Chp7 China Economic reforms

Economic reforms introducing capitalist market principles began in 1978 and were carried out in two stages. The first stage, in the late 1970s and early 1980s, involved the DE collectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start-up businesses. However, most industry remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry and the lifting of price controls, protectionist policies, and regulations, although state monopolies in sectors such as banking and petroleum remained. The private sector grew remarkably, accounting for as much as 70 percent of China GDP by 2005. The success of China's economic policies and the manner of their implementation has resulted in immense changes in Chinese society. Together with large-scale government planning programs alongside market characteristics has reduced poverty, while incomes and income inequality increased, leading to a backlash led by the New Left. In the academic scene, scholars have debated the reason for the success of the Chinese 'dual track' economy, and have compared them to attempts to reform socialism in the Eastern Bloc and the Soviet Union, and the growth of other developing economies. During the 1930s, China developed a modern industrial sector, which stimulated modest but significant economic growth. Before the collapse of international trade that followed the onset of the Great Depression, China’s share of world trade and its ratio of foreign trade to GDP achieved levels that were not regained for over sixty years. The economy was heavily disrupted by the war against Japan and the Chinese Civil War from 1937 to 1949, after which the victorious Communists installed a planned economy.Afterwards, the economy largely stagnated and was disrupted by the Great Leap Forward famine which killed between 30 and 40 million people, and the purges of the Cultural Revolution further disrupted the economy. Urban Chinese citizens experienced virtually no increase in living standards from 1957 onwards, and rural Chinese had no better living standards in the 1970s than the 1930s.One study noted that average pay levels in the catering sector exceeded wages in higher education.