Ashik kabir

The newly established Chinese communist regime in 1949, planned and executed economic development policies that led to an unprecedented annual average economic growth of 4 percent from 1953 to 1978. The growth was among the highest in the developing countries of the world at that time. When China began its post-Mao economic reform in the year 1978, it achieved an enormous annual average economic growth of 8 to 10 percent. Many studies have shown that, it was China’s domestic and global factor which have influenced the unforeseen growth during 1949-1978 and 1978-present periods.
Domestic factors like people’s Republic of China’s (PRC) economic development policies, high savings rate, government control of investment capital and lessons from Chinese experience with the pre-1949 global economy. Investment in the health, basic literacy and motivation for low wage workers have also been played significant roles in China’s post 1978 economic development.
Global factors mostly post 1978, include global economy trade opportunities, foreign investment, foreign advice, foreign loans, export- led development opportunities, export processing zones, investment and assistance by Chinese from Hong Kong and other parts of greater China and the examples of other successful export-led economic development by Japan and by the four ‘Asian Tigers’ Hong Kong, South Korea, Singapore and Taiwan.
In 1949, the new Chinese communist regime took full control of China using its complete sovereignty, including the economy. The new government to begin with started with the land reforms in the countryside. They gradually took over the control of almost all sectors of China’s modern economy. Sectors like railway, shipping companies, the energy sector, the communication sector, agriculture processing, light and heavy industries, and the financial sector everything came under the control of the Chinese government. The communist government also took control of China’s foreign trade and tariff administration. The government eradicated opium production, gradually eliminated opium addiction , and addressed many other social problems such as homelessness and rampant disease left over from the poverty and corruption of the previous Chinese governments. Foreign merchants, real estate investors, bond holders, missionaries and residents in China lost their privileged lives in the treaty ports, their tax free investment in China and their homes. For many Chinese , the regaining of full sovereignty meant a new beginning for Chinese economic development efforts.
The post 1949 Chinese authorities established a new commodity based currency and stopped paying for loans. They implemented a successful plan for stopping the rampant inflation of 1946-49 that had been so hurtful to the Chinese middle class. Chinese authorities established new laws and regulations to established the confidence in the Chinese economic system rather than providing any foreign political regime. They started a state- planning economic system based on the soviet model. Economic development was also carried out with modest but remarkable assistance from the soviet Union and Hong Kong. The result was an excellent growth of Chinese economy of 4 percent per capita from 1949 to 1978, starting from a per capita base of about US$50. There was a massive loss of about 30 million Chinese lives during the policy created famine of the “ Great Leap forward” during 1958-1960 and there were also social destruction , chaos, and persecution of intellectuals and party members during the cultural revolution of 1966-76. Despite all these negative impacts the world bank reported that China’s economic growth rate was faster than India and most other similarly poor countries.
In 1978, after a policy struggle in the wake of the death of Chinese leader Mao Zhedong, Deng Xiaoping and other pragmatic Chinese reform leaders began to gradually reform China’s planned economy into a market economy and to open china to foreign trade, foreign investment, foreign technology and export-led development all under tight Chinese government regulation and observation. China’s post 1978 goal was rapid economic development similar to that of the four tigers, focused on domestic rather than foreign benefit . After 1978, the Chinese government focused continuing to own and control major Chinese industrial and economic sectors. Private control of agricultural land was made possible through long-term leases for farmers and a free market was opened up to small business people and those providing consumer goods and services. China’s economy has grown at an average rate of 8-10 percent annually since 1978. If that high rate of economic growth continues, China is estimated to become the largest economy in the world by about 2020 in terms of purchasing power parity.
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