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Before the founding of the People's Republic of
China in 1949, in this weakened giant of a country with a population of nearly
500 million people a territory of 9.6 million square kilometers, the highest
annual output of major industrial and agricultural products were as follows:
yarn 445,000 tons, cotton cloth 2.79 billion meters, raw coal 61.88 million
tons, generated energy 6 billion kwh, grain 150 million tons, and cotton 849,000
tons. This was the starting point of the economic development of the new
China.
 After 50 years' planned and large-scale economic construction,
China today is one of the major economic powers with the greatest potential of
development in the world, and its people live a comparatively well-off life as a
whole. From 1953 to 2000, China had successfully completed nine five-year plans
and marked achievements had been made, laying a firm foundation for future
economic development. Since the implementation of reform and opening-up in 1979,
China's economy has grown at an unprecedentedly rapid speed.
Economic restructuring is one of the main aspects of China's reform. In
the first 30 years after the founding of the PRC, the Chinese government carried
out a system of planned economy, and targets and quotas for various spheres
of economic development were all set by the special "planning committees" of the
state. Factories produced goods according to state plans, and farmers planted
crops also according to state plans. Commercial departments replenished and sold
their stocks according to state plans, and the qualities, quantities and prices
of the goods were all fixed by planning departments. On the one hand, this
system contributed to the stable, planned development of China's economy, but on
the other it also limited the development of the economy and sapped its
vitality. At the end of the 1970s, mindful of the gap in economic growth between
China and other countries, China's leaders made a great decision to reform
China's decades-old economic system.
The reform began first in the rural areas in 1978, when the household
contract responsibility system was introduced there. Under this system, farmers
got the right to use the land, plan farmwork and dispose of products
independently. State monopoly of the purchase and marketing of agricultural
products was eliminated; the prices of the majority of farm products were freed;
many policies restricting agricultural development were abolished; and farmers
were allowed to go in for diversified business and set up township enterprises.
All this had greatly aroused the farmers' enthusiasm for production.
In 1984, the economic restructuring shifted from the rural areas to the
cities.
 After ten-odd years of reform and opening-up, in 1992 the
Chinese government formulated a policy to establish a market economy. According
to the official documents, the main aspects of the economic structural reform
are as follows: The development of diversified economic elements will be
encouraged while keeping the public sector of the economy in the dominant
position. To meet the requirements of the market economy, the operations of
state-owned enterprises should be changed so that they fit in with the modern
enterprise system. A unified and open market system should be established in the
country so as to link the rural and urban markets, and the domestic and
international markets, and to promote the optimization of the allocation of
resources. The function of managing the economy by the government should be
changed so as to establish a complete macro-control system mainly by indirect
means. A distribution system in which distribution according to work is dominant
while giving priority to efficiency with due consideration to fairness should be
established. This system will encourage some people and some places to become
rich first, and then they may help other people and places to become rich too. A
social security system, suited to China's situation, for both rural and urban
residents shall be worked out so as to promote overall economic development and
ensure social stability.
In 1997, the
Chinese government stressed that the non-public sectors of the economy are an
important component part of the socialist economy of China, in which profitability
is encouraged for elements of production, such as capital and technology,
making the economic restructuring march forward in bigger strides.
In 2001, reform in various fields was carried out smoothly, and saw
great achievements. At present, a socialist market economy system is well on the
way to being established in China, and the basic role played by the market has
been improved in the sphere of resources allocation. At the same time,
the macro-control system has basically taken shape. Moreover, the extensive mode
of economic growth is being replaced by an intensive mode. According to the
plan, the socialist market economy will be further improved by 2010, and by 2020 a
comparatively mature socialist market economy structure will have been
established in China.
From China -- Past and
Present
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