ECONOMY OF CHINA

Economy of China

[Name of the institute]Economy of China

REFORMS OF CHINA

1978-84

In China, the economic reforms were initiated in the time of Deng Xiaoping. When Deng came in to power, the elite groups within China supported the notion economic reforms. The first reforms developed by Deng proved to be majorly successful in mounting the wealth of the country. The initial focus of the first reform was targeted towards the sector of agriculture. This sector has been neglected for long time by the Communist Party. By the end of 1970s, it was feared by the officials of the government that China was very likely of repeatedly the 1959 disaster, due to the shortage food supplies. This was known as The Great Leap Forward and managed to kill millions of people across China. It was obvious that Deng had to do something about it and he managed to emphasize the system of the responsibility of the households. This divided the land of the people in to privately owned plots.

The Chinese farmers were permitted of retaining the output produced by their land, if they could pay a share of it to the government. This move severely facilitated the farming industry of China and increased the standard of living of millions of farmers. Thus, the rural industry flourished. For the urban industry, Deng introduced a system of dual pricing. This system focused on the industries owned by the state and provided that they could sell their products above the quota that that had been allotted to them and the selling prices could be both, the market price as well as the plan price. This significantly reduced the shortages witnessed in the Era of the Maoist. Privately owned organizations were permitted of operating and with the passage of time; they proved to produce a greater percentage of the output produced by the industrial sector. The flexibility in pricing was also permitted, which facilitated the sector of service industry. Special economic zones were created by Deng for the foreign investment. It was after a long time that foreign investment was permitted (LENG, 2009, pp. 165).

1984 to 1993

With the success of initial policies of Deng, further policies were implemented during this period. The privately owned businesses were allowed a more free hand and the government owned enterprises which were becoming impractical were privatized. There was a decentralization of the control of the state and this permitted the leaders of different provinces to experiment various approaches in the facilitation of the economic growth. Numerous sectors of the government were privatized. However, it is important to note that conservative opposition, which was headed at the time by Chen Yun managed to prevent various reforms that would have eventually harmed the interests of the special interest groups in the government bureaucracy.

In addition to that, increased corruption as well as towering inflation led to the 1989 protests of the Tiananmen Square and thus numerous important reformers of China were expelled. In addition to that, many reforms of Deng ...