China’s Economic Miracle
China’s transformation from a small and relatively backward economy in 1978 to the second largest economy in the world by 2018 has been nothing short of a miracle. During China’s unprecedented thirty-year period of high economic growth, they managed to lift more than 800 million people out of poverty and become a global powerhouse.
Many attribute this success to the market-oriented reforms implemented by leader Deng Xiaoping in 1978. Deng Xiaoping initiated the opening and reform of the Chinese economy, which set the course for today’s economic transformation. However, it is important to note that the economic reforms were successfully implemented over a number of decades, and under the continued meticulous guidance of the Chinese Communist Party and the leadership of a string of Chinese leaders, from Deng Xiaoping to the current leader, President Xi Jinping.
The Fundamental Aspects of China’s Reforms
China’s economic reforms were based on fundamental economic principles, such as:
- Prioritizing market-based mechanisms as the basis for resource allocating.
- Closing many of the state-owned enterprises and replacing them with private firms.
- Encouraging foreign investment in the form of joint ventures.
- Abolishing the rural communes in favor of individual farming, which increased agricultural output and provided the food needed to fuel China’s industrial growth.
These foundational aspects of the reforms focused largely on the rural areas and also provided the opportunity to diversify the economy and more importantly, helped secure the foundations of the market economy.
The Reforms Under Deng Xiaoping
Deng Xiaoping initiated the economic changes in 1978, with a series of reforms known as the Four Modernizations. This essentially involved modernizing China’s agricultural, energy, defense and service sectors. As the Chinese economy continued to grow during this period, it began to develop new heavy industries and even bolster its own technological sector.
Furthermore, foreign investment into China was encouraged by Deng Xiaoping in the form of joint ventures with state-owned companies. This foreign investment not only injected much-needed capital into the Chinese economy but also brought with it advanced technologies and know-how.
The Reforms During the Jiang Zemin Era
Jiang Zemin continued to build on the accomplishments of Deng Xiaoping and further reform the Chinese economy during his tenure from 1989 to 2002. Jiang Zemin oversaw the gradual transformation of the Chinese economy from a largely rural one to an increasingly urban-centered one, which was geared towards producing consumer goods and services.
More importantly, Jiang Zemin implemented socio-economic reforms, such as a major overhaul of the legal system, which provided a level of certainty for both foreign and domestic firms when conducting business in the country. Jiang Zemin’s policies also expedited the process of enterprise restructuring, which played a key role in streamlining the Chinese economy.
The Reforms During the Hu Jintao Era
During the Hu Jintao period, the Chinese economy continued to expand at a rapid rate. In addition to the continued development of both industry and technology, Hu Jintao focused on continuing to improve the country’s human capital, in the form of providing better health care and education to the populace. These improvements had a major impact on the nation’s poverty levels, with more individuals now able to access a higher standard of living.
Furthermore, Hu Jintao initiated a number of initiatives aimed at improving the country’s infrastructure. These included the building of bridges and roads as well as developing the country’s rail system. These developments had a major impact on the national economy and enabled communities to connect and open up new markets.
The Reforms Under President Xi Jinping
Since taking office in 2012, President Xi Jinping has continued the legacy of the country’s previous leaders when it comes to propelling the Chinese economy forward. Under his administration, the Chinese economy has continued to grow, albeit at a slower rate than before.
One of President Xi’s primary objectives is to forge ahead with market-based reforms, particularly in the field of finance and banking. Under his leadership, the Chinese government is continuing to deregulate the banking system, and encouraging competition between lenders. This competition has resulted in lower interest rates, which in turn has provided the impetus needed to sustain and lift the Chinese economy even further.
In addition, President Xi is also looking to expand China’s presence on the world stage, with the goal of making the country a leader in both industry and innovation. The national ‘Made in China 2025’ initiative is just one example of President Xi’s ambition to develop the country’s manufacturing sector and provide the country with the necessary tools needed to compete at a global level.
From the opening and reform begun by Deng Xiaoping all the way through to the leadership of President Xi Jinping, the Chinese government has demonstrated its commitment to the market-oriented reforms needed to transform the Chinese economy and improve the lives of its population. As a result, China has become one of the foremost economic powers in the world and continues to post impressive economic growth year after year.
It is only through the leadership and the dedication of those that have been in power can China’s economic miracle be truly attributed.
