RISE OF THE CHINESE

ECONOMY
(SUMMARIZED)
STATS

China is the 3rd alternative center of power.

It has been the fastest growing economy since the 1978 reforms which were
introduced by Deng Xioping which ended years of stagnation in the Chinese
economy.
It is projected that it will overtake the USA as the largest economy by the year
2040.
 As of 2018, the GDP of USA was 19 trillion dollars while China had a GDP of
12.0 trillion dollars
ECONOMIC MODEL UNDER
MAO
Chinese Communist Revolution (1945-1949). The
communist led by Mao Zedong defeated the
Nationalist Party headed by Sun Yat-Sen.
Eventually, Mao led a revolution, and the
communist party obtained control in 1947. They
followed the example of the soviet model of
development through heavy industry with
surpluses extracted from peasants.
The Great Leap Forward (1958-61) was instituted
to help transform China into a heavy industrialized
society. However, this was largely considered to be a
failure and many Chinese starved to death.
The economically backward communist China chose to sever its link with the
capitalist word and fell back on its own resources and for a brief period, Soviet
advice and aid.
The model was to create a state-owned heavy industries sector from the capital
accumulated from agriculture. As it was short of foreign exchange that it needed in
order to buy technology and goods on the world market, China decided to substitute
imports by domestic goods.
This model allowed China to use its resources to establish the foundations of an
industrial economy on a scale that did not exist before. Employment and social
welfare was assured to all citizens, and China moved ahead of most developing
countries in educating its citizens and ensuring better health for them.
CHINA UNDER DENG
XIAOPING
After Mao's death, the ideals of China shifted under Deng
Xiaoping to a form of "market socialism."
He instituted the "Four Modernizations", describing
agriculture, industry, science and technology, and the military.
Deng is commonly credited as the person who turned China
into the economic world power that he is today. He opened up
China to the outside world and industrialized successfully. 
By 1978, the then leader Deng Xiaoping announced the
‘open door’ policy and economic reforms in China. The policy
was to generate higher productivity by investments of capital
and technology from abroad.

China followed its own path in introducing a market economy. The Chinese
did not go for ‘shock therapy’ but opened their economy step by step.
The privatization of agriculture in 1982 was followed by the privatization of
industry in 1998.
Trade barriers were eliminated only in Special Economic Zones (SEZs)
where foreign investors could set up enterprises.
A special economic zone (SEZ) is an area in which the business and trade laws are
different from the rest of the country. SEZs are located within a country's national
borders, and their aims include increased trade balance, employment, increased
investment, job creation and effective administration.
IMPACT OF REFORMS
There can be no doubt that the reforms since 1978 generally have succeeded in both
the system reform aspect, marked by the decollectivization of agriculture and the
dismantling of Soviet-style central planning in industry.
And the opening-up aspect, leading to China’s entry into the World Trade
Organization (WTO) in 2001.
It is also beyond doubt that the reforms have resulted in rapid economic growth.
However, it is also true that in the early 21st century many Chinese people remain
desperately poor, and the reforms continue to be incomplete and controversial.
IMPACT OF THE ECONOMIC
POLICIES
-Privatization of agriculture led to a remarkable rise in agricultural production and rural
incomes. High personal savings in the rural economy lead to an exponential growth in
rural industry.
-The Chinese economy, including both industry and agriculture, grew at a faster rate. The
new trading laws and the creation of Special Economic Zones led to a phenomenal rise in
foreign trade.
-China has become the most important destination for foreign direct investment (FDI)
anywhere in the world. It has large foreign exchange reserves that now allow it to make
big investment in other countries.
China’s accession to the WTO in 2001 has been a further step in its opening to the outside
world. The country plans to deepen its integration into the world economy and shape the
future world economic order.
CONSEQUENCES OF THE
REFORMS
1) Poverty plummeted
2) Incomes skyrocketed
3) Shift from agriculture to industrialization
4) People moved to cities
5) Where people worked changed
6) People had fewer children
7) CO2 emissions increased