Chinese Economic Reform Essay Example | Topics and Well Written Essays - 750 words

Chinese Economic Reform - Essay Example This led to a situation, where by 1978 seventy five percent of the industrial output was state controlled, and there was hardly any private enterprise worth mentioning. The foreign trade of China was restricted, and consisted of only those items that were not available, or could not be produced in the country. The economy remained stagnant and inefficient, as a result of the policies followed by the Chinese government. There was hardly any competition, and the price and production controls by the government led to severe distortion of the economy. All these factors led to the living standards being extremely low in comparison to all its neighbors. In 1978, Deng Xiaoping took over the reigns of the country, which saw the start of the reform era. The realization of the poor economic state of the country, and the need for economic reforms to revitalize the country, and maintain its strategic importance caused the Chinese government to reconsider its policy of centrally controlled economy, and initiate economic reforms. The Chinese government set about a gradual reform process in the belief that this would cause significant economic growth, and raise the living standards in China, and restore its importance in a region, where its traditional rivals like Japan and South Korea, were displaying steady economic growth, and as result boosting their relevance in the region. (Morrison, M. Wayne, 2006). The economic reform in China has two sides to it. The positive side of the reform has seen greater efficiency in the economy, which has led to the boosting of output, and increased resources for even more investment in the economy. The Chinese have traditionally demonstrated a high rate of savings, and the boost in the economy has seen these savings rates rise to forty percent of the GDP, making the domestic savings rate in China rank among the highest in the world. The GDP of China for 2005 was estimated at $1.9 trillion, and its per capita GDP at