Perceiving Truth and Ceasing Doubts: What Can We Learn from 40 Years of China's Reform and Opening up?

Abstract

China's reform, opening up and resultant economic growth in the past 40 years have led to the accumulation of an immense array of experiences, which economists are obligated to look into, analyze and theorize upon. In fact, the rich literature in this area has positively assessed and documented China's successful experiences. However, theories that were established in Western countries have been applied as doctrine to judge China's experiences. By adopting an analytical framework unifying historical logic and theoretical logic, the purpose of this paper is to reveal the unique Chinese experience and its relevance to the general laws of economic development. Based on the experiences of and in reference to research findings about China, this paper chronicles the process of reform, opening up and economic growth, and analyzes the nexus between them. The study demystifies how the incentive mechanism, the factor accumulation and allocation system, market development, and macro policy environment reforms have spurred China's economic growth, structural changes and the increase in productivity. The changes in development stage are examined and policy implications for further reform are discussed.

Flying with the Dragon: Estimating Developing Countries’ Gains from China's Imports

“…China's rapid growth has influenced the domestic economies and foreign trade of developing countries while its domestic growth amplified demand and attracted international trade from numerous developing countries (Hanson, 2012;Cai, 2018).…”

The promise of China’s free trade zones – the case of Hainan

“…This became an established method of managing change: the results of local experiments were used to overcome resistance (Heilmann, 2008). Moreover, economic reform was pursued simultaneously with market opening (Cai, 2018). The approach was successful; "[t]he SEZs have made crucial contributions to China's success.…”

Off-farm employment in rural China and the hukou system

“…The increase in off-farm employment has not only provided additional labour supply to support the industrialisation and urbanisation processes in China, but also facilitated the transformation and development of rural China through strengthening the rural non-agricultural sector. Between 1978 and 2015, real GDP per capita in China increased by 16.7 times, with 44 per cent of this coming from labour force reallocation from agriculture to non-agricultural sectors (Cai 2018).…”

“…Under this system, China's population was divided into 'agricultural' and 'nonagricultural' sectors. As the system is not only a population registration system, but also a comprehensive policy system bundled with other institutional arrangements, it is believed to be one of the most important policies in preventing rural-to-urban migration and off-farm employment in the non-agricultural sector (Cai 2018).…”

“…The third group of literature focuses on how the hukou system influences the spatial migration of rural labour's employment. Dividing the labour market into urban and rural markets, non-agricultural employment and agricultural labour transfers can be achieved only at the margin (Cai 2018). Geographically, with the hukou reforms, rural labour transfers have been concentrated mainly in eastern China, followed by the central and western regions (NBS 2018).…”