Chinese Economic Reform - Reasons For Success

Reasons For Success

Scholars have proposed a number of theories to explain the success of China's economic reforms in its move from a planned economy to a socialist market economy despite unfavorable factors such as the troublesome legacies of socialism, considerable erosion of the work ethic, decades of anti-market propaganda, and the "lost generation" whose education disintegrated amid the disruption of the Cultural Revolution. One notable theory is that decentralization of state authority allowed local leaders to experiment with various ways to privatize the state sector and energize the economy. Although Deng was not the originator of many of the reforms, he gave approval to them. Another theory focuses on internal incentives within the Chinese government, in which officials presiding over areas of high economic growth were more likely to be promoted. Scholars have noted that local and provincial governments in China were "...hungry for investment" and competed to reduce regulations and barriers to investment to boost economic growth and the officials' own careers. A third explanation believes that the success of the reformists are attributable to Deng's cultivation of his own followers in the government. Herman Kahn explained the rise of Asian economic power saying the Confucian ethic was playing a "similar but more spectacular role in the modernization of East Asia than the Protestant ethic played in Europe".

China's success is also due to the export-led growth strategy used successfully by the Four Asian Tigers beginning with Japan in the 1960s - 1970s and other Newly industrialized counties.

The collapse of the Soviet Bloc and centrally planned economies in 1989 renewed impetus in the China to further reform its economy in a different course to avoid the same fate. China also wanted to avoid the Russia under Boris Yeltsin with ad-hoc experiment with market capitalism which resulted in the rise of powerful oligarchs, corruption and loss of state revenue which exacerbated economic disparity.