Beijing, February 11 (Xinhua): Since 1949, when the Peoples’ Republic of China was established, China has accounted for over 70 % of poverty reduction in the world, and nearly 30% of the world’s economic growth, according to official figures.
In 70 years since the founding of New China, the Chinese economy expanded to over 90 trillion Yuan (US$ 13.28 trillion) in 2018 from roughly 67.9 billion Yuan (US$ 10 billion) in 1952.
At first glance, China’s A+ economic performance seems to be a matter of course ,only to be expected, because the country’s population is a staggering 1.3 billion. Labor costs are low. There is a huge domestic market to buy the goods produced and the exchange rate was favorable.
Political And Economic Framework
However, to better understand the Chinese economy, it is worth delving into China’s political and economic system which provided the necessary institutional support.
Chinese policymakers innovatively started the reform and opening-up policy in 1978 to gradually eliminate the constraints of a planned economy, nurture the private sector, and reform the state-owned enterprises step by step.
Such reforms helped ensure social stability and created favorable conditions for continuous improvement.
By adopting a prudent yet accommodative regulatory approach, the Chinese government has successfully nurtured the entrepreneurial spirit.
As a result, the number of market entities (private sector companies) has seen exponential growth, to the tune of more than 100 million in 2018. Many Chinese private enterprises are now established global market leaders.
In line with the country’s progressive philosophy, the Chinese economy finds its way upward and onward through experimentation.
The country creates pilot programs and policies in certain regions to test their effectiveness and perfect them before rolling them out nationwide.
History of Change
The opening-up campaign that transformed China into a manufacturing giant started in a coastal village in southern China now known as Shenzhen. The country’s agricultural reform took place in an eastern village.
The latest examples include pilot free trade zones and a negative-list approach for market access.
The experimentation approach makes it easy to fine-tune policies during the implementation process and keep risks from spilling over to the whole country.
While China is no longer a planned economy, strategic planning does play a key role in keeping the country’s economic growth in the fast lane.
Setting targets, outlining plans and making all-out efforts to achieve them constitute makeup China’s success story.
The most notable case of strategic planning would be China’s five-year plans, mapping social and economic development frameworks with specific goals and reform initiatives.
Initiated in 1953, China’s 13 five-year plans effectively showed how China transited from a rural country to an industrial powerhouse. It is now going towards a rising consumer and service provider.
Stephen Roach, a senior economist with Yale University, observed that making medium to long-term plans avoids policy short-sightedness and helps push the government’s agenda through.
Poverty Eradication By 2020
The country’s seven-decade economic development centers on one major theme: improving people’s livelihoods. This has become a fundamental goal and a consistent priority in policy-making despite changes in leadership.
To serve the purpose, China has made it a top priority to lift all its people out of poverty by 2020 and has launched the supply-side structural reform to cater to people’s growing demand for higher-quality lives, ranging from safer milk to cleaner air.
People-oriented policymaking ensures a stable social environment for economic growth and unleashes the potential of the masses to work for a better life.
China’s GDP per capita has risen from less than US$ 30 to nearly US$ 10,000 dollars in the past 70 years.
Democratic centralism combines the strengths of both democracy and efficiency, helps forge unity to govern the country and avoids impediments placed by partisan politics or self-consuming conflicts.
Given China’s vast territory, a huge population and a complicated geopolitical environment, governing it is not easy.
By sticking to democratic centralism, the Communist Party of China (CPC) and state organs have managed to maximize government effectiveness in the interest of the people.
In 2017, China ranked 24th in terms of governance among 192 surveyed countries, according to a report released by the East China University of Political Science and Law.
It took seventh place when governance difficulty was factored into the equation. It was the only developing country to enter the top 10 list after this adjustment was done.
For a country as vast and varied as China, regional differences pose challenges as well as opportunities for development.
China has taken advantage of each region’s own strengths while coordinating their development.
China’s economic growth took off in coastal areas. Now the western region has become a popular investment destination thanks to a string of supportive policies.
The central government has rolled out regional growth strategies for the Beijing-Tianjin-Hebei region; the Yangtze River Economic Belt; and the Guangdong-Hong Kong-Macao Greater Bay Area, which become growth engines.
Macro Regulation Toolkit
China’s policymakers have many economic levers at hand to deal with challenges. History has proven China’s skill in changing its macro policies and capability to maintain stable economic growth in case of global economic turbulence.
A case in point is the financial meltdown in 2008, which is seen by many economists as the worst crisis since the Great Depression of 1929.
Thanks to targeted macro regulation measures, China’s economic growth has survived, largely intact and has become a bright spot in a gloomy world economy.
Without exporting a crisis or practicing protectionism, China has led the global economic recovery.
Despite greater difficulties ahead, China is still confident of keeping economic growth within a reasonable range by innovating and improving its macro regulation.
Despite the economic achievement, China’s reform momentum has remained steady and the government is working to cut red tape, streamline administration, and create a level playing field to enhance the efficiency of the economy.
Over the past five years, China has held at least 45 high-profile meetings on reforms, during which 400 documents and 1,932 reform plans have been launched.
The CPC has taken a series of steps to enhance internal supervision, tackle corruption, create a sustainable development environment and foster both domestic and international demand.
China has pursued development with its door open. Openness has become a trademark of China.
Without being open-minded, China could not have come up with a reform and opening-up policy to learn from developed economies or have launched the Belt and Road Initiative to share growth across the globe.
Although the world is witnessing trade protectionism, the Chinese government supports an open and inclusive world economy, takes efforts to broaden market access, eases foreign equity restrictions, and lowers import tariffs.
It organized the world’s first national-level import-themed exposition last November.
Chinese culture has been evolving, but there are some fundamental features that have remained unchanged for thousands of years, including a strong collective spirit and a love for harmony.
“There is a lot to respect for Chinese culture and approach that led to its remarkable accomplishments,” said Bridgewater Associates founder, Ray Dalio.
In Chinese, the word “country” is “guojia,” a combination of state and family, which indicates a close bond between individuals, their families and the motherland or the State.
That is why for the honor and well-being of themselves, their families and country, the Chinese people have been diligently working.