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When the People's Republic of China was first established in 1949, it maintained a carefully planned centralized command economy, similar to many other communist states at the time. In a command economy, the government of China directed and controlled the majority of the economic progress, setting production goals, price limits, and controlling resources.
However, in 1978, Den Xiaoping took over as Chairman after Mao Zedong's death. Xiaoping instigated many economic reforms in China, initially targeting the agrarian market. For the first time since the state's establishment, farmers were allowed to sell their produce in the free market for their own monetary gain and at their own prices.
During the 1980's, Xiaoping's reforms continued to transform China's economy. Several changes were made in order to attract more foreign investments, and the government made an enormous effort to reach the ideal "more export than import" trade imbalance. Agricultural exports more than doubled, and tariffs were lowered to allow the importation of high-end technology from foreign markets.
A major reform was enacted in the middle of the 1980's when the government opted to eliminate many of the state-controlled prices on a variety of products. This gave China a considerable push in the direction of a free market economy.
Many economists, however, contend that China has not yet reached the full definition of a market economy. In 1993, Beijing's leaders approved another long-term reform that allowed the state to continue to dominate many key industries in China. Because of this, economists have coined the term "socialist market economy" to describe China.
Wiki User
∙ 10y ago
Wiki User
∙ 9y agoMany reforms programs made in China have brought a market economy to China. However the economy is still governed by the government. This has curbed freedom of markets in China.
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