In what ways did Globalization contribute

to the rapid development of China during

the late 20th century?
Joshua Lau - 10J

Since the late 20th century, China has undergone a drastic and unprecedented rate of
economic growth, catapulting them from a third world status into a leading global power and
prominent member of the world
economy - all within the space of 3 to 4
decades. This unparalleled rate of
development, sometimes referred to as
a growth miracle for China, has
yielded an annual GDP growth rate
averaging at around 10% since the late
1990s1 - three times higher than that of
the global average(see graph). The
country has seen to a tenfold increase
in GDP over the last 30 years2, and
most people, myself included, would
GDP growth rate of China and the world
average between 1965 and 2007 (GDP Growth agree that it was under Deng
Rate, n.d.) Xiaopings leadership, who abandoned
traditional communist ideologies in introducing capitalist practices, that made this a reality.
He introduced an array of economic reforms, gradually abolishing long-standing protectionist
policies, and opening China up to the benefits of Globalization in doing so. As such, this
particular article will discuss how Globalization contributed to the rapid development of
China during the late 20th century, looking into the foreign policies introduced by Deng
Xiaoping in, how these policies capitalized on the economic benefits of Globalization, and
whether or not their approach to economic reform would benefit other currently developing
countries.

What significant foreign policies did China implement to stimulate

their rapid economic growth?

Deng Xiaoping, who by the early 1980s, had absolute control over both the Chinese

1
(Wearden, 2010)
2
(China, n.d)
Communist party and the Government3, had a clear vision for China. Looking to the
complete west, he recognized not only the need to modernize but also the opportunities
that Globalization offered, and sought to seize them through economic reform, turning
away from the roots of Communism to introduce Capitalist policies.

The series of economic reforms set off with the noteable Open Door Policy,
announced by Deng in the December of 1978. Citing the importance of studying foreign
technology, management techniques and foreign policy as justification, and introducing
the initiative as a window for observing contemporary capitalism in a government
document4, 4 Special Economic Zones were set up in southern China. Also referred to as
S.E.Zs, these regions boasted special tax incentives5. By 1985, the gradual increase in
capitalism was evident, with 18 additional regions (14 cities, 3 river areas, 1 island) having
been established as development zones.

3
(Deng Xiaoping, n.d)
4
(Silk, 1985)
5
(Open Door Policy, n.d)
 Bringing it back to a broader picture, The Four Modernizations outlined the key
areas of focus for the economic reform. This term referred to the set of goals which Deng
Xiaoping enacted upon throughout his tenure, which were to strengthen the respective
fields of agriculture, industry, national defense, and technology6. With Agriculture, the
government began practicing
the concepts of personal
incentives and diversification, by
introducing the Household
Responsibility System. With this
initiative, production
responsibility was returned to
farming households, allowing
them control over their labour
and also the freedom to Production of Wheat in China between 1961 and

distribute their produce in

whatever way they wanted to. The initiative proved to be highly successful, with 98% of
farming households having joined the programme by 1984, along with
a 25%increase in agricultural production between 1975 and 19857. (see graph)

To benefit Industry, State-owned enterprises changed to allow joint ownership

under both the state and individuals, with certain enterprises even becoming privately
owned. In addition to this, Township and Village Enterprises, or TVEs, were introduced
throughout the country, allowing ordinary people to establish small business outside of
state or party control. These businesses, while mostly small in stature and ranging from
carpentry shops to slaughterhouses, were many in number, with a total of 17 million TVEs
registered in 1985 compared to a mere 1.5 million in 1978. These TVEs proved to have large
contributions towards Chinas economic growth, with these enterprises accounting for
approximately a quarter of Chinas GDP by 19958. Briefly looking at another important
aspect of the Four Modernizations, developments in technology were highly prioritized, with
China investing heavily on technological and scientific research throughout the 1980s, while
also strengthening IT education in order to catch up to western standards.

6
(Coniel, n.d)
7
("Deng Xiaoping: Economic Policies and the Four Modernizations.", n.d)
8
(Field, 2006)
How did these policies capitalize upon the economic benefits of
Globalization?

Looking closer at Deng Xiaopings economic reform, it can interpreted that many, if
not all of the aforementioned policies were made to capitalize upon the various benefits of
Globalization.

Looking at the Open Door Policy of 1978, four areas, were set up as Special
Economic Zones with comparative advantages such as tax incentives or unique labour laws.
This was done in order to attract foreign capital and investment in the form of multinational
corporations. With a massive inflow of foreign investment, along with tradings role in the
Chinese Economy becoming more and more prominent, the nation simultaneously became
more and more attractive to investors from Hong Kong, Japan, West Germany, or the United
States9. This, along with the Household responsibility system and the various enterprise
initiatives mentioned above, finally allowed for cross-border trading, after decades of
protectionist practices under the maoist regime, allowing the outside world to tap into their
vast resources, and inadvertently benefitting Chinas economic prowess in doing so.

Chinas decision to also focus in the development of Science and Technology was
also a move made in light of modern globalization, and a wise one at that. In an increasingly
interconnected world, technologys prevalence in modern society simultaneously grows
larger and larger, and this relationship goes both ways. Economists generally come to the
consensus that advancements in technology are one of the major driving forces behind
Globalization10, with improved communication technology spurring on the exchange of
goods and services. With this in mind, Chinas choice to prioritize the development of
technology in their economic reforms seem highly commendable. Deng Xiaoping himself
put forward the theory that Science and Technology and the primary productive forces 11
all the way back in 1988, and it would seem more than justified, with an array of uses in
medicine, travel, communication, and far, far more.

Would taking a similar approach of opening up oneselfs market

benefit currently developing countries?

9
(Coniel, n.d)
10
(Forces behind Globalization, 2015)
11
(""Science and Technology Are Primary Productive Forces" in 1988.", 2008)
 To say that Chinas open-market approach would definitely benefit all currently
developing countries would probably be an overstatement, though there is a general
consensus among economists that such a system would greatly benefit the economy of
most countries.

In East Asia and the Pacific, where most,

if not all countries have turned to trade-oriented
development strategies, a clear relationship
between trade and GDP can be observed (see
graph), where the GDP is shown to increase
synonymously with trade intensity12 ; while data
from the world bank records a generally faster
growth from open economies. Essentially, most
information points towards the economic (Evolution of per Capita GDP and Trade
superiority of an open market in comparison to a closed or protected one.

Vietnam is a prime example of the benefits of following in Chinas footsteps. The

country, officially a communist nation and supposedly following a marxist regime, has been
turning away from its ideologies in implementing a range of free-market reforms since the
late 1980s13. Prior to the reform, the Vietnam War had just come to a conclusion, leaving
destruction and plunging the country into an economic crisis, not unlike China following the
Great Leap Forward. Thanks to these economic reforms - gradually transitioning into a
open-market, Vietnam has seen to an admirable rate of economic growth, with an average
annual GDP growth of 7% in the past two to three decades14.

Another, more recent, example of Burma (or Myanmar), can be observed. Until
recently, Burmas military government had kept the country isolated both economically and

12
(Why Open Markets Matter, n.d)
13
(Is Vietnam still a Communist Country?, 2016)
14
(Vietnam eyes Growth of 6.5-7% for 2016-2020, 2015)
politically15. Since 2010, the country has made great strides in economic liberation, with the
gradual dismantling of the sanctions which had prevented foreign investment. In addition to
this, the government has been implementing reforms which have allowed for tax and tariff
incentives, as well as eased domestic ownership requirements. This saw to a $4.1 billion in
foreign direct investment in the 2013/14 fiscal year, then following this an additional $8
billion in the 2014/15 fiscal year16.

To summarize, my research has shown that Chinas meteoric growth can be

attributed to its choice of foreign policies and method of economic reform, which actively
aimed to transition China from a closed, protected market into an open, trade-based
market. Looking closer into these policies, it was seen observed that these economic
reforms, which placed particular focus on cross-border trading, foreign direct investment,
and the development of their technological industry, were implemented to take advantage
over the rapid rate of Globalization in modern times. The success that these reforms
brought certainly pointed towards both the economic benefits brought by Globalization and
the superiority of an open-market economy, and looking further into the highly similar
cases of Vietnam and Burma, both of whom were undergoing similar economic reforms,
only served to reinforce this notion.

Bibliography

1. Coniel, Oscar. "China under Deng Xiaoping, Economic Policies and the Four
Modernizations." IB Guides. N.p., n.d. Web. 01 May 2017.
<http://ibguides.com/history/notes/china-under-deng-xiaoping-economic-policies-and-
the-four-modernizations>

2. Field, Jason, Michael Garris, Mayuri Guntupalli, Vishaal Rana, and Gabriela Reyes.
"Chinese Township and Village Enterprises: A Model for Other Developing
Countries."Chinese Township and Village Enterprises: A Model for Other Developing Countries
Submitted April 24th , 2006 (2006): n. pag. University of Michigan. University of Michigan.
Web.

3. Purcell, Jacob. "Liberalization in Burma Creates New Investment Opportunities." Global

Risks Insights. N.p., 23 Apr. 2016. Web. 2 May 2017.
<http://globalriskinsights.com/2016/04/burma-liberalization-creates-opportunities/>.

4. Silk, Leonard. "Economic Scene; The Open Door Policy in China." The New York Times. The
New York Times, 26 Sept. 1985. Web. 01 May 2017.
<http://www.nytimes.com/1985/09/27/business/economic-scene-the-open-door-policy-

15
(Purcell, 2016)
16
(Tun, 2015)
 in-china.html>.

5. Tun, Aung Hla. "Myanmar 2014/15 FDI Swells to $8.1 Bln." Reuters. Thomson Reuters, 25
Mar. 2015. Web. 01 June 2017. <http://www.reuters.com/article/myanmar-investment-
idUSL3N0WR25Q20150325>.

6. Wearden, Graeme. "Chinese Economic Boom Has Been 30 Years in the Making." The
Guardian. Guardian News and Media, 16 Aug. 2010. Web. 01 May 2017.
<https://www.theguardian.com/business/2010/aug/16/chinese-economic-boom>.

7. "China." The World Factbook. Central Intelligence Agency, n.d. Web. 01 May 2017.
<https://www.cia.gov/library/publications/the-world-factbook/geos/print_ch.html>.

8. "Deng Xiaoping." Encyclopdia Britannica. Encyclopdia Britannica, Inc., n.d. Web. 01 May
2017. <https://www.britannica.com/biography/Deng-Xiaoping>.

9. "Deng Xiaoping: Economic Policies and the Four Modernizations." Deng Xiaoping:
Economic Policies and the Four Modernizations (n.d.): n. pag. Island School History. Web. 2
June 2017.
<http://www.islandschoolhistory.com/uploads/1/4/9/6/14967012/four_modernisations.p
df>.

10. "Forces Behind Globalization." Economics Discussion. N.p., 11 Aug. 2015. Web. 01 June
2017. <http://www.economicsdiscussion.net/international-economics/forces-behind-
globalization-with-diagram/4217>.

11. "Is Vietnam Still a Communist Country?" The Vietnam War. N.p., 03 May 2016. Web. 01
June 2017. <http://thevietnamwar.info/vietnam-still-communist-country/>.

12. "Open Door Policy." BBC News. BBC, n.d. Web. 01 May 2017.
<http://news.bbc.co.uk/2/shared/spl/hi/in_depth/china_politics/key_people_events/html/
8.stm>.

13. ""Science and Technology Are Primary Productive Forces" in 1988." China Daily. China
Daily, 30 Oct. 2008. Web. 01 June 2017. <http://www.chinadaily.com.cn/bizchina/2008-
10/30/content_7169055.htm>.

14. "Vietnam Eyes Growth of 6.5-7% for 2016-2020" The Star Online. N.p., 15 Sept. 2015. Web.
01 June 2017. <http://www.thestar.com.my/business/business-
news/2015/09/15/vietnam-sets-growth-target/>.

15. "Why Open Markets Matter." OECd. Organisation for Economic Co-operation and
Development, n.d. Web. 01 June 2017.
<http://www.oecd.org/trade/whyopenmarketsmatter.htm>.

Images

16. Evolution of per Capita GDP and Trade Intensity- East Asia and Pacific Region. Digital
image.OECD. Organisation for Economic Co-operation and Development (, n.d. Web.
2 May 2017. <http://www.oecd.org/trade/whyopenmarketsmatter.htm>.
17. GDP Growth Rate. Digital image. Google Public Data. Google, n.d. Web. 01 May 2017.
<https://www.google.com.hk/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp
_mktp_kd_zg&idim=country:CHN:IND:USA&hl=en&dl=en#!ctype=l&strail=false&bcs=d
&nselm=h&met_y=ny_gdp_mktp_kd_zg&scale_y=lin&ind_y=false&rdim=region&idim=
country:CHN&ifdim=region&tdim=true&hl=en_US&dl=en&ind=false>.

18. Production of Wheat from 1961 to 2004. Digital image. Wikipedia. Wikipedia, 4 Apr.
2005. Web. 2 June 2017. <https://en.wikipedia.org/wiki/Chinese_economic_reform>.