Benefits of Chinese Economic Development – Term Paper


It was during the eve of 10th November 2001 when China opened its door to Economic reform. The policy was enacted by the world’s most prominent leaders-Deng Xiaoping, because China was allowed to join the World Trade Organization in Doha, during the 4th Ministerial meeting after hard talks that took about 15 years to be accepted. The Chinese official doctrine had been dominant since the occurrence of the strategic change in 1978, and it had become one of the political reform. Revitalizing and loosening the grip of the communist and the foreign policy invited cooperation and interaction with the outside world. The decision to open up and encourage reforms has on many occasions been cited by the Chinese authorities to be the primary force behind its overall growth since 1978. The policy assisted China to be one of the countries that managed to become a world power within a short time. China also had to take a new role in defining its responsibilities as a state that was persuasive both at the international and regional levels. However, the open door and reform policy have brought about problems that are elemental and have the cultural impact, income parity areas as well as influencing China to embrace Capitalism instead of Socialism. Therefore, this article will focus on the benefits of the Chinese development recorded in its economy and the drawbacks as well.


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Improved technology and infrastructure have been brought about by growth in the Chinese economic. As a result of economic growth, the amount of money spent on; gas, electricity, communication, water supply and various technologies has also gone up. According to Canning and Pedroni (1999), there is a substantial evidence of the GDP influence on the societys stock and infrastructure. The growth is also attributed to have a positive impact on the standard of living of the general population leading to the rise in the economic growth. There have also been improvements in the health of the general population due to improvements in standards of living now that the basic needs such as shelter, clothing, and food are available to the people. Frank (2004), noted that the mortality rate, as well as child malnourishment, was low because of a reduction in poverty levels thus improving life expectancy. Rivera and Currais (1999), on the other hand, have also confirmed the relationship between health and economic growth. It only demonstrates a high association between the health status and the increase in income because all these factors point in the same direction. In low-income countries, there is the likeness of getting more mortality healthy rate compared to the developed countries. Since China has a real economic growth, its health status is good, therefore, improved the standards of living. It because of the access to high incomes. Both individuals, as well as governments, can use more money on health in regards to; infrastructure and health facilities, sanitation and nutrition, innovations in technology, medical and research while trying to ensure life is improved. Whenever this happens, a direct impact is felt at the national level leading to development. In case, the existing healthcare system is weak; a lot could as well be called upon to remedy the situation. On the other hand, the state of healthcare is measured by the level of income and tends to increase faster only illustrating how this is likely to impact on the economic growth of a nation. Due to advancement in technology in China, it has become easier for the health sector to conduct research on the most life-threating diseases.


Among the leading sectors include the education sector. Emphasis focuses much on ensuring quality education mainly due to an improvement in the economic growth in the Chinese economy. The connection that exists between economic education and economic development is thus real. The level of economic growth influences education because when the level of income is high, the number of people seeking education also increases. As a result of the GDP per capita increasing and both the public as well the Chinese government has more to spend on education. Whenever this happens, the number of individuals seeking knowledge increases while, on the other hand, a lot of investment is carried out on education to cater for the rising need thus implying that there is great access to quality education. The focus also shifts from merely setting up facilities rather also focus on ensuring the provision of adequate tutors who are well-renumerated while hoping that this will translate to quality education. Education also plays a better part in empowering people thus may not only need to focus much on employment rather can as well come up with ventures aimed at addressing the need in society. As of now, the Chinese can easily access luxuries and the core needs because they earn enough to cater for such goods.

Social structure

The policies leading to Chinas economic reforms have brought about an improvement in the structure of the Chinese society, politics, social value system, and rapid advancement of its economy. Our focus will direct attention on, China’s political development model. The point aims at finding out how it managed to realize much within a short time. Chinas political advancement will thus be studied. The growth in the economy is said to have promoted political development and political change. Chinas economic reform policy has mainly assisted the nation in an opening to the outside world. One is also likely to see how a lot of investment has been carried out in China thus leading to urbanization across China. During the transition period, people had to change the wy they thought to welcome change. Without acknowledging this, not much was likely to come about. A lot of significance was given to the transition period during which this was encouraged. Before the year 1979, the Chinese community was much closed. Although there was little knowledge about the socialist countries as well as the former U.S.S.R, the local people in China had no exposure to the outside world, and they knew nothing concerning the western world. Therefore, they did not dedicate themselves to working hard. As a result of reform, people realized the importance of working hard because they saw how this was going to replicate back benefits to their lives thus elevate their living standards. As a result of change, people focused more on economic matters as opposed to politics. The entrepreneurial spirit played a great role while steering growth. The spirit did not exist in the old system of economy.

The social structure of China is now more diverse owing to many races from across the globe. Many cross-cultural activities also take place across China leading to mutual understanding among people as opposed to the past when foreigners treated with a lot of suspicions. Before the reform, the country had rigid and unitary social structure founded on the status system relatively fixed with a lot of dynamics like position and power. It was not connected directly to the income or even education as seen in the western societies while measuring social status. In the previous social structure of China, individuals looked for status by pursuing power through promotions to powerful positions, while income was a central determinant of status and development. During the economic reform period, there were changes in resource allocation. Social structure witnessed a transfer of resources. Resources assigned to individuals with lower position and less power according to the new economic system. There has been a shift in the resource allocation triggering the tight relationship between skills, income, and position to a liberated element in judging the people’s status. Position and power not used in determining the relationship. Individuals can attain the status that is higher by raising their levels of income.

Resource transfer

The changes in resources transfer have shown the existence of independent economic interests of the objective existence. Before all these reforms, individuals were mainly educated on how to seek for common interests. If a person pursued interests that were individual-centered, he or she was prone to critique because the benefits were considered to be bad. The recent changes, however, encourage people to pursue their economic interests independently. Through investment diversification and resource transfers process. New strata and new social classes have made levels that did not exist in the previous structure such as the difference discern. Individuals are likely to express themselves by speaking what they feel, and this has resulted to the widening of the range of discussion.

;;;;;The reform has minimized the role of the Communist Party in individuals’ private lives. It shows how Chinese people have become free, knowing that historically they were never free as the are today. Individual freedom influenced by the work unity of danwei. All persons in the past were involved in a work unit that not only determined salaries, housing and promotions but other issues like whether they could travel or they could get married. Each worker’s dossier was kept in the unit; the file listed political as well as biographical information. In contrast, a significant number of individuals now are no longer engaged in the work-unit scheme, because they are personally involving themselves in businesses, or employed in foreign countries. The Chinese realized that for a person to make a living, he or she must rely on one’s self to be free from the danwei. Even those still working in the work units are enjoying freedom in the highest degree. However, most Chinese in the current society opt to concentrate on the future by living within the present system of the Chinese community.

The reforms helped raise efficiency as compared to the past but were as a result of an introduction of profit incentives to rural collective enterprises which despite being owned by the local government managed by the principles of the market. Small private businesses, traders, foreign investors and family farms freed most enterprises from the authority interference. As a result of the stake by the state-owned enterprise, the output reduced from 56 percent of the output of the country to 40 percent, while the share common business rose to 50 percent from 42 percent, and the incentive returns of the common ventures and individual firms rose 10 percent from 2 percent. The incentives of profit have shown how they impacted the private capital market in a positive manner, as small producers and factory owners were eager to get more returns while engaging themselves in business.

     A remarkable productivity performance is an evidence of Chinas economic reform benefit. How did the changes work to boost the modern economy of China? Before the reforms of 1978, nearly out of five, four people in China worked in agriculture; by the year 1994, the number reduced to one person in two people. The reforms made the rights of property be expanded in the countryside and resulted in the formation of rural nonagricultural businesses. Higher prices and collectivization for the products of agricultural-led to more efficient labor use and farms that belonged to the families. The forces together made many people get out of agriculture. The village enterprises drew many people into manufacturing that had a higher value addition, making them abandon traditional farming. The 1978 post reforms gave greater autonomy to enterprise managers. It gave them freedom to set their goals on production, to use competitive prices in the market to sell their product, to make a choice on investment, had the authority to give bonuses to excelling workers and also they had the ability to fire the nonperforming employees.

The reforms encouraged ownership of own production, and there was a creation of jobs, more consumer commodities developed, foreign trade assisted in earning of the hard currency, the state taxes were paid. It offered the nation a resilient and flexibility that was not there before. By encouraging foreign investment, the economy was only bound to grow. Cumulative investment from the foreign countries increased; these investments helped in factories construction, job creation and it made China link with the international markets. Also, significant transfer of technology was witnessed. Economic freedom boosted exports. The price reform assisted the Chinese to proceed vigilantly, offering an autonomy amount that was fair to agricultural products and consumer goods but much lower to the rest of the sectors. Poverty reduction

China has 20 percent of the population in the world. As they continue becoming richer, apparently consumption rate will grow. Many businesses will attempt to vend to the Chinese market, the worlds biggest. The products will be made in the tastes and preference of the Chinese. As a result of economic growth, the country has become an economic leader in the whole world. China is also known as the world’s largest producer of steel and aluminum. The tech companies in China are becoming world-class. Huawei and Miami are two smartphone producers and number one in China. Miami has increased its exports to India and Brazil. Huawei Company is exporting to South America and Peru. Lenovo Company is also another personal computer manufacturer that is a world class.


In conclusion, the Chinese economic growth has led to many benefits compared to the drawbacks. Although China takes a unique position in the political economy of the world due to its large physical size and huge population, making it an influential globally player, it is still likely to offer great lessons to most of the developing countries. A great lesson learned is that there is a need to provide incentives to small private businesses and rural based enterprises while encouraging growth. By doing so, it is likely to support productivity able to aggravate growth. For nations with a large population who depend on agriculture, the Chinese example may be instrumental, by encouraging rural enterprises growth and not necessary focusing on industrial sectors in the urban areas. China has transferred millions of workers into factories from off farms without causing a crisis in the cities. And finally, the open-door policy in China has spurred direct investment from foreign countries thus leading to job creation and economic development.


Canning, D., ;Pedroni, P. (1999).Infrastructure and long-run economic growth.Consulting Assistance on Economic Reform II Discussion Paper, 57.

Rivera IV, B., ;Currais, L. (1999). Economic growth and direct health impact or reverse causation?. Applied Economics Letters, 6 (11), 761-764.