China’s economic reforms . . .
As China marks the 70th anniversary of its current political system, it also recently marked 40 years of its current economic trajectory born of Deng Xiaoping’s economic ‘Reform and Opening Up’ policies announced at a Central Committee meeting in late 1978. That meeting spurred China’s domestic transformation following the PRC’s first decades, which were marred by the Great Leap Forward, the Cultural Revolution, and other programs that left tens of millions dead. China’s 2001 entry into the World Trade Organization marked the start of its international transformation, including becoming the world’s manufacturing hub. The aftershocks of that December 1978 meeting have been felt from the individual (Chinese youth are now on average four centimetres taller due to improved health and nutrition) to the global (China is the largest contributor to global economic growth this decade).
China’s re-positioning in the global economy . . .
In late 2012, Xi Jinping took the reins of the world’s second largest economy, and almost immediately announced his signature ‘new normal’ for growth and the ‘One Belt, One Road’ infrastructure project (now the Belt and Road Initiative). But internationalization reforms in currency and trade have exposed China to new international risks – on investment, China has made mixed structural and legal moves to attract foreign firms, but Beijing’s restrictions on capital outflows and international pressure have dampened its global deal-making. China’s trade and technological policies have fuelled this international opposition, leading to the current trade war with the U.S. Raising the stakes as China faces its slowest growth in decades, its recent rights violations have corresponded with other slowdowns, and China still maintains weak social security and labour rights.
China’s economic prospects . . .
Consumption, namely retail sales, remains the brightest sector in China’s near term, even as China’s external-facing sectors face the effects of the trade war. Efforts to reduce harm have also distracted from other challenging reforms, such as closing inefficient ‘zombie’ state firms, managing ballooning debt, and redirecting excess industrial capacity. Reforming state firms is notoriously difficult; doing so and simultaneously battling the anticipated economic impacts of demographic shifts and environmental destruction, and unanticipated tariffs, will be even more difficult. But the stakes are high: China could be the world’s biggest economy by 2030 if it hits its growth targets to become a ‘fully developed economy’ by 2049, by which time China could make up one-fifth of the global economy.
- South China Morning Post: China’s 2019 economic growth forecast cut by IMF as risks and uncertainties of US trade war remain
- China Briefing: Economic reform in China: current progress and future prospects
- The Financial Times: China’s economic reform: 40 years of change