The People's Republic of China was established in 1949 and has always aimed at achieving high rates of economic growth as well as transforming their economy into an industrial economy. In the last few decades, the world's most populous nation has liberalised its economy and gone from producing low-quality and simple exports to sophisticated high-technology goods while attracting nearly $500 Billion in foreign direct investment (FDI). The Chinese government also implemented many strategies to do this and it has resulted in China overtaking the United States as the world's growth engine. The emergence of globalisation has impacted profoundly on the nation.
Trade Liberalisation -
Until the end of the 1970's, China maintained a close economy and a policy of self-sufficiency. With major economic reforms in 1978-1980, China's economic pattern changed dramatically. This began the structural change for liberalisation and modernisation. The ultimate aim was to raise the growth performance of the economy to improve national living standards.
Specific emphasis was placed on developing export markets for China's industries and on developing the capabilities of China's firms for competing successfully in the world markets.
Agricultural reforms of the late 1970's were also designed to improve China's performance. Under a policy of de-collectivisation, they involved the abandonment of the Communist Party's control of the commune system of production. It was replaced with private production under the Household Responsibility System. This was where households could make their own production decisions and sell surplus output in free markets. As a result, food production expanded significantly and surplus income was being invested into privately run town and village enterprises. This led to rising real incomes and living standards whilst also providing capital investment in farm machinery and technology.
Another of the major characteristic of economic reform in China has been...