China’s Four Decades of Reforms and Development

Abstract

This chapter gives an overview of the major socio-economic transformations that occurred in China for more than four decades. They include transitions from a centrally planned to market economy, from a closed to an open economy, and from a manufacturing and export-driven to a more consumption- and innovation-led growth path. It also describes the main features of the socialist market economy with ‘Chinese characteristics’ including the gradual ‘step-by-step’ approach in the economic reforms in the different production sectors of the economy. In particular, the financial reforms that were given a major boost in the early 1990s and still require the necessary deepening of the current transition to a more sustainable economy are discussed. This chapter also elaborates on the adverse consequences of the rapid growth model and China’s incomplete transition to a market economy. The traditional development model caused a huge depletion of natural resources, serious environmental pollution, which hindered the sustained economic development. Special emphasis is given to some current problem areas in the housing and stock market; the huge local government and increasing corporate debt; and the capital flight and excess capacity described in their relation with the current inevitable economic slowdown which could be seen as a breeding ground for new initiatives where the BRI can be seen as an important example and is central to this pivot.