Reason behind China’s economic growth
A few decades ago, the two Asian neighbors were in a somewhat similar position, and both of them were given the title of emerging economies of the world. Cut to this day, China has not only emerged as the economic superpower but has created its presence amongst the top countries in the world. As for India, well, we are still an emerging economy. They posit that the paths of growth for the two countries weren’t so different yet the patterns have been different as day and night calls for a discussion. A discussion on what went behind this miraculous economic growth of China and what lesson it leaves for its neighbor.
Just to give a short glimpse of the miracle that we’re talking about, note that the People’s Republic of China has transitioned from about per capita of income 50 yuan to now 32,000 yuan over the span of a little more than 7 decades, even though its population still tops the charts. The growth in China has left baffled all the economic theories of the world, given serious debate topics, and has contributed in a lot of particular areas, both academically and economically. It is worth unveiling what the Communist Party of China’s contribution to the country has been.
To begin with, the country’s growth can majorly be attributed to something as simple yet important as acknowledgments and execution. All over the globe, the conversations of execution of China’s five-year plans and their impact has been talked about, and even if it feels like something common to every country, it is evidently not.
The communist party of China, which holds in its hand the ability and adroit to influence markets, has been fairly active in ensuring China’s five year plans, which as yet have been fourteen in total, are accorded with the country’s current and long term needs, with proper follow-ups and perfect execution. As for India, well, lousy government authorities have led five-year plans to cling on to the coming ones, with most numbers being deceiving and estimations being false promises.
Industrialization, economic and social development were the beginning roots of China’s blueprint and history has it, the journey still remains a mirage for other countries. The growth has been miraculous, so much so that it puts proponents of the free reign capitalism in some debate-worthy questions.
The conversation around this effective execution is because of the strategy the government had devised and how those targets were deemed ambitious at the time. In particular, the reference is made to doubling the gross national product of the economy back in the decade of 1980s, and then again by the end of the 20th century. And even though the exponential population growth was named a factor that could help ease the journey towards the goal a little, the ambition to make the per capita income reach the level of developed regions was a considerable one in the line.
This proposition came in after the reform declaration in 1978, which later came to be the reason for China’s exclaim-worthy growth.
The evidence of it was provided when the country achieved its target of doubling its GNP, twice, before the beginning of the twenty first century five years before the timeline, further aggravated by the never seen before reformist strategies undertaken by the party.
And the effectiveness of the five year plan continued, for the greater part of the twenty first century as well, where the country transitioned from a planned economy to a socialist economy over the course of five years, in an attempt to honor its obligation with the World Trade Organisation back in 2001. The country had gained significant momentum during the mentioned period, and while we are aware of what came ahead, the goosebumps to this point are also unanimous.
“The main feature of the five-year plans is the top-level design, which is holistic, macroscopic, forward-looking, anticipatory and binding,” as explained by a notable economist from the director of Modern Economic history at China research center, and well, we can’t say we disagree.
Even after the outbreak of the COVID-19 pandemic, the way China’s economy rebounded has excelled in all possible accounts, with even advanced nations failing to follow the trajectory. To give a glimpse of what we’re referring to, note that China’s economy never even fell before the pre-pandemic level despite the world dealing with a global recession, and its policy actions have been a lesson for the entire world.
However, like any great nation, this entire journey of success did not come without mistakes, lessons, and guilt. But like I said, there’s no greater tool than acknowledgment and no greater solution than efforts. And well, China’s communist party had them both. Whilst the cultural revolution wreaked havoc on the then-weak economy, proper acknowledgments of the problems being encountered and coming to terms with the true objective saved the country’s economy.
Case in point- the late 1970s agenda of the party where they targeted their approach towards being the socialist modern power, and the period before that had been a deviation from it. A step in knowing the way forward makes things way easier, and well, so has been the case for China as well, with global growth coming its way in the years that followed.
So, while the Indian government has been busy claiming the Indian economy’s resilience, coming to terms with the truth of the economy and working on improving it thus would actually be the one thing that would make the difference.
And while we may continue to applaud the acknowledgments and the execution, there’s still a lot of credit due to the revolutionary policy actions undertaken by the regime over the course of these years. The transformation of public-owned enterprises and institutions has been one impressive feat, for it laid down the entire timeline of China’s growth. Opening to the global economy and still maintaining its true nature, inculcating the world’s leading policies like significant expenditure on research and development sectors have been the key indicators of the regime’s flexible and advancing approach.
Its nature of self-driven and innovation-led growth has reaped numbers numerous benefits for the country. The case of China is studied today by almost every budding economist to lay outgrowth patterns for the future. The investment in state-owned enterprises also reaped significant results for the country and gave the developing world, especially India, a great lesson meanwhile. The research sector literally saved the country’s economy during the pandemic while the world was witnessing the global recession, and who can forget China taking over the United States as the top global foreign direct investment destination.
Again, no country goes on the journey of growth without hurdles, complications, and mistakes. So is the case for China, even today as well. However, with a reaping economy and a powerful regime, it is expected to take over even more of the world and we can only be witnesses of it happening.
Edited by Aishwarya Ingle