The expansion of the service economy and the changing role of SOEsĪfter the 2008 financial crisis, however, the rate of productivity improvement started to fall. The agricultural labour force, which represented almost 75 percent of all workers in the late 1970s, declined steadily to less than 25 percent four decades later. Reforms continued into the 1990s, as SOE restructurings deepened and consolidation accelerated.Īt the same time, the shifting of China’s labour force from agriculture to industry made higher productivity growth possible. Deng allowed non-SOEs to enter the market, and spearheaded the opening of the country to the world, creating competition. Many SOEs were closed down, and those that remained were given greater autonomy. In a stark departure from Mao’s legacy, Deng dismantled his predecessor’s “people’s communes,” which had destroyed productivity, deciding instead to rely on market forces in the countryside. The implementation of these reforms was due in large part to Deng Xiaoping, who emerged as leader within a few years of Mao Zedong’s death in 1976. This, combined with the move away from agriculture into industry, propelled China’s economic growth to an average of 10 percent per year until the 2008 financial crisis. Starting in the late 1970s, market-oriented reforms produced notable improvements in productivity, enabling large state-owned enterprises (SOEs) to catch up to private-sector productivity levels. Source - RBC Wealth Management, World Bank Reforms and industrialisation spur growth 2013–2022: Xi Jinping prepares China for the next stage of development.
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A confluence of these forces could halve China’s economic growth compared to recent levels, according to World Bank forecasts that see growth declining to 4.5 percent per annum in 2019–2031 and falling further to 3.5 percent the following decade. Now, despite its might, China is challenged by two trends that have become entrenched over the past decade: a persistent decline in the working-age population, and a decreasing rate of productivity growth.
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Throughout this process, the CCP has successfully changed tack to adapt to circumstances and foster rapid modernization.
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It has given rise to technology giants, built ultramodern infrastructure, brought free-market forces into its economy, and become an integral part of the global supply chain. Under the Party’s watch, China has experienced a profound metamorphosis-from a poor agrarian country led by Mao Zedong in the 1960s, to a global economic titan today. Few regimes in modern times have remained in power more than 70 years. The Chinese Communist Party (CCP) recently celebrated its 100-year anniversary, highlighting its remarkable longevity even within the context of the country’s 5,000-year history.