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Assignment of Area Studies

Submitted To,
Sonam Saha
Lecturer,
Department of Development Studies,
University of Dhaka

Submitted by,
Nefertum Mursheda
Roll-3
Department of Development Studies,
University of Dhaka
Date of submission-18-11-2015

Reasons behind economic success in China are the followings:


Command economy was prevailed in China up to 1979. In pre-1979 period, China had seen
annual growth of 6 percent a year and post-1979 China saw average real growth of more than 9
percent a year with fewer ups and downs. The reasons behind these high economic situations are
the followings:
1. Import substitution: At first it can be said that from the very beginning Chinese
government focused on closed economy to increase the reserved amount of foreign
currency and they promoted their export rather than importing goods.
2. Trade liberalization: After changing the policy of closed economy Chinese government
went for free market economy. The government established several economic zones for
attracting foreign investments, boosting export and for importing highly technological
products. Citizens were encouraged to start their own business.
3. Economic reforms: It means decentralization of economic productions that led vast
growth in Chinese domestic savings and corporate sector also. At first most of the savings
were come from state owned capital. This high economic saving is one of the main
reasons of economic development. Chinas decentralization of economy led to rise of non
state enterprises. Such as- Private firms and these firms pursued more productive
activities than the state owned enterprises. Because they were more market oriented and
more efficient. Mainly export sector was exposed to competitive forces. The government
also took several measures to boost exports and to promote and protect certain industries
of the country.
4. Large scale capital investment: It was financed by domestic savings and foreign
investments. This investment increased the productivity.
5. Governance: Though the characteristics of the good governance were absent in China, the
service delivery system was good. And it took austerity measures whenever it needed.
The policies were taken in the exact times.
6. Personal savings: Personal savings is almost 25% in their country and almost everyone
has their own saving. So, presence of bankruptcy is little there from the past and

government has to pay little for the welfare sectors. Thus, Chinese government can
develop their own infrastructure by borrowing from the bank. Dependency on foreign
loan is almost absent there.
7. Technological development: They werent dependent on traditional production system.
Rather, they developed their technologies in various sectors like- transportation,
communication, agriculture and industries. These strategies led to Chinas long term
growth.
8. Productivity gain: Increase in efficiency of the labor led high productivity gain. For
example- agricultural reforms boosted productions and freed workers to join in more
productive sectors. They also utilized relatively cheap labor force.
9. Agricultural development: De-collectivization of agriculture and the introduction of the
household responsibility system led the agricultural growth dramatically. Farmers are
granted long term leases and allowed to privately farm and sell their produce in new
private market and free markets were created to sell foods. This strategy led their
economic growth high.
10. Education System: Various researches had been done to find out the causal relationship
between education system and economic growth in China. The researchers found direct
relationship between education and economic growth in China. At least nine years of
schooling is mandatory for all citizens. Chinese government after the end of Cultural
Revolution (1966-1977), the economic system in China had been geared towards
economic modernization. In the early 1980s, science and technology education became
an important focus of education policy. Brain drain is little in China.
11. The Four Modernizations: These goals were first set by Zhou Enlai in 1963, to strengthen
the fields of agriculture, industry, national defense, and science and technology in China.
These goals were enacted by Deng Xiaoping in 1978. The Four Modernizations were
adopted to revitalize China's economy in 1978 after the death of Mao Zedong.

12. Natural resources: The country has vast natural resources and these are helping for the
growth of Chinas economy. There are sizeable reserves of coal, iron, tin, copper, lead,
zinc, molybdenum, tungsten, mercury, graphite, antimony, magnetite, fluorspar etc.
These are the major factors and strategies that led Chinas economic growth.