Although China has always been one of the largest and most populated nations in the world, it hasn’t always been the most wealthy. However, for the last few decades, China has been one of the fastest growing economies in the world. In fact, the growth is so significant that China and India are now even predicted to be economic giants within the next several decades. The question is, how did the growth start?
In 1978, the Chinese government set out on an economic reform; the government invested in industrial production, liberalized foreign trade and investment, and loosened the state control over some prices. And as the graph shows, China has gone through intensive economic growth ever since, peaking at 35% GDP growth in the year 1994.
The economic reform encouraged many small and non-agricultural businesses to form and grow in rural areas. Also, prices for agricultural products rose, and in turn led to a more efficient use of labor and land. The freedom, foreign investment, and the increasingly competitive market in China eventually lead to the large scale growth of its economy.
As of now inflation and overpopulation are two of the main economic problems that China faces. If these two problems can be kept under control, it can be expected that China will be an economic superpower within 20 years.
