Reviewing the global impact of 40 years of reforms in China
- By Sabena Siddiqui
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E-mailChina.org.cn, May 30, 2018
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Initiated by Deng Xiaoping in 1978, the "opendoor" policy set the country in a new direction by introducing the novel concept of an open market as a vital part of the socialist economy.
Starting with the simple methodology of combining market reforms with government programs, the focus has been on achieving sustainability rather than a high economic growth. The policy was effectively executed and resulted in unprecedented economic achievements. Even though China's success was denied due recognition for a long time, achievements speak louder than words and in particular its success in poverty alleviation has become "one of the greatest stories in human history" in the words of World Bank President Jim Yong Kim.
To recap the main milestones, in the very beginning, Special Economic Zones were created in the 1980s to expedite the process of "opening up China to the world" and create an export-oriented economy. Out of these, Shenzhen was the very first zone and today it symbolizes the actual rise of China from an under developed country to the world's second largest economy.
After establishing these zones, the next step allowed foreign capital into the country and the Shanghai Stock Exchange was reopened in 1990. In 2001, China joined the World Trade Organization, and then the Asian Infrastructure Investment Bankwas initiated. Virtually unstoppable, China recorded double digit economic growth over a span of three decades until 2012, becoming the world's largest economy on a purchasing power parity basis. Launching the yuan as a reserve currency with the acceptance of the International Monetary Fund in 2016 made a significant global impact. Now the latest achievement is the Belt and Road Initiative connecting the world with a geo-economic vision.
Resolving to carry on with further reforms until the "Chinese Dream" is turned into reality, President Xi Jinping recently addressed the Boao Forum in 2018 saying, "With the 40th anniversary of the reform and opening-up policy as a turning point, we shall cut paths through mountains and build bridges across rivers, overcome all difficulties and carry reform through to the end." He announced four new measures to speed up the process, ranging from expanding market access to attracting foreign capital, increasing the volume of imports and reducing tariffs, and thepresident plans to further "open up" China to the world and bring the reform phase to completion.
On a global scale, China's "socialist market economy" is an ideal model for developing countries to emulate and offers an alternate solution to a capitalist economy. Proving far more sustainable than a capitalist economy, the Chinese formula of combining the state sector with the private sector has improved the living standards and alleviated poverty at an unprecedented scale. Keeping in mind that China does not have a small economy and cannot be compared with any of the other four "Asian Tigers," it has registered the fastest growth ever seen by amajor economy. Going over the statistics, China's economy grew 35-fold from 1978 to 2017 at the annual average growth rate of 9.5percent while its economy grew 7percent annually from the years 1990 to 2015. Continuing this winning streak, it is now also the world's largest manufacturer, foreign exchange reserve holder as well as exporter.
Notably, Deng Xiaoping's reforms created new possibilities for the world and changed its entire direction with the rise of the Asian continent. Right now, Asia is rising as a dominant global economic force poised to provide 52 percent of the global GDP by the year 2050, and at the very centerof it is China, with its Belt and Road Initiative enhancing regional connectivity.
Becoming the world's largest consumer market as well as the largest economy is just a matter of time, so opening up further to assure greater global integration is now a strategic choice according to experts. Meanwhile, moving into the next phase of its growth model, China has seen a complete transformation and the focus now is on achieving high-quality development rather than just focus on quantitative development.
In modern China, there is more interest in the latest technologies like Artificial Intelligence, cash-less transactions, start-ups, upscale innovation and e-commerce. China is also working on solutions for climate change, protecting the environment, ecology and green energy as its contribution to the world.
Also the cultural implications, when the balance of economic power moved East from the West, brought about a flourishing middle class and a huge population with a growing purchasing power. Nowadays, international designer luxury brands focus on the Chinese as buyers more than any other nationality and that is just one small example signifying a changed world.
Sabena Siddiqui (Twitter: @sabena_siddiqi) is a foreign affairs journalist and lawyer based in Pakistan.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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