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The Factors Fuelling the Chinese Economic Growth

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In general, the Deng reforms decentralized the state economy by replacing central planning with market forces, breaking down the collective farms and getting rid of state-run enterprises. The emphasis shifted from heavy industries to consumer-oriented industries. China’ s economy was slowly globalized. The process had three distinct stages; rural reform (1978-1984), urban reform (1984-1988), Price reform (1989-1991) and Confirmation (1992-1993). The Rural reform moved the agrarian economy from community farms to property ownership, which allowed the peasants to sell the produce they grew. Urban reform gave impetus to joint ventures with foreign companies and development of Special Economic Development zones along the coastline.

Further, 12 state-owned companies controlled imports and exports and economic zones. The price reform brought stability to non-staple prices, opened stock exchanges and attracted greater investment in multinational companies. The tariffs were cut from 56% to 43% paving way for a gradual shrinking of import barriers. Confirmation of the reform process enhanced the confidence of the foreign companies in the Chinese economy. The reform process gave China a stupendous growth in the economy in terms of GDP and fivefold increase in foreign trade.

Certain technology-intensive industries contributing to infrastructure such as telecom received emphasis. The important features of this successful reform are the "within" and "without” production plans, which granted autonomy to the businesses to pursue their individual targets over and above the quotas set by the state. This scheme permitted the Enterprises and factories to retain profits and deploy them to award merit pay and offer incentives, which in turn fueled productivity. 6 The Effect of Reforms In the pre-1978 reforms era, nearly four out of five in China served the agriculture sector, which by 1994 shrank to one out of two.

The augmentation of property rights gave impetus to the formation of nonagricultural businesses in villages. Measures such as De-collectivization and higher price realization for agro products gave a fillip to productive farms owned by families raising the efficiency of labor.  

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