China's Economy Evolution

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measure the success of these reforms.
China's transition from a planned economy to a market economy began at the end of 1978. When China started the process, the government did not have a well-designed blueprint. The approach to reform has been characterized by some to be piecemeal, partial, and often times experimental. This view however has not been shared by all economists, "some economists regard this approach as self-defeating (Murphy, Schleifer, and Vishny 1992)". "China's average annual rate of GDP growth has been miraculous since the beginning of the transition (Lin 1996)", and is the most successful of the transition economies. Nonetheless, the Chinese economy has been troubled by a "boom and bust" cycle.
Whether China's experience provides useful lessons for other transition economies is hotly debated. Some economists argue that China's success "demonstrates the superiority of an evolutionary, experimental, and bottom-up approach over the comprehensive and top-down ...

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with artificially low interest rates, overvalued exchange rates, low nominal wage rates, and low prices for living necessities and raw materials. 2) Allocation for credit, foreign exchange, and other materials. 3) A traditional micro management institution of state enterprises and collective agriculture (Perkins and Yusuf 1984).
These three components grew out of the choice to go with capital-intensive HOIDS in a capital-scarce, and mainly agrarian economy.
At the founding of the People's Republic in 1949, the Chinese government inherited a war torn agrarian economy in which 89.4 percent of the population resided in rural areas and industry consisted of only 12.6 percent of the national ...

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