The Chinese Economic System – Reforms and economic growth

Abstract

In the last three decades, the PR China has made impressive rate of economic growth. The reforms carried out by Deng Xiaoping in 1978 have enabled very poor, closed, planned economy to become the world’s largest exporter and the most attractive country for foreign investments. China has continuously recorded high growth rates, balance of payments surplus and a current account surplus, a large inflow of foreign direct investments, high savings rates, as well as the largest foreign exchange reserves in the world. Although rapid economic growth has improved the living standard of Chinese people, a large part of the population is still struggling with extreme poverty. Social and economic inequalities in this country are becoming more emphasized, and the one-party system led to the problems of corruption, lack of protection of workers, lack of social and health care, and insufficient protection of the environment. Chinese authorities had become aware that neglect of these issues could threaten further progress and they decided to change the strategy of growth. Last projections show that China is still going in the right direction, and it could take a leading position in the world economy this year.