Deng's Economic Reform Case Study

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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…show more content…
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 conditions in rural areas. The rural sector focused on producing agricultural goods and creating small handcrafted goods. Deng introduced the household responsibility system (HRS) it was adopted in 1981 and by 1993 98% of rural households had adopted this system. The HRS system is where the land has is owned by the public however the capital within the land was under private ownership and properties were also under independent management. Usually land was contracted out for a few years, on average around 15 years. This…show more content…
Controls on private businesses continued to decrease and the number of state owned enterprises decreased by 48%. As a result of this deregulation it improved economic efficiency of state owned enterprises and it was also able increase competition between newly deregulated and private sector industries(Seaze et al.2001). Over the past 20-odd years since reform and opening-up, China 's economy has maintained sustained and rapid development, export and import since it began to open its doors to foreigners. As seen in (Appendix 2) China has experienced a continuous annual growth rate in foreign trade. For example as seen in (Appendix 4) Chinas trade with EU has continued to increase from 2004 right through to 2013. Along with a decrease in regulation tariffs were reduced, trade barriers and regulations, reformed the banking system, reduced inflation, and joined the World Trade Organization (Brandt et al.2008). The vigorous development of China 's foreign trade has propelled the free circulation and optimized distribution of global resources. As a result of joining the world trade organisation this encourages trade between international boarders creating more income for China’s economy it also increased production. During 1979 to 2000 the rate of China 's contribution to global trade growth reached
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