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Economic history of China
26 Nov 2017
The economic reform process begins with the purpose of making communism work better. This is through increasing the role of market mechanisms and reducing (rather than eliminating) government planning and direct control.
Diplomatic relations are established with the US. The government introduces the one-child policy to limit population growth. The contract responsibility system is introduced in agriculture as a way for poor rural people in mountainous and arid areas to increase incomes. The four coastal economic zones are created as areas where foreign investment could receive special treatment.
China’s period of adjustment to these economic reforms ends, producing positive results such as substantial growth in incomes and availability of consumer goods. Due to these the reform program was broadened. The ‘Open-Door policy’ opened the country to foreign investment and encourages development of a market economy and private sector.
Output and prices and prices grow rapidly. Over 2000 SEZs are introduced, facilitating inflow of foreign capital. More long term reforms were approved which aimed to give more control to market oriented institutions and strengthen central control of the financial system.
Private entrepreneurship and free market activities are legalised and encouraged.
Restrictions on trade are further loosened and foreign investment is legalised.
The process of restructuring and/or closing of state-owned enterprises is accelerated.
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