Chinese economic reform

The Chinese economic reform or Chinese economic miracle,[1][2] also known domestically as reform and opening-up (Chinese: 改革开放; pinyin: Gǎigé kāifàng) or the opening of China in the West, refers to a variety of economic reforms termed "socialism with Chinese characteristics" and "socialist market economy" in the People's Republic of China (PRC) that began in the late 20th century. Guided by Deng Xiaoping, who is often credited as the "General Architect", the reforms were launched by reformists within the ruling Communist Party of China (CPC) on December 18, 1978, during the "Boluan Fanzheng" period.[3][4][5][6] The reforms briefly went into stagnation after the 1989 Tiananmen Square protests and massacre, but were revived after Deng Xiaoping's southern tour in 1992. The reforms led to significant economic growth for China within the successive decades; in 2010, China overtook Japan as the world's second-largest economy by nominal GDP[7][8] and in 2017 overtook the United States by becoming the world's largest economy by GDP (PPP).[9]

Chinese economic reform
Simplified Chinese改革开放
Traditional Chinese改革開放
Literal meaning"Reform and Opening-Up"

Prior to the reforms, the Chinese economy was dominated by state ownership and central planning. From 1950 to 1973, Chinese real GDP per capita grew at a rate of 2.9% per year on average, albeit with major fluctuations stemming from the Great Leap Forward and the Cultural Revolution.[10] This placed it near the middle of the Asian nations during the same period,[11] with neighboring capitalist countries such as Japan, South Korea, Singapore and then rival Chiang Kai-shek's Republic of China (ROC) outstripping mainland China's rate of growth.[12] Starting in 1970, the economy entered into a period of stagnation,[13] and after the death of Mao Zedong, the Communist Party leadership decided to abandon Maoism and turn to market-oriented reforms to salvage the stagnant economy.[14]

The Communist Party authorities carried out the market reforms in two stages. The first stage, in the late 1970s and early 1980s, involved the de-collectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start businesses. However, a large percentage of industries remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry. The 1985 lifting of price controls[15] was a major reform, and the lifting of protectionist policies and regulations soon followed, although state monopolies in the commanding heights of the economy such as banking and petroleum remained.

In 2001, China joined the World Trade Organization (WTO). Not long after, the private sector grew remarkably, accounting for as much as 70 percent of China's gross domestic product (GDP) by 2005.[16] From 1978 until 2013, unprecedented growth occurred, with the economy increasing by 9.5% a year. The conservative Hu Jintao's administration regulated and controlled the economy more heavily after 2005, reversing some reforms.[17] On the other hand, a parallel set of political reforms were launched by Deng in 1980, which also inspired the then Soviet Union's Glasnost and Perestroika, but eventually ended in 1989 due to the crackdown on Tiananmen Square protests, halting further political liberalization.

The success of China's economic policies and the manner of their implementation resulted in immense changes in Chinese society in the last 40 years, including greatly decreased poverty while both average incomes and income inequality have increased, leading to a backlash led by the more ideologically pure New Left. In the academic scene, scholars have debated the reason for the success of the Chinese "dual-track" economy, and have compared it to attempts to reform socialism in the Eastern Bloc and the Soviet Union; as well as to the growth of other developing economies. Additionally, these series of reforms have led to China's rise as a great power and a shift of international geopolitical interests towards China, especially in matters relating to the ambiguous political status of Taiwan. Nevertheless, matters such as corruption, pollution and a rapidly aging population remain serious issues that the Chinese government has to tackle.[18][19] Some analysts have also added that the reform era has been scaled down significantly during the leadership of current CPC General Secretary Xi Jinping when the reformists lost power,[20][21][22] citing that Xi has reasserted state control over different aspects of Chinese society,[23] including the economy.[10][24][25]

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