy based entirely around the state to a more open, market-based economy, their growth rate has been an astounding 9.5% per year on average (Wikipedia, 2013). China is also the world’s second biggest exporter of goods and services, with 2012 exports totaling over $2 Trillion USD. Their trade surplus is $322 Billion (CIA Factbook). When one considers the fact that China is still classified as a communist country, these economic indicators become even more impressive.…

    • 3518 Words
    • 15 Pages
    Powerful Essays
  • Powerful Essays

    China's Economic Growth

    • 1232 Words
    • 5 Pages

    China’s economic growth is expanding at a great pace, while other countries may be at a standstill. China has been the world 's fastest-growing economy. One of the main stimuli twelve years ago was the release of Hong Kong to China from Great Britain. The second largest stimulus was the opening of free trade with other countries, in which China was originally a closed trade country. Foreign trade and investment have played a crucial role in the growth of the Chinese economy. Its foreign trade currently ranks 11th in the world economy. The third stimulus package was their drastic position in population control with their one child per family and improved methods to feed their population. There has been a trend from a command economy system towards a market economy system. The market-oriented reforms China has implemented over the past two decades have unleashed individual initiative and entrepreneurship.…

    • 1232 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    China is the second largest economy in the world after the US. This is measured by both nominal GDP ($4.99 trillion), and by purchasing power ($8.77 trillion). The Peoples Republic of China, as it is officially called, is the world’s fastest growing major economy in the world with an average growth rate of 10% for the past 30 years. China is also the second largest trading nation in the world as well as being the largest exporter and second largest importer of goods.…

    • 800 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    China is located in East Asia and, just as Japan, Taiwan or (South) Korea at earlier stages of their development, has now grown very rapidly for some three decades. That is not enough, however, for it to qualify for membership of the club. The East Asian development model has a number of additional and important characteristics. Four are selected for discussion: the almost constant encouragement given to investment, the manufacturing sector and external competitiveness, and pursued via a variety of fairly interventionist industrial, trade and financial policies; a concomitant belief in the virtues of intense domestic (Japan and Taiwan) and foreign (Korea) competition; a set of broadly sensible and appropriate macroeconomic policies; and a number of favourable (pre-)conditions, such as the presence of a homogeneous population, a relatively high stock of human capital, reasonable income equality and fairly authoritarian governments. China, since reforms began in the late 1970s, has shared some of these characteristics, but not all. In particular, it is still much more of a command economy than the other three countries have ever been, yet, at the same time, has embraced globalization with, arguably, much greater enthusiasm than was done, in earlier times, by Japan, Taiwan or Korea. If China’s experience, however, is compared with that of other, more or less successful, developing countries, the similarities with the East Asia development model would seem to dwarf such differences.…

    • 8990 Words
    • 36 Pages
    Powerful Essays