China’s Development Trajectory

Sara Hsu

The “China Model” “China Model” Colonialism and Communism Planned economy Mao’s death

Reform History 1978 through 1989

• Third Plenum• Household Responsibility System• Decentralization• State Owned Enterprises• Tiananmen Square

Reform History 1992 to 2001

• Deng’s Southern Tour in 1992• Elimination of dual-track system• Privatization• Trade decentralization• Foreign direct investment• Banking reform

Reform History 2001 to Present

• WTO entry• Scaling up in export value chain• Minimum wage changes• Impact of the Great Recession

Political Economy of Reform

Political barriers to reform Dominance of the Party

Data and Pattern of Growth

China’s Sector Value Added (%)

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0

10

20

30

40

50

60

AgricultureIndustryServices, etc.

Bottom Line China’s gradualist approach to reform

helped the country closely guide the economy toward successful developments and avoid domestic political conflict

Rural, urban, trade and financial sector reforms were all components of planning.

Did You Know? China’s latest Twelfth Plan has sought

to increase production in all three sectors-agriculture, manufacturing, and services.

The plan attempts to equalize standard of living among rural residents, rural migrants, and urban residents.

Fin Questions?