Topic:

Explore and analyze the Chinese Economic Miracle in 21st century. Do

you think the term “Rise of China” is justified and valid?

Name: Fatima Asghar & Rahima Arif

BA Honors Semester 3

Session: 2019 – 2023

Course Name: Area Study; East Asia

Submitted to: Dr. Qudsia Akram

Submission Date: February 4th, 2021

Department of International Relations

Kinnaird College for Women

Contents
ABSTRACT....................................................................................................................................3
Rahima Arif
Introduction:....................................................................................................................................3
China on its way to success in the 20th century:..............................................................................3
Chinese Economic Miracle:.............................................................................................................4
Rise of China:..................................................................................................................................4
Fatima Asghar
 Reasons behind the Chinese Economic Miracle:.................................................................5
 Opening Up to the World....................................................................................................5
 The ‘Going Global’ Strategy...............................................................................................6
 Labor Supply and Raw Materials........................................................................................6
 Strong Leadership and Political System..............................................................................6
Impacts of the Chinese Economic Miracle:.....................................................................................7
Is the term ‘Rise of China’ valid?....................................................................................................7
Rahima Arif & Fatima Asghar
Analysis:..........................................................................................................................................8
Conclusion:......................................................................................................................................9
References:......................................................................................................................................9
 ABSTRACT
Chinese Economic Miracle of 21st century are the most significant series of events, starting from
the reforms of the late twentieth century, and has altered the position of China in the
International world. This Miracle has proven to be the reason behind the Rise of China. This
paper sheds light on the reasons behind this economic miracle and how it has impacted us in the
21st Century. Moreover, it also sheds light on the fact that whether the term Rise of China is
justified under the pretext of this Chinese Economic Miracle.

Introduction:
The Rise of China is undoubtedly one of the greatest economic growth of the 21 st century. Its
economic growth and the active diplomacy has a great impact on East Asian region and many
future prospects are there that it will have even more greater economic power and influence.
Ever since China made a step to open its economy to the world since the last 40 years, this step
has turned China into a world’s leading economic powerhouse and is second in Gross Domestic
Product today, and that too only to the United States. This four decades of economic reform has
made China as one the most powerful economies. To discuss the rise of China itself, it is
important to look at how and what path China adopted to become a leading economy and how
the rise of China as an impact of Chinese economic miracle began.

China on its way to success in the 20th century:

The Chinese economy since 1980’s started to grow enormously more than any other country in
the world. However, if compared with USA or Europe in the 19 th Century, China’s economy was
way too much sleepy but then eventually Napolean Bonaparte’s prediction became true when he
quoted that ‘Let China Sleep, if she wakes up, she will shake the world’. The Chinese economy
in the latter half of the 20th century mainly after WW2 witnessed some economic growth in the
Mao’s era but in the post Maoist Era, Chinese economy started to flourish rapidly and eventually
boomed. There are different reason that can be seen through which Chinese economic
development can be analyzed. First is, After Mao’s death, China became decentralized. In the
Mao’s era, since he was a communist leader, hence supported communist values but after his
death, Deng Xiaoping under his leadership, reformed economy is such a way that it became less
centrally planned and also he did not reject the West and this meant that the capitalist values also
stated influencing the Chinese economy. The second reason that can be seen is, the Chinese
economy became privatized. Industries and agriculture became privatized. Many new
opportunities were opened for foreign investors. Moreover, Tourism also increased in China and
religious practices were relaxed. The only purpose of Deng Xiaoping was to make china as a
developed state at the end of 20th century and so his mission got completed even after he retired.
He emphasized on the thing that Capitalism and Communism doesn’t matter, the only thing that
matters is what is best for China.

Chinese Economic Miracle:

The Chinese rapid and enormous economic development in the twentieth century is known as the
Chinese Economic Miracle. In the latter half of the twentieth century, China changed its
economic system to a market economy. They eliminated socialist values and this was a game
changer for China’s economic development. Starting from 1980’s, China became a prosperous
state in the mid of 1990’s. Many reforms were brought and consumer goods were becoming
common. Peasants were also been given the opportunities and they were given a certain amount
of a land to have them grow crops on it on contracts. Industries and factories which were
nationalized were now independent. They owners were then permitted to make contacts with the
suppliers and customers themselves. They started giving bonuses to the workers if they have had
any profits. The new motto of china was ‘glory is to be rich’. China has a huge and enormous
progress in is economy, industries and even made the standard of living very good and now it is
predicted that, China will be the largest world’s leading economy by the year 2040.

Rise of China:
After huge success and development of China in the Figure 1: Source:NY Times
International game, it can be seen that half of the
goods that we use have most often the tags written
‘Made in China’ on it and this is how Chinese
industries are growing rapidly. China did not export
much before the economic reforms but ever since
the economic reform took place in 1970’s, China began to have trade ties and played great role in
world’s economy. By the start of the year 2000, china became the leading exporter and supplier
of shoes, clothing, other and mobile components and accessories and as well as the seafood.
China became the 2nd largest economy after USA in the world in 2010 and by 2011, it has
become the world’s largest manufacturer.

So this Rise of China as an impact of the Chinese economic Miracle was an economic integration
as well as the political integration and by this, it means that China began to enhance its
diplomatic ties with the West. It also developed relations with other regions like Africa and it is
today investing in African infrastructure etc. Many of the opponents say that it is China’s new
form of imperialism and many supporters of China claim that investing in Africa, China is
making the African economy better and even greater in the near future.

Reasons behind the Chinese Economic Miracle:

 Opening Up to the World

When China rose to power in 1949, its industrialization process was restricted to only its
domestic boundaries. This isolationism was not only due to domestic policies but this was also
the result of the responses from the outer world i.e., the Sino-Soviet split or the UN trade
embargo.

By 1970s, China realized that it’s lacking behind the world in terms of its economy and the
policy of ‘Opening Up to the World’ is really necessary. This was made possible when Deng
Xiaoping came to power in 1978, and hence started the Reform and Opening Up era. Under this
policy China expanded its economy and trade in foreign countries and also acquired foreign
funds and modern expertise to function its economy in a modernized way. Deng not only
introduced new policies of opening up, but also made
sure of its implementation in the form of various
reforms in various sectors.

 Market-Oriented Reforms
The introduction of market-based reforms built the Figure 2: Source: World Bank
pathway of the Chinese Economic Miracle. The
decentralization of the Chinese economy along with the reforms in the State owned Enterprises
(SOE’s), served as an impetus for prosperity in all the sectors.

Previously Agriculture was the main focus of China and the major chunk of labor was devoted to
it. By the time when Deng came to power, China was on the verge of a famine and hence
reforms in this sector became a necessity. The privatization reforms introduced in this sector not
only resulted in an increased agricultural output, but also improved lives of millions of farmers.

The introduction of Foreign Direct Investment (FDI) policy in the Economic Reforms, attracted
foreign investment via equity joint ventures, which will allow both the partners to enjoy benefits.
For this a series of Special Economic Zones (SEZs) were also formed. The zones provided a
preferable environment for foreign investments and their main aim was gaining foreign currency,
but now they are redefined as Windows of Technology which highlights the absorption of
advancement in Chinese economy. These all reforms were a gradual process rather than a big
shock, which became the main reason for prosperity and a lesson for other states to learn.

 The ‘Going Global’ Strategy

Under the going global strategy, the policy of FDI was adopted and along with it China also
bought foreign companies in other states. Africa is an eminent example of China’s investment in
foreign states. Moreover, China also bought companies in North America. These policies were
made possible by government along with China Council for the Promotion of International Trade
(CCPIT).

 Labor Supply and Raw Materials

The main forces behind the Chinese Economic Miracle and functioning of its large industries are
the labor supply and presence of immense raw materials and energy. The supply of workers is
the result of the urban-rural migration, which started in the early phase of economic development
due to bad situation in the agricultural sector. This immense supply of the labor was also as a
result of voluntary migration which was the result of better opportunities in the urban area and
aggressive re-planning of the rural lands.
  Strong Leadership and Political System
For every nation to prosper, economy and politics go hand in hand. For a prosperous economy
one needs an impactful political impetus in the form of strong leadership and an influential
political system. Fortunately, this was present in China. From the very beginning China’s
leadership has played a major rule in the policies regarding economy, whether it was under the
communist regime or under the evolutionary market based economy. The evolution of political
system in China has made it easy for them to embrace a western-style economy by valuing and
accommodating opposing views as well as giving some autonomy to local leaders for efficient
decision-making. The series of five-year plans initiated by Mao in 1953 initiated a gradual
process of evolution and now China is in its 13 th five-year plan. Deng’s leadership qualities and
his policies were a breakout for Chinese Economic Miracle.

Impacts of the Chinese Economic Miracle:

The Chinese Economic Miracle has been a major turning point in the contemporary world. It has
not only affected the Asian region, but its economy has altered the polarity in the world. This
Economic Miracle has been the reason of China’s rise in these past decades. This rise altered the
position of USA being the sole superpower i.e., hegemon, especially in the economic world.
China has now become an important factor for proper running of USA’s economy and the same
goes with China as well. China has achieved such a status in international arena that its economic
prosperity has become essential for other states as well, which clearly depicts that how it has
taken away the status of the ‘keeper of all the states’ from USA (as after the World Wars, almost
every state became dependent on USA).

One of the major impacts of this miracle include the dependency of Western nations on Chinese
products. As we know that the growth in China’s economy has been greatly driven by the
exports, under their going global strategy, and hence US and other European states are somewhat
dependent on China for their raw materials and other goods making it the center of global
production network. The best example can be of the current pandemic COVID-19. Even before
the spread of the deadly pandemic, China was the one to produce half of the masks in the
world[ CITATION YAS20 \l 1033 ], being the one advanced in pharmaceuticals etc. Moreover,
many electronics, textile, furniture, toys etc. are manufactured in China. ‘Made in China’ things
are common in every household in this world.
Is the term ‘Rise of China’ valid?
In order to look at the status of any state in the international arena in terms of its power and
influence, one needs to take a look at its Gross Domestic Product (GDP), which is the main
indicator used to measure states’ economic growth. In case of China it is able to increase its
economy, power and influence in the world, quite evident from its GDP which is growing at a
higher rate as compared to the super power USA. The stats show that in 2019, China had GDP
growth of 6.1 percent, as compared to USA’s, which was 2.3 percent. In this time period of
decades of Chinese Economic Miracle, China has the GDP of $14 trillion as compared to USA,
which has GDP of $21.44 trillion. Even with the difference of $7 trillion, China is predicted to
take the status of being the superpower away from USA due to its rapid growth rate. These facts
clearly justify the term ‘Rise of China’ which is used for the impact of the Chinese Economic
Miracle.[ CITATION Wor19 \l 1033 ]

Apart from these hard core facts, we can see that current achievements of China will soon make
her help conquer the world. The project of ‘one belt one road’ initiative promises to extend trade
routes from China to all over the world, and it may also reach the status of the Ancient Silk
Route in the near future (which has proven to be the longest trade route of ancient time). This
project has been initiated since seven years and is extended in various states including Pakistan,
and aims at creating better economic cooperation in various regions including Asia, Africa and
Europe. It is also said that it is the pathway for China to dominate the world. The other project
worth mentioning in justifying the rise of China is its 5G network program. China has been
working on establishing 5D network nationwide, and soon globally as well. This program will
make China dominate the world of technology, which is our future. Keeping in view all the
current developments on the side of China, the term Rise of China seems valid.

Analysis:
The Chinese Confucian principle ordered the world into tributaries on the basis of Chinese
approximates, and China’s policy of isolationism was considered as their main approach to bring
prosperity. The change in China’s policy came when it saw himself lacking behind nations in
terms of modernization and technology, and soon also realized that in such a globalized world
isolationism is not an option. When China came out of its bubble, it shackled the entire world
with its gradual policies of economic prosperity, which was not less than any miracle. China’s
main strategy which brought its rise is it focus on the area where it saw a complete ‘winning
situation’ i.e., agriculture. Initiation of reforms from agriculture and then moving gradually
towards economy helped China in creating more influence in world with increase in power,
making it rise in the contemporary world.

Like other states China also has a challenge to tackle and in China’s case it’s overpopulation.
China has turned its challenge into an opportunity for making it a superpower. It has used its
population as its key source in developing a better economic future. The ability of China to bring
itself equivalent to the only superpower in the world i.e., USA, and that too in such a short time,
clearly justifies the Rise of China.

Conclusion:
To conclude, the rise of China has become a bitter reality for states like USA, as it is growing on
a very fast pace. With Deng’s policies as a game changer and with its opening up to the world,
China set an exceptional example for every state. The economic miracle has set new standards in
the world of economy and trade as well as has shackled the polarity of the system. Keeping in
view all these factors (in terms of economy) and the contemporary rate of growth of China it can
be said that in a decade or two, China would replace USA and would dominate the world.

References:

Andrabi, T. H. (n.d.). ISSI. Retrieved from http://issi.org.pk/wp-content/uploads/2015/12/Tahir-

Hussain-Andrabi_3435_SS_41_20142015.pdf

GILSINAN, Y. S. (2020, April 24). THE ATLANTIC. Retrieved from

https://www.theatlantic.com/politics/archive/2020/04/us-britain-dependence-china-
trade/610615/

Ray, A. (2002, September 14). JSTOR. Retrieved from https://www.jstor.org/stable/4412606?

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