China and Its Economic Reforms : An Historical Perspective

Abstract

October 1, 1999, as millions upon millions of people gathered on Tiananmen Square, in celebration of the People's Republic of China's 50th anniversary, a sense of growth and prosperity prevailed throughout Beijing. Indeed, despite all critics, few can deny that in the past fifty years China has come a long way. The common perception of China has long since departed from that of grey Mao suits and fanatical communists. Instead, China is being viewed more and more as the market of the future and the land of capitalistic opportunities. Within the span of twenty years the Chinese economy advanced from one of virtual non-existence to the present position as a growing member of the global market, outstripping many western developed countries in its annual GDP growth. Through these facts, it is evident that the preservation and further development of the Chinese economy/market is now of vital importance to business communities worldwide. However, despite the wild optimism and cheer for China's future, one can not ignore the looming problems facing the country today, brought about by the very reform policies that had so greatly improved China's economy. Problems such as raising unemployment, disappearing welfare safety net and increasing social discontent, all of which are directly or indirectly tied to the gradual restructuring of China's state-owned enterprises (SOEs). If not properly handled, these issues will not only destabilize China both politically and economically, but will also cause lasting damage to the world economy itself. The correct treatment of these problems, however, will prove to be beneficial to both the Chinese economy and that of China's foreign counterparts.