Economic Reform And Openness In China: China’s Development Policies In The Last 30 Years

Economic Reform and Openness in China: China’s Development Policies in the Last 30 Years
Abstract:
Clem Tisdell
Professor Emeritus
School of Economics
The University of Queensland Brisbane, 4072
(email: c.tisdell@economics.uq.edu.au)
This article adopts the point of view that China’s development policies can only be appreciated if they are considered by applying perspectives frominstitutional economics. This requires attention to be given to the historical, political and cultural context in which its economic development has occurred. Therefore, this article gives attention to the political events leading up to China’s decision in 1978 to begin its economic reforms and the way in which Deng Xiaoping crafted its new development path. It also discusses the subsequent extension ofDeng’s development policies by more recent leaders of the Chinese Communist Party. Indicators of China’s economic progress (including its increasing economic openness) since 1978 are given, and its emerging economic issues and concerns are highlighted. The concept of ‘market socialism with Chinese characteristics’ is analysed and consideration is given to the economic challenges now facing China asa result of the global economic recession and the way it is responding to these challenges. In conclusion, the article touches on China’s economic and political future and its growing international status.
I. INTRODUCTION
Since 1978, China has experienced extraordinary institutional change which has proven to be effective in promoting its economic growth and is advancing its internationalstatus. It has achieved institutional change in a steady systematic and staged manner. This has altered its economic system substantially. At the same time, the structure of its political system has hardly altered. It still remains a one-party state which relies heavily on the guidance of the leadership of the Communist Party for its direction. Institutional economists contend that the development ofnations can only be well understood by considering the manner in which their institutions change and evolve or fail to do so. This requires simultaneous account to be taken of their political, social and economic settings. The importance of doing this is apparent in China’s case where the government has played a very active role in the reform of China’s institutions since 1978. Therefore, I giveconsiderable attention in this article to political events that have influenced the development of China in the last 30 years.
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ECONOMIC REFORM AND OPENNESS IN CHINA: CHINA’S DEVELOPMENT POLICIES IN THE LAST 30 YEARS
Most institutional economist believe that traditional neoclassical economics is unable to provide an adequate explanation of the forces that promote or retard economic development(see, for example, North 2003, pp.2-3) because it fails to take into account factors that shape institutions, particularly political institutions. In this context, North (2003, p.3) states, ‘The economic institutions we have that shape directly our world derive from political institutions. Economists do not like to think that they are dependent on political science but they are. As well asrecognizing the formal rules like constitutions, laws, rules and regulations, we are interested in who makes the rules and for whom’. This view is adopted in this article but it is also pertinent to note that political institutions are not the sole influence on economic institutions. For example, the cultural background of a society shapes norms which in turn have consequences for economic and politicalinstitutions. Institutional change involves complex social interactions (mutual causation) and path-dependence. For example, in the case of China, Confucianism may be linked with the type of political systems it has sustained. Confucian culture supports respect for authority and values social stability maintained by an acceptable authority (compare Qian and Wu 2008, p.62).
Few, if anyone, could...