Question -
Answer -
Reforms were initiated jn China in 1978. China did not have any compulsion to introduce reforms.
1. Pre-Reform Period : Failures
(a) There was slow pace of growth and lack of modernisation in the Chinese economy under the Maoist rule.
(b) It was felt that Maoist vision of economic development which was based on decentralisation, self-sufficiency and shunning of foreign technology, goods and capital, had failed.
(c) Despite extensive land reforms, collectivisation, the Great Leap Forward and other initiatives, the per capita grain output in 1978 was the same as it was in the mid-1950s.
Pre-Reform Period: Success
(a) There was existence of infrastructure in the areas of education and health.
(b) There were land reform.
(c) There was decentralised planning and existence of small enterprises.
(d) There was extension of basic health services in rural areas.
(e) Through the commune system, there was more equitable distribution of foodgrains.
2. Post-Reform Period (after 1978): Success
(a) In agriculture, by handing over plots of land to individuals for cultivation, it brought prosperity to a vast number of poor people.
(b) It created conditions for the subsequent phenomenal growth in rural industries and built up a strong support base for more reforms.
(c) More reforms included the gradual liberalisation of prices, fiscal decentralisation, increased autonomy for state owned enterprises (SOEs), the introduction of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment.
(d) The restructuring of the economy and resulting efficiency gains have contributed to a more than ten-fold increase in GDP since 1978. Measured on a Purchasing Power Parity (PPP) basis, China in 2005 stood as the second largest economy in the world after the US.
(e) China’s economic growth as measured in terms of GDP on an average is 10.9% per year. In economic size, China is surpassed today only by the US, Japan, Germany and France.
(f) If its present growth trend continues, China is likely to be the world’s largest economic power by any measure by the year 2025.
Comparative Development Experience of India with its Neighbours 11 .IS
(g) China had success when it enforced one-child norm in 1979. The low population growth of China can be attributed to this one factor.
Thus, China’s structural reforms introduced in 1978 in a phased manner offer various lessons from its success story.