China: Twenty Years of Economic Reform

China: Twenty Years of Economic Reform

Ross Garnaut
Ligang Song
Copyright Date: 2012
Published by: ANU Press
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    China: Twenty Years of Economic Reform
    Book Description:

    China: Twenty Years of Reform outlines the experiences of China over the past two decades.  It highlights the processes of reform, successes achieved, and problems faced during the economic transition. “China, and its relations with the international community, have been transformed. China's economy has expanded five times, and its foreign trade by twelve. It has greatly increased consumption levels of what had been about half of the world's people in poverty.” - Ross Garnaut “Tremendous progress has been made over the past twenty years, but much more needs to be done in setting up a more open, efficient and transparent trade system, in line with the requirements of the WTO.” - Ligang Song “Radical reform is neither in China's tradition, nor is it an easy task. Given the difficulties of the reform task and the structure of the political economy, it will probably take a few more years for China to accomplish SOE reform and reforms in other areas.” - Yiping Huang “The most remarkable aspect of China's agricultural reform was it's “spillover” effect. Non-agricultural activities in rural China sprang up immediately after the reforms began—the gross output value of TVEs grew at 24 per cent per annum from 1978 to 1995 and employment grew at 9 per cent per annum.” - Yongzheng Yang  This work, originally published by Asia Pacific Press, is reproduced here in the interests of maintaining open access to high-quality academic works no longer in print.

    eISBN: 978-1-922144-46-1
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-v)
  3. Tables and figures
    (pp. vi-viii)
  4. Abbreviations
    (pp. ix-ix)
  5. Contributors
    (pp. x-x)
  6. Chapter 1 Twenty years of economic reform and structural change in the Chinese economy
    (pp. 1-26)
    Ross Garnaut

    On 22 December 1978, the Eleventh Central Committee of the Chinese Communist Party completed its third plenary meeting. There was no contemporary recognition in the West of the significance of the meeting.

    The twentieth anniversary of the third plenum received far more attention. In the intervening years, China, and its relations with the international community, have been transformed. China’s economy has expanded by five times, and its foreign trade by twelve. It has greatly increased consumption levels of what had been about half of the world’s people in poverty. Then an isolated, autarchic economy, China through the mid and late...

  7. Chapter 2 Economic growth over the past twenty years
    (pp. 27-50)
    Xiaolu Wang

    China has experienced rapid economic growth over the past twenty years of reform. Official statistics show that the average growth rate of GDP increased from 6.1 per cent during the pre-reform period (1953-78) to 9.7 per cent for the reform period of 1979-98 (State Statistical Bureau 1998; Economic Daily, January 1999). Growth of per capita GDP was around 7.8 per cent (World Bank 1996a, 1997a).¹

    What contributed to the acceleration of economic growth? Was the rapid growth input-driven and short-term, or sustainable over the long run?²

    Development of China’s rural industrial and other non-agricultural sectors—the township and village enterprises...

  8. Chapter 3 Agricultural reform
    (pp. 51-70)
    Yongzheng Yang

    China’s reform began in agriculture. To be precise, it began in farming, where reform has universally been acclaimed a success. In the first seven years of reform (1978–84), grain output increased by 5 per cent per annum, 1.5 percentage points higher than for the pre-reform period, 1949–78. Even more rapid than the growth of grain output was the growth in the output of other agricultural commodities. During the prereform period the growth of grain output had been at the expense of these commodities. Over the longer period of reform from 1978 to 1996, gross agricultural output grew at...

  9. Chapter 4 Trade reform and development
    (pp. 71-94)
    Ligang Song

    Trade system reform has been an important component in the overall strategy of reforming the economic system in China. Tremendous progress has been made over the past twenty years, but much more needs to be done in setting up a more open, efficient and transparent trade system, in line with the requirements of the World Trade Organization (WTO).

    China’s trade system was a highly centralised and controlled planned system during the pre-reform period (1958–78). The main features of this type of trade system were¹

    foreign trade was conducted strictly according to central planning, which covered areas such as trade...

  10. Chapter 5 State-owned enterprise reform
    (pp. 95-116)
    Yiping Huang

    China’s agricultural sector was the first to experience significant success from reform, but initial reform efforts in the late 1970s were directed at state-owned enterprises (SOEs). In 1978, when farmers started to experiment—secretly and illegally—with the now famous household responsibility system (HRS) in several villages in Anhui province, the government was already introducing the first set of policy experiments with SOEs in Sichuan province and then in other places in the following years. The government’s rationale for focusing on reform was obvious—the state sector dominated the Chinese economy in terms of both production and urban employment, so...

  11. Chapter 6 Financial system reform and implications
    (pp. 117-148)
    Michael Hasenstab

    From 1978–98 China dramatically changed its mechanism for distributing capital within the economy from a strictly planned bureaucratic system to a hybrid of state and market allocation by dismantling the credit plan and promoting the development of new financial markets to service changes in the real sector. After creating a semi-commercial banking sector and private capital markets it became possible to begin securitising financial assets in the form of loans and securities and to increasingly do away with outright government transfers and subsidies. Although residual non-performing loans and an incomplete privatisation of the state-owned sector continue to limit the...

  12. Chapter 7 Labour market reform
    (pp. 149-168)
    Xin Meng

    Over the last twenty years China has undergone transition from a planned to a market-oriented economy. Reforms have brought about remarkable economic growth, through transformations in the agricultural sector and rapid export growth. However growth until 1997 has not been accompanied by significant state-owned enterprise reform or labour market reforms in the urban sector. During the initial stages of economic growth such lack of structural change is not so serious, but as incomes rise further reform is essential. Due to the current East Asian financial crisis it seems unlikely that exports will make a large contribution to growth in the...

  13. Chapter 8 Changing income distribution in China
    (pp. 169-184)
    Li Shi

    Since the late 1970s, China has undergone transition towards a market economy. In terms of economic growth, China has achieved an impressive record. The average annual growth of GDP per capita was as high as 8.4 per cent during the period 1978 to 1997. The human development index also indicates an improvement in well-being on the average for the Chinese population (UNDP 1998). During this time, China has become strongly integrated into the world economy. China’s exports grew an average of 16.7 per cent per annum over the last two decades. China absorbed US$205 billion as foreign direct investment during...

  14. Chapter 9 Review of economic reform in China: features, experiences and challenges
    (pp. 185-200)
    Zhao Renwei

    In comparison to Eastern Europe and the former Soviet Union, economic reforms in China have some distinct characteristics. As noted by Harvard Professor Dwight H. Perkins, there is a particularly Asian pattern of reform of socialist economic systems. According to this view, the reforming Asian economies have three characteristics: economic reform precedes political reform, the socialist countries in Asia are much poorer than their counterparts in Eastern Europe and the former Soviet Union, and the majority of people in Asian socialist countries are employed in the agricultural sector. Small and medium-sized enterprises account for the lion’s share of industry output....

  15. Select bibliography
    (pp. 201-220)
  16. Index
    (pp. 221-230)