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China’s economic reform and Indonesia’s economy
China celebrated the 40th anniversary of its historic economic reform in December 2018. It was a reform that had turned China from one of the poorest countries in the world in the 1970s to the economic superpower it is today.
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Wide open: Chinese President Xi Jinping speaks at the opening ceremony of the first China International Import Expo (CIIE) in Shanghai, China. Xi has vowed to widen access to China’s economy. (Reuters/Aly Song)
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hina celebrated the 40th anniversary of its historic economic reform in December 2018. It was a reform that had turned China from one of the poorest countries in the world in the 1970s to the economic superpower it is today. Its income per capita reached US$7,300 in 2017 from $400 in 1978, when the reform was started. Its economy has been growing rapidly.
China overtook Japan as the second-biggest economy in the world in 2010. More than 500 million people have been lifted out of poverty, the biggest poverty reduction the world has ever seen. China has become the “factory of the world”, and by using abundant cheap labor, its products have flooded markets all over the world at low prices.
In 1978, after decades of economic stagnation and severe drought, then-prime minister Deng Xiao Ping began to reform China’s economy. He eased control on farming, allowing farmers to keep part of their produce to consume or sell at market prices. Restrictions on private companies were also lifted, foreign companies were allowed to come in and a special economic zone was established in Guangdong province to accommodate their factories.
At the same time its trade regime was opened up further by rapidly lowering tariff barriers. The result was stunning. The opening of China’s economy unleashed its entrepreneurial talent and ingenuity, enabling its companies to survive brutal competition with foreign companies. Many thrived and become world class companies with distinct international brands.
