The Economic Development Of China Essay

The Economic Development Of China Essay

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The socialist market economy is a model used by the Republic of China and it is the second largest economy in the world. After the 1980 economic reform implemented by Deng Xiaoping the Chinese economy has been growing positively for their domestic economy as well as the world economy. The world economy is the global economic activity between countries that are considered intertwined and can affect other countries negatively or positively. China was able to transform their economy from a former centrally planned economy into a full market economy in 1992. China was economically frail before 1978, however it has now become one of the world 's major economic powers. In the 22 years following the start of the reform in 1979, China 's economy developed at a remarkable rate in three major stages. The three major stages in the reform consists of policy changed in the rural sector , financial sector , foreign trade and investment, Industry sector, service sector and government finances.(Dilip, K.2012). A combination of Dengs reform policies in these sectors lead to changes within its own domestic economy and the world economy.

The Chinese economic reform commenced in the December 1978 and began after Deng Xiaoping and his reformist allies ousted the Gang of Four Maoist faction. Before the start of Deng’s reform the Chinese economy was at a very poor state. The early stages of the reform started by transforming the rural sector and also by opening foreign trading after it was closed by the Chinese communist party (CCP) in 1979 (Wilson 2009). On the eve of Deng’s reform an estimated 80% of the Chinese population lived in the rural sector. Deng created systems/policies to combat Chinas problem of a labour surplus and poor living condition...


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...lowing the United States (14.4%) and Japan (6.9 %) As a result of this it influenced the world economy for countries that are manufacturing for exports, i.e. those competing with China in the exporting markets, the terms-of-trade (price) decline causing welfare losses for China and those countries competing with China such as India. There is a decline for these countries because these countries are competing with each other in terms of trade policies. For countries that import Chinas products such as USA and EU this may cause structural adjustment, but also improve welfare for Chinas labourers and economy. The relationship between China and EU import and export has grown over the years due to being opened up to foreign trade, as a result of this EU imports has grown from €129,203mil in 2004 to €280,095mil in 2013(European Union. Directorate-General for Trade, 2014)

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The Economic Development Of China Essay

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