The reform policies of the late 1970s had a dramatic impact on China and its economy. These policies, known as Deng Xiaoping’s reform and opening up, were enacted by the Chinese Communist Party (CCP) in 1978, shortly after the death of Mao Zedong. Deng Xiaoping’s vision was to transform China into a modern, industrialised socialist country through economic liberalisation, marketisation and opening up to foreign investment.
The reform policies allowed China to break away from the stagnant economic situation brought about by Mao’s rigidly centralised and coercive planned economy. For the first time since 1949, China began to liberate the market, allow entrepreneurialism and look outward to the international community for trade and investment.
The early years of reform saw substantial liberalisation of the economy, with state-owned enterprises becoming increasingly market-oriented, and the establishment of special economic zones to attract inward investment. Many of the restrictions that had been placed on agricultural production were also relaxed or removed, allowing Chinese farmers to once again choose what to grow and how to produce it.
At the same time, foreign investment was actively courted, and foreign companies were encouraged to set up operations in China. This allowed China to benefit from the latest technology, managerial know-how and the economies of scale that come from the globalisation of markets.
These reform policies also saw the gradual liberalisation of China’s foreign exchange regime, allowing for the convertibility of the yuan into foreign currencies. This facilitated the expansion of international trade and encouraged further foreign direct investment.
The combination of these policies resulted in average annual growth rates of 9.4 percent between 1978 and 2001. This period of growth saw a huge transformation of the country and its people. Between 1978 and 2000, China’s GDP more than quintupled, from US$147 billion to US$1,246 billion. During the same period, life expectancy at birth rose from 67.7 years to 71.7 years, while educational attainment increased dramatically, with the number of students enrolled in universities increasing tenfold between 1978 and 2000.
In terms of trade, exports and imports grew rapidly and the balance of payments moved into surplus. This sparked the emergence of an export-oriented economy, which transformed China into one of the world’s leading exporters.
Overall, the reform policies of the late 1970s had a profound impact on the economic, social and political landscape of China, enabling it to develop into one of the world’s most important economies. In addition to helping create an environment for rapid economic growth, these reforms also laid the groundwork for the emergence of a much more open, democratic and pluralistic society.