The Chinese Giant: Market Leninism

One of the major surprises in economic development during the last decade was the rapid growth in the Chinese economy. After the Chinese revolution of 1949, China initially adopted a Soviet transcendentalist system.The high-water mark of centralization came with the Cultural Revolution of 1966- 1969, which led to an economic slowdown in China. .After the death of the revolutionary leader Mao Tungsten, a new generation concluded that economic reform was necessary if the Communist party was to survive. Under Deng Xiaoping (1977-1997), China decentralized a great deal of economic power and allowed competition. Economic reform was, however, not accompanied -by political reform; the democracy overtime was ruthlessly· repressed in Tienanmen Square in 1989, and the Communist ‘party has continued to monopolize the political process.

The robust performance of :’~le Chinese economy has surprised .observers almost as much as did the collapse of the Soviet economy. According to the World Bank, China’s real GDP growth averaged 10 percent per year for the period 1977-1998. Exports grew over 16 percent per ‘year during that period. The share of the labor force in agriculture fell from
30 percent in 1977 to 18 percent in ]998. By 1998 China had a foreign trade surplus of $40 billion and had accumulated $150′ billion in foreign exchange reserves. This’ remarkable, economic progress was made while political reforms ,and freedoms were sharply curbed. Many countries are watching carefully to see if China can stay on its fast-growth track.