China’s Economic and Structural Development Since 1978

China’s Economic and Structural Development Since 1978

In the years following 1978, China underwent a series of economic and social reforms that are central to the country’s powerful economic system in present-day society. The Chinese government’s approach toward economic development is the most influential reform that the country has sought to achieve in its history. Essentially, China’s economic reformation is what has allowed its economy to flourish and prosper. The newly developed capitalist economic system that was implemented in 1978 has created the basis for significant geopolitical and socioeconomic change.

The Initiation of the Open Door Policy

During the post-Mao era, Deng Xiaoping implemented the Open Door Policy implemented by Deng Xiaoping in 1899 (Link, 2013). Through this policy, Deng sought to reform China through a linguistic approach by providing the social and economic foundation necessary for sustaining a long lasting market economy (Link, 2013). Deng’s central motive was economic development. He sought to accomplish this through four established principles – dictatorship of the proletariat, Party rule, Marxist-Leninist Thought, and the policy of reform and opening (Link, 2013). To achieve economic growth, Deng’s objective was to revive communism as an official ideology (Link, 2013). This is because communism’s demise and the reforms that followed Mao’s death not only eroded the CCP’s legitimacy and its mass support, but also led some Chinese intellectuals to turn toward Western ideology, specifically liberalism, as an alternative.

Xi Jingping’s Rule

Xi Jingping is currently the president of the People’s Republic of China. When Xi became president of the People’s Republic of China in 2012, Xi aimed at reviving the communist ideals that had eroded amidst Deng’s economic reforms (Lu, 2014).  Xi sought to reinforce party rule, and launched a campaign aiming to increase party loyalty and utilized his personalized strategy to gain support for the Communist Party. His strategy used Maoist imagery and rhetoric to heighten his image in an effort to gain influence over the citizens of the country (Lu, 2014). As a result, Xi Jingping, the Communist Party, and the state remained committed to enforcing a tighter control over freedom of speech, specifically the media and its influences (Lu, 2014). School curriculum and university speeches in China have also been heavily censored. Xi is worried about the influence and power that the media has, specifically, its power to influence thoughts and ideals (Lu, 2014). President Xi’s control over freedom of speech demonstrates the difference between China and other capitalist nations. Although China’s political system still heavily restricts fundamental rights, such as freedom of speech, China has allowed the economy to self-regulate and flourish, thereby improving the wealth of the proletariat class and the nation overall.


-        The Impact of Globalization on Culture

China’s march towards globalization enhanced the prosperity of the nation. In addition, the globalization of the economy promoted China’s domestic welfare by increasing national wealth. By the mid-1990s, China’s foreign export revenue totaled around $90 million (Hooper, 2000). In addition to the significant increase in export revenue, most of the exported goods were luxury goods. Essentially, the wealth of the Chinese people grew with the westernization of the country (Yan, n.d.). By nature of the growing revenue, the lives of the proletariat class improved.

The growing interest in foreign goods stems from a desire for modernity by China’s consumers. Foreign products allow people to feel superior, as they are expensive and represent a higher social standard (Hooper, 2000). In addition, foreign brands symbolized a higher quality of production and also reflects the economic power of the country in which it was produced (Hooper, 2000). Foreign brands symbolize high quality and reflects the economic power and overall quality of a nation, thereby demonstrating the prosperity and high social class of the buyer (Hooper, 2000). Essentially, foreign goods helped modernize China’s society in regards to culture and social standards (Hooper, 2000). Technological advancement, such as the use if washing machines, refrigerators and television sets, all represented interests in modernity and rising living standards in China. By welcoming western culture into the nation, China grew in economic and cultural connectivity, which inevitably led to its own economic and social gains.

-        McDonald’s in China

One prominent example of growing interests in western culture among the Chinese population is the establishment of McDonald’s restaurants in China. On April 23, 1992, the largest McDonald’s restaurant in the world opened on Wangfujing Street, Beijing (Yan, n.d.). This restaurant was a setting where Chinese people could get a taste of American culture, something they had been unable to do prior to the open-door policy. In reality, many people commented that the food tasted strange to them and that they didn’t like it. However, they were still attracted to the restaurant to obtain an experience of western culture (Yan, n.d.). They say that they liked the atmosphere of the restaurant, the style of eating, and the experience of being there. The act of being there is not for fulfilling food but for fulfilling experience demonstrate the interest of the Chinese people in western culture (Yan, n.d.). The interest of the Chinese population in western culture, in turn, represents China’s desire for globalization

Economic Growth and Urbanization

Over the past three decades, China has achieved an impressive annual increase of 9% in national economic growth (Naughton, 2007). Much of this growth is thanks to the urbanization that has taken place in China, specifically the importance of urbanization in regards to economic growth. Since the mid-1980s, China’s urban population has sustained an average annual urban population growth of 10-22 million (Naughton, 2007). As a result, the urban population has become 2.4 times larger each year, forcing the amount of urbanized land in China to become 3.9 times its original size each year. In retrospect of China’s economic growth, much of its success can be attributed to China’s urbanization process.

Prior to 1979, there were two kinds of land ownership: state-owned and collective ownership. There was virtually no private land ownership and the Constitution prohibited land transactions (Naughton, 2007). During this period, a land market did not exist and land was neither a commodity nor did it have any value attached to it (Naughton, 2007). The state claimed ownership of land and allocated it to socioeconomic units, called the danwei.

-        The Danwei

The danwei was recognized as a basic unit that had dual functions as an administrative structure for organizing the society and the economy as well as a political tool for inculcating a socialist collective ethic (Naughton, 2007). A danwei was responsible for both the production and housing of all the members it embodies. Due to the fact that the public owned danwei, land use rights and land ownership were legally inseparable (Naughton, 2007). Essentially, the state owned the land and granted land use rights to the danwei, which were legally prevented from transferring their land use rights to a third party (Naughton, 2007). In regards to land allocation, allocation depended largely upon the political powers to which a danwei was connected as well as the political atmosphere in which the industrial sector plans were determined (Naughton, 2007). Under the China’s planned economic system, economic efficiency was not the primary concern nor was the goal of optimal land development. Instead, an efficient method of production and population management was the primary focus, which essentially reflects the ideology of the danwei.

As a result of the land allocation problems that emerged, China had undertaken a series of land reforms. The Land Administration Law was passed in 1986 in the government’s first attempt to establish land markets (Naughton, 2007). Essentially, the law establishes the land use rights system and separates land use rights and land ownership. Through this system, the state still maintains its ownership of land, but individuals and private and public entities are allowed to lease the state-owned land (Naughton, 2007).

-        The Hukou System

Since there was no market for land, farmers who experienced displacement of land could be compensated for their losses and provided means for a livelihood according to the Constitution (Lu, 2014). Compensation normally included offers of employment, resettlement, money for the loss of crops and capital structures, and the granting of an urban residency permit (Lu, 2014). Another phenomenon that caused the displacement of farmers was the issuing of hukous. A hukou was the local residency license that granted the holder access to public services attached to a locality (Hui, 2003). This led to mass displacement of rural farmers, as most migrated to urban areas, as an urban hukou was more desirable (Hui, 2003). Essentially, an urban hukou allowed farmers to access social welfare and public services, all of which were previously denied to them. The government during this time, sought to monopolize the agricultural and industrial sectors of the economy (Hui, 2003). By doing so, the government was able to set low prices for agricultural goods and high prices for industrial goods. Urban residents were subsidized from the price policy and the peasants were forced to endure the negative externalities it caused (Hui, 2003).

Generally speaking, urban residents and hukou enjoyed a higher standard of living than rural residents so there was less resistance from farmers negotiating land acquisition (Hui, 2003). The hukou system, although beneficial for urban residents, proved to be detrimental for rural residents (Hui, 2003). From 1955-1982, most rural residents were organized into local bodies with a primarily economic function. Just as rural collectives were never incorporated into the national administrative hierarchy, similarly, rural property was never integrated into the system of national state ownership (Hui, 2003). During the reforms of 1978-1984, collective farming ended in almost all of China. A complete formal system of rural land does not exist.


According to Marx, the whole purpose of primitive accumulation is to privatize the means of production. This allows the exploiting owners to increase profit rates from the surplus labor of those who must work for them. Essentially, this theory reflects the problem experienced during the peasant era. During this time period, the landlords were the owners of the means of production. As a result, the landlords used their authority to hoard wealth and crop yield away from the peasants. Primitive accumulation, therefore, can only be efficient and morally justifiable if workers are allowed ample wages and the surplus product is utilized properly. Specifically, the majority of the surplus product needs to be reinvested into production rather than consumed by the capitalist. This can provide a just foundation for the practice of primitive accumulation.


China’s development and economic system since the implementation of the Open Door Policy mirrors the ideals of neoliberalism. The ideals of self-regulation and free market activity are heavily practiced in China’s present-day economic system. However, the thriving market economy existing in present-day China would not have been accomplished if the exploitative properties of the prevailing economic system of the peasant era had not been reformed. By ensuring that the social inequalities were alleviated, capitalism was able to flourish without causing insurmountable social problems for the proletariat class.


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