Long-term trend of economic liberalization

Management in China

China today is an economic powerhouse. Fuelled by a near limitless supply of cheap labor and a long-term trend of economic liberalization, China has grown from a poor, agriculture-based economy as late as the 1970s to the world’s third largest economy (IMF, 2008). This transformation did not come easily for China. Economic reform was something sought by Mao Zedong when the Communists took over in 1949 (BBC, 2005). Mao’s reforms ultimately failed. When Deng Xiaoping took over in 1978, he instituted sweeping economic reforms intended to modernize the Chinese economy. After Deng stepped down, reforms accelerated, bringing us to the China of today.

Don't use plagiarized sources. Get Your Custom Essay on
Long-term trend of economic liberalization
Just from $9/Page
Order Essay

This paper will examine China’s economic reforms, both during the Mao era and the post-Mao era. Economic management during these eras will be considered, in particular with respect to deriving motivation while simultaneously maintaining strong central control. The success and failure of the different reforms will be analyzed, and conclusions formed about the policy directions that led to success and those that did not.


In 1949, when Mao Zedong and the Communist party took control of China, forcing the Kuomintang into exile on Formosa, China’s economy was in shambles. China had been underdeveloped for several decades at this point. Chinese society, at several points in history the world’s most developed, had been reduced to a peasant agricultural state. Mao sought to modernize the economy. Unfortunately for China, Mao believed that Communism was the one true economic and social philosophy to which all nations would gravitate (BBC, 2005).

After stabilizing the country, Mao launched his first Five-Year Plan, modeled after the economic policies of the Soviet Union. Stalin had send China money and engineers to help build the Chinese industrial base. Thus, Mao’s first Five-Year Plan set goals with respect to the production of industrial commodities — steel, coal, cement and pig iron among them. The first five-year plan was for the most part a success, with goals met in terms of the production of most commodities, oil being an exception (History Learning Site, n.d.)

Emboldened by the modest successes of the first Five-Year Plan, Mao then launched into the Great Leap Forward. The underlying principle of the Great Leap was that steel production was the key to economic growth. Targets were set — China was to overtake Britain in steel production within fifteen years. Peasants were conscripted to make steel in their villages with coke ovens, and had quotas to fill. They smelted down everything, eventually including farm implements. This, of course, did not yield steel, which cannot be produced in such a crude fashion. The peasants, unable to grow and having what little crops they did produce hauled away to the cities, died by the million. The Chinese government accelerated the objectives — the 15-year objective was shortened to one (Harms, 1996). The steel story illustrates why the Great Leap Forward failed in the most catastrophic fashion. Mao had devised his economic policy based on unrealistic assumptions, and the misguided belief that he could attain an outcome simply by dreaming it up. The total absence of any serious thought in the Great Leap Forward set the country back decades.

The Great Leap Forward represented an abject failure of the Chinese system of governance and oversight. Mao and his advisers were utterly ignorant of economics, production and commerce. They dictated output levels without consideration how those might be achieved. Instead of heeding the advice of dissenters, Mao had them executed, over half a million in all (Harms, 1996). If China had had any system of oversight, the tragedy of the Great Leap Forward could have been avoided.

Liu Shaoqi, Mao’s successor as Chairman, moved to restore pre-Leap economic policies and rural land practices. This retrenchment was an admission that the Great Leap Forward strategy of irrational goal-setting, no oversight and execution of dissenters was a failure. It was not, however, a move away from socialism. The reforms were successful, which following the Great Leap was not exactly a difficult task.

The Four Cleanups Movement was an attempt by Mao to restore what he viewed as ideal ideology to China, including in economics. This movement had no lasting impact, however, and was soon followed by the Cultural Revolution. The Cultural Revolution was more a social and political event than an economic one. Economic reforms came to a standstill during this era as the power struggle within the Communist party raged. Economic activity was still centrally planned, but there was little thought given to non-revolutionary activity.


After the end of the Cultural Revolution and Mao’s death, one-time Mao adversary Deng Xiaoping took over. With Deng’s arrival, China began the process of transforming its economy into today’s modern powerhouse. One of the first reforms was that rural families were able to work family plots, removing the most communistic aspects of the economy. Deng worked to improve infrastructure, including an overhaul of the education system. The Chinese people were allowed to purchase consumer goods and international investors were courted. His reforms culminated in self-sufficiency in food

and successful negotiations with the British for the return of Hong Kong, the economic engine of Southeast Asia (CNN, 2001).

Another major reform was the creation of special economic zones, where tax breaks were given to encourage export business and foreign investment. These zones were the earliest drivers of the modern Chinese export economy.

Deng’s reforms offered baby steps towards capitalism, in that Chinese citizens were now allowed to earn their own money and make decisions with respect to how to spend that money. The economy, however, remained subject to intense central planning. Deng had kept the Communist Party’s authoritarian system of governance. The major change of Deng’s reforms, therefore, was to step back from the micromanaging of the economy that Mao had deigned to undertake. This was in part due to the lessons of the Great Leap Forward, where local politicians routinely lied about production numbers in order to save themselves or their regions from punishment. The system of motivation utilized in the Great Leap — fear — did more harm than good. In the 1980s, corruption was a major threat to these reforms (BBC, 2005). Deng’s reforms did not have a strong system of governance. The tendency of managers and low-level politicians towards corruption and incompetence remained, even though they had the profit motive dangled as a carrot in front of them. Social control was kept strong by Deng, and this may have provided some degree of control over the nation’s most important economic actors. But the degree of governance remained poor, and contributed to significant economic difficulties in the latter part of the decade, when the government was forced to retrench on some of its reforms.

Further Reforms

Deng had restarted the pattern of Chinese economic growth in 1992 and pushed harder for foreign investment than he had in the past. It was at this point in time that China began to dismantle the centrally-planned economy in earnest. Although Deng had realized in the 1970s that the Soviet-styled planned economy had failed to meet any of its objectives, he also realized that a transition period was going to be needed. By the 1990s, he was convinced to take the next step. Central banking was instituted and capital markets created.

Uneasy about the transition process, the Chinese government was slow to dismantle its state-owned enterprises. These had been run under the centrally-planned economy, and were neither competitive in their cost structure nor did they product goods of value to Chinese consumers. By the end of the 1990s the state-owned enterprise system began to collapse. Viable businesses found themselves with foreign joint venture partners, non-viable business closed. The decline of the state-owned enterprise was precipitated by poor performance in key economic measures. Productivity decreased, particularly with respect to returns on capital (Jefferson, 1999). This was a function of an underdeveloped financial sector and weak governance.

Shoddy governance continued to dog the Chinese economy. The financial sector was inefficient. There were few systems that could effectively protect enterprises or their property rights. China, for all its reforms, still ran its economic system like a third world country. A further problem compounding the difficulties of reform in this sector is that of incentives. The incentives offered by the central planners were not congruent with improved efficiency (Cauley et al., 1999).

Property rights continue to be a major bottleneck for China. In the past ten years, the country has made tremendous strides with respect to its economic development. The government has little influence on business activity, focusing strictly on exercising control over the macroeconomy. The end to central planning is admirable, but property rights, or lack thereof, are reducing the potential rate of further economic growth and reforms.

At this point, the remaining presence of SOEs is another key bottleneck. The SOEs were subsidized until 2003, when China was forced to end subsidies as a result of their ascension into the World Trade Organization. Most of the remaining SOEs by this point were unprofitable, but were being propped up by the Chinese government because of the jobs they represented in economically important exporting provinces (Eckaus, 2006).

The most recent trajectory for China’s economy has been notable for its absence of emphasis on heavy industry. Mao’s original plans focused on heavy industry the major driver of Chinese economic growth. Deng, too, had wanted to build out China’s capacity in steel and heavy manufacturing industries. In recent years, service industries and light manufacturing have taken a more prominent role in the Chinese economy. The sense is that during the first years of the reforms, it was essential for China to build out its industrial capacity. Having done that, the only role left is to leverage the heavy industry infrastructure in order to help build out the fledgling service industry.

It was the heavy industry that facilitated productivity growth in China in the past couple of decades. Productivity has contributed 13.5% of China’s economic growth since the early 1930s (Wu, 2003). Substantial improvements in infrastructure and technology were able to reverse the sluggish productivity growth of the 1990s. Between 1995 and 2002, productivity in China improved an average of 17% per year (Mauldin, 2004). Indeed, this increase in productivity was coupled with decreases in manufacturing jobs.


The first 30 years of the PRC saw little in the way of economic progress, despite some sweeping attempts at reform. The first Five-Year Plan was a good idea — increase production of key industrial commodities. The Great Leap Forward that followed was disastrous policy made with zero governance, ultimately setting the country back by decades.

Deng’s reforms and those of his successors have sparked a phenomenal increase in productivity and the end of the centrally-planned economy. China has had some growing pains. They use social control as a means of economic control, but the country has at times been subject to significant corruption and managerial incompetence. The Chinese government remains in a process of transitioning out of the economy. They do not, as of yet, have an answer for governance. It is governance issues that are the final bottleneck for China. Investors need to feel confident in the protection of their rights. The rule of law needs to become more developed in China as well, in order to facilitate the next stage of China’s economic development. Corruption needs to be eliminated. China at this point in time has weak controls over incentives and governance. Better control over economic actors and the installation of a robust legal system will break the bottlenecks and allow for Chinas to continue to grow its economy.

Works Cited:

BBC: China’s Economic Reform website. (2005). Retrieved May 1, 2009 from http://news.bbc.co.uk/nol/shared/spl/hi/pop_ups/quick_guides/05/asia_pac_china0s_economic_reform/html/1.stm

GDP figures from the International Monetary Fund. (2009) Retrieved May 2, 2009 from http://www.imf.org/external/pubs/ft/weo/2009/01/weodata/weorept.aspx?sy=2008&ey=2008

History Learning Site. (n.d.) Retrieved May 1, 2009 from http://www.historylearningsite.co.uk/china_five_year_plan.htm

Harms, William. (1996). China’s Great Leap Forward. University of Chicago Chronicle. Retrieved May 1, 2009 from http://chronicle.uchicago.edu/960314/china.shtml

No author. (2001). Reformer with an Iron Fist. CNN. Retrieved May 1, 2009 from http://www.cnn.com/SPECIALS/1999/china.50/inside.china/profiles/deng.xiaoping/

Jefferson, Gary H. (1999). China’s State-Owned Enterprises did their Job — Now they can Go. World Bank. Retrieved May 1, 2009 from http://www.worldbank.org/html/prddr/trans/so99/pgs31-32.htm

Cauley, Jon; Cornes, Richard & Sandler, Todd. (1999). Stakeholder Incentives and Reforms in China’s State-Owned Enterprises: A Common Property Theory. China Economic Review. Vol. 10, Issue 2, pp.191-206.

Eckhaus, Richard S. (2006). China’s Exports, Subsidies to State-Owned Enterprises and the WTO. China Economic Review. Vol. 17, Issue 1, pp. 1-13.

Wu, Yanrui. (2003). Has Productivity Contributed to China’s Growth. Pacific Economic Review. Vol. 8, Issue 1, pp. 15-30.

Mauldin, John. (2004). The China Productivity Miracle. Safe Haven. Retrieved May 2, 2009 from http://www.safehaven.com/article-1772.htm

Get Professional Assignment Help Cheaply

Buy Custom Essay

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

Online Academic Help With Different Subjects


Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.


Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!


While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.


Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.


In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.


Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.


We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!


We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.


Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

  • When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
  • We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

  • The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
  • We will have a different writer write the paper from scratch.
  • Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment Help Service Works

1. Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2. Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3. Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4. Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

smile and order essay GET A PERFECT SCORE!!! smile and order essay Buy Custom Essay

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!
Open chat
Need assignment help? You can contact our live agent via WhatsApp using +1 718 717 2861

Feel free to ask questions, clarifications, or discounts available when placing an order.
  +1 718 717 2861           + 44 161 818 7126           [email protected]
  +1 718 717 2861         [email protected]