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Sources of China Development from 1978 to 2011 | Essay

   

Added on  2022-08-13

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Leadership ManagementLanguages and CultureEconomicsPolitical Science
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RUNNING HEAD: DEVELOPMENT ECONOMICS
0
Sources of China
Development from
1978 to 2011
ESSAY
[Year]
Sources of China Development from 1978 to 2011 | Essay_1

RUNNING HEAD: DEVELOPMENT ECONOMICS
1
Introduction
China is currently the fastest growing economy in the world, it has made tremendous
progress since the economy was opened to the world in 1978. On an average the economy of
China is growing at the rate of 9.72% (Xu,2011). The growth and development of China in
such a short time is historically unprecedented. The country was open to the world and
changes its reform in 1978 and after that the economy of the country is growing at the
increasing rate. The sources of development have come from labour inputs, increasing
capital, productivity growth and increasing efficiency (Zhu,2019). The main source of
development for China is export as the country made reforms to open up to the world by
opening up 100 sectors out of 160 sectors in business (Xu,2011). In order to know what
reforms were implemented by China for development and the role of government analysis of
policies adopted and implemented by China is done for period of 1978 to 2011. This essay
focus on the sources that China adopted or strategies that China implemented in order to
grow and develop at the global level.
Literature Review
China rise from a poor developing country to a major economic power in about last three
decades has been spectacular. In accordance with the World Bank, China has “experienced
the fastest sustained expansion by a major economy in the history and lifted more than 800
million people out of poverty between 1978 to 2011” (See figure 1). According to Woo
(1996), Economic reforms that China adopted were the reason of that tremendous growth.
Before 1978, China was dominated by central planning and state ownership and that time per
capital income of country grew at the rate of 2.9% annually (Moore et.al,2002).
China developed after implication of economic reforms in 1978, the implementation was
done in two stages. First stage started in early 1980s that included opening up of China for
the world, privatization, de collectivization of agriculture and boost to start-ups. Second stage
started in early 1990’s that mainly focused on protectionist policies, lifting of price control,
getting state monopolies in sectors such as petroleum and banking (Todaro and Smith,2015).
This private sectors after reform grew tremendously and contributed 70% of China economy
in 2005. Zhu (2012), said that this growth was experienced by China because of reforms and
policies adopted by China. The reforms that were adopted by China related to agriculture,
foreign direct investment and international trade. The success of China economic reforms and
manner of their adoption and implementation bought changes in economy of China and
Sources of China Development from 1978 to 2011 | Essay_2

RUNNING HEAD: DEVELOPMENT ECONOMICS
2
improved life of Chinese people. The benefits that the country experienced were reduction in
poverty, higher employment rate, infrastructural development and improved standard of
living (Chen et.al,2011).
Figure 1: Economic Growth of China after implementation of 1978 reforms
Source: (Lippit,2018)
Golley and Meng (2011), criticized the model and reform that were adopted by China for
development and growth as this model is not applicable or used by any developing country.
The criticism that China faced regarding its policies and reforms of 1978 were increasing
inequality, shift of people from rural to urban area and overutilization of resources of the
country at lowest price (Lippit, 2018). Further, because of increasing FDI and exports
impacted on the production and consumption pattern of people at the domestic level. The
consumption pattern of Chinese people reduced and they produced for boosting export of
the country (figure 2).
Sources of China Development from 1978 to 2011 | Essay_3

RUNNING HEAD: DEVELOPMENT ECONOMICS
3
Figure 2: Domestic consumption in China decreased between 1978 to 2011
Source: (Lippit,2018)
The export of the country contributed to approximately to 14.24% to the GDP of the country
in 2011, minimum of 2.49% in 1970 and maximum of 36.04 percent in 2006 (Lippit,2018).
Due to increasing export by the country the domestic consumption reduced that led to
dependency of China more on international trade rather than domestic consumption or
production (figure 3).
Figure 3: Increase in Exports of China from 1978 to 2011
Source: (Xu,2011)
The reason behind the development of China economy was its policies and reforms but that
impacted the country in negative way in longer run as dependency of the country on exports
Sources of China Development from 1978 to 2011 | Essay_4

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