China Economic History

china economic historyIt is common knowledge that China is one of the leading industrial producers and most important economic actors in the world and the global economy today. This wasn’t always so, of course. Chinese economic history, especially in the past few decades, is very interesting, and it can be quite instructive for those who want a case study in economic liberalization and the effects of injecting a good deal of free market into a once centrally-planned economy.

After the establishment of the People’s Republic of China (i.e., Communist China) in 1949, a centrally-planned economy was instituted and controlled by the one-party Communist state, with a strong focus on socialist heavy industry, as in most other Communist states. Throughout the strictly Communist and state-planned phase of Chinese economic history, the economy and all of industrial production, agriculture, and Chinese manufacturing was under strict ideological control, and what one would think of as economic goals were rendered secondary to the political and ideological goals of the Communist regime. While Communist China was initially successful in boosting its heavy industrial output, agriculture and light manufacturing suffered–the former especially under the policy of the Great Leap Forward, which (similar to farm collectivization in Stalin’s Soviet Union) created agricultural communes and de-privatized much of the agricultural land in the country.

After the economic failures of the period between 1949-1979 and the death of Chairman Mao Zedong, China began a long, arduous, but very successful process of reforms and economic liberalization, which, while still maintaining Communist political control, greatly eased the party-state’s pressure on the economy, enterprise, and manufacturers in China. This program of economic liberalization is still ongoing today in the 21st century. While the Chinese government claims this is not a turn toward capitalism but rather a pragmatic, specifically Chinese version of socialism, it has been extremely successful not just at creating economic surplus value, but also at lifting a vast segment of the population out of poverty.