Introduction
Economic development is a key target for all nations around the globe, including those
leading in development. Although nations utilize different factors such as offering the necessary
incentives, utilizing the market-based competition, and proper signaling, scholars argue that the
elements do not guarantee special policy deals. As a result, experts recommend the need for
developing policy systems that focus on integrating both challenges and opportunities of the
specific nation. Countries that have managed to customize their developmental packages have
realized economic development successfully. Through strategies that have focused on growth
ignition and sustenance, policy-developers have efficiently managed to create an environment
that favors development. Therefore, these pages will focus on evaluating China's development by
assessing the application of Rodrik’s conceptual framework on growth strategies to China.
Further, the paper will emphasize on evaluating how China utilized government policy to create
the conditions for economic development and whether China followed a strategy based on core
mainstream economics principles. More so, the paper will evaluate how successful China has
been in its pursuit of economic growth and development.
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Application of Rodrik’s Conceptual Framework on Growth Strategies to China
According to Rodrik 3, China has been a significant example of a notable economic
development by undergoing a remarkable development rate of 8%, which surged since the late
70s. Further, the scholar associates the notable economic development of China to the utilization
of effective growth strategies. Strategies of growth are defined by Rodrik 4 as institutional
arrangements and economic policies that target the achievement of financial merging with the
fundamental standards of living in developed nations. China’s growth dates back from 1979 after
the establishment of economic reforms and has continued over the decades, documenting a
yearly average of about 10% in 2017 (Morrison 1).
Although China has developed alongside other nations around the globe, its development
trend it’s historically remarkable. Rodrik 9 notes that while china was targeting to realize
development like the western countries, it employed a different strategy for reforms. China
customized its reforms in a manner that ensured the combination of both challenges and
opportunities of the nation. China’s ability to customize its reforms enhanced its spontaneous
development recorded through the years. For instance, while economic experts argue that the
reforms should be initiated the rural areas where a significant percentage of the poor reside, the
idea could not realize an efficient solution.
According to Rodrik 9, focusing on the rural areas would require reforms that relate to
agricultural market liberalization or the elimination of state order system that required peasants
to post mandatory crop deliveries at reduces costs that are controlled by the state. Nevertheless,
understanding that a policy that focuses on the liberalization of costs alone cannot ensure the
necessary generation of supply motivations through communal land ownership approaches the
need for land privatization would be necessary. Understanding the case, China focused not only
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on a tragedy focusing on price liberalization but also on property rights. The move was targeting
to leverage the opportunities that would be realized in cost liberalization and also eliminate the
challenges associating with property rights. However, unlike economists who would focus on
land privatization, China opted for the idea of innovative institutional arrangements.
More so, China focused on the idea of ensuring anonymous banking systems to ensure
the availability of financial organizations that would support local businesses in making the
unavoidable changes. China-focused on approaches that focused on eliminating possible political
and administrative challenges to speed up the economic development challenges. Although the
strategy implemented by China appeared experimental as it primarily focused on institutional
novelties that differed from the approaches employed in the West, they were largely efficient in
enabling economic development.
Utilization of Government Policy to Create the Conditions for Economic Development in
China
Morrison 1 notes that China is the only nation that has managed to ensure a speedy
maintained growth historically with World Bank noting the uplifting of over 800 million
individuals from poverty. As a result, the country is now a world economic power leading to
different economic sizes including merchandise trade, purchasing power parity (PPP), foreign
exchange reserves holder, and value-added manufacturing. Prior to the introduction of economic
reforms in 1979, China ensured command or centrally designed economy where the state saw the
control of a significant share of the nation’s financial output (Morrison 2). The strategy ensured
that the state was in charge of setting the goals of production, allocating resources and
controlling the prices.
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For instance, in the 50s, Chinese personal home farms had been collectivized in
communes as a strategy of supporting prompt industrialization (Morrison 2). As such, between
the 1960s and 1970s, the central government utilized the farms to implement human and physical
capital large-scale investments. As of 1978, about 75% of China’s industrial production was
manufactured by centrally organized state-owned enterprises (SOEs) (Morrison 2). During that
time, the government had prohibited foreign investing organizations and private enterprises.
Basically, the primary target for the government was to ensure that the economy of China was
self-adequate.
China’s foreign trade was restricted to the importation of commodities that could not be
produced or sourced from the country (Morrison 2). Although the policies seemed effective in
regard to minimizing government expenditures in the importation, they presented economic
falsifications. For instance, considering that the government was in charge of significant
economy aspects, market strategies that would ensure the proper allocation of resources were
missing, thus limiting the number of incentives that could encourage productivity among
workers, farmers, and organizations (Morrison 2). As a result, the quality of production stagnated
as the firms focused on meeting the limits and targets set by the government.
From 1979, various economic reforms were launched in China, such as the introduction
of ownership and price incentives for Chinese farmers (Morrison 4). Although the primary plan
remained, the central government allowed Chinese farmers to sell the surplus crops on free
markets, where the costs were developed after the state had met its targets under the centrally
organized system (Rodrik 10; Morrison 4). Rodrik 10 argues that the strategy was only a creative
strategy that ensured both parties benefited and resolved a challenge relating to general
liberalization. Typically, the government was able to understand the efficiency of offering
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producers microeconomic incentives and at the same time shield itself from liberalization
financial penalties.
A dual-track reform triggered optimum effectiveness as the state quotas were agreed
lower than the completely liberalized market results such that trade was limited to the margin
market costs and was never increased up such the manufacturers did not worry about possibilities
of market surplus (Rodrik 10). Nevertheless, the system included varying inframarginal
distribution, which conserved the profit tributaries of the primary supplicants. Later the dual-
track strategy was applied in different industries such as the labor markets in contracts of
employment and industrial goods such as steel and coal. Rodrik 10 notes that the approach
played a significant role in enabling the achievement of political support during the process of
reform more so in maintaining the progress and reducing negative social effects.
More so, china managed to utilize policies relating to property rights to foster economic
development. Instead of privatizing industrial assets and land, the government of China applied
innovative institutional arrangements that included Township and Village Enterprises (TVEs) as
well as the Household Responsibility System that ensured individuals were given land depending
on the size of households. (Rodrik 10) Specifically, the Township and Village Enterprises drove
a significant share of China's growth until the mid-1990s with their impact on industrial
significance increasing above 50% during the early years of the 1990s (Rodrik 10). In TVEs, the
rightful ownership privileges were entrusted to local communities, and local governments
ensured their prosperity as they offered direct revenue.
Rodrik 10 that while evaluating the conditions of China, the security of property rights
was guaranteed while governed by direct local government ownership while compared to
probable ownership by the private property-rights legal regime. Local government control
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ensured some form of inherent security guarantee that was missing in private control rights. The
enterprises contributed significant entrepreneurship and investment boosts that contributed
notable expansions in economic growth. More so, China focused on other transitional institutions
that were employed to trigger economic growth; the institutions included anonymous banking,
Special Economic Zones, as well as economic agreements between local and central
governments.
Whether China Followed a Strategy Based On Core Mainstream Economics Principles
Globally, China is a largely developed, socialist nation. Regardless of the notable global
setting relating to the Soviet Union’s disintegration, together with the remarkable alterations that
occurred in the early years of the 1990s in Eastern Europe, China continued to realize economic
success (Huang 57). During the time China was adhering to a specific center as well as two
simple factors and equally ensured the improvement of the socialist primary economic
mechanism, strategy, and organizations through the continuous movement of socialist market
economic system improvement (Huang 57). Huang 57 argues that the idea was to preserve
Marxism liveliness together with the socialist approach that contributed notably recognized
surpluses to social and economic development.
The China strategy implies that the nation never focused on an approach relating to the
core mainstream economic principles, which are the Washington Consensus. Instead, China
focused on the Beijing Consensus (Huang 57). Equally, the country did not focus on western or
neo-liberalism mainstream economics but instead focused on principles relating to socialist
theories with the traits of China. As a result, China managed to create a developmental path that
was increasingly different from the systems employed by other Western capitalist nations
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(Huang 57). The varying policy applied in china describes an example of a cautiously made
policy that varied from the policies implemented in other regions.
For instance, while the neo-liberalism mainstream economics expected the liberalization
of agricultural markets or the elimination of state order system, China focused on an approach
that enabled the farmers to sell all their excess produce at a cost that was higher than that of the
government production proportions in open markets (Commission on Growth and Development
31). Although different, the strategies implemented by china presented outcomes that were
closely similar to those that would have resulted from a microeconomic concept. For instance,
the lives of farmers improved and as the prices increased, the farm output increased as well.
According to the Commission on Growth and Development 31, policy developers in China
focused on ensuring that they did not utilize macroeconomic reforms similar to those applied in
developing nations. This was because China had understood an economy like theirs that had just
introduced policies would not react to variables relating to macroeconomic such as rates of
interest in the manner forecasted by developed nations.
Although the Commission on Growth and Development 31 notes that the intentional step-
by-step gradualism presented significant concerns, good policies could, at times be developed
during bad times in some circumstances. The Commission argues that problems that could
disrupt political forces unchanging conformation could, at times offer a chance for implementing
primary development systems that could have been blocked. Nevertheless, in the same way there
exists different issues that lead to positive cases; others trigger negative outcomes as well.
Basically, problems could eliminate hindrances thus promote a positive development approach,
though they can never guarantee the selection of a positive growth approach (Commission on
Growth and Development 31). In the case of China, enlightened and influential technocrats, as
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well as positive leadership, played a significant role in promoting the development of policies
that enhanced the nation’s reforms efficiently.
China’s Success in Its Pursuit of Economic Growth and Development
Evidently, China has managed to realize quick growth within a prolonged duration while
compared to all other capitalist nations (Huang 58). Although different nations have
continuously struggled with tough economic times that disrupt economic development despite
the application of macroeconomic reforms that predict positive outcomes. Relating to Rodrik’s
concept, the disruption of economic development in the countries could be linked to the failure
of integrating both the opportunities and challenges of the specific nation. When a country is able
to understand the underlying challenges and opportunities, it could efficiently utilize the relevant
measures to leverage the positive outcomes and resolve the challenges.
During the progressing industrialization process between the period of 1770 and 1790,
the United Kingdom recorded the uppermost average yearly economic development proportion
of 2.31% and recorded its peak during the 20th century, which was 3.54% during the 1960s
(Huang 58). Nevertheless, between 1970 and 2007, the growth rate of the UK had declined to an
average of about 2.73%. On the other hand, between 1791 and 1820, the United States recorded
an economic average rate of growth of 4.38% (Huang 58). The rate increased to 4.46% between
1820 and 1860 but declined between 1860 and 1913 to 3.39%. On the contrary, Japan realized
significant growth between 1961 and 1973 recording proportions of 8.78% annually, but the
rates declined between 1974 and 1991 to 4.09% (Huang 58).
Nevertheless, Japan recorded its lowest annual growth rate between 1992 and 2015 as the
country documented a rate of 0.8%, and economists described the period as “the lost 20 years.”
Another china competitor South Korea realized a significant growth proportion between 1963
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and 1991 marking a rate of 9.57% (Huang 58). However, the rates reduced between 1992 and
2007 to 5.68%; the rates declined further to 3.11% between 2008 and 2015. Unlike the nations,
China managed a positive growth rate of about 9% for 38 years between 1978 and 2015.
Although experts argue that China been struggling with an increasing plunging pressure relating
to its economic operation from 2012, the nation has managed to maintain a continuous
development documenting a yearly growth proportion of more than 7% (Huang 58). The positive
development of China’s economy, regardless of its idea of developing integrative and cautious
reform approaches and ditching the mainstream economic strategies suggested by developed
countries.
The idea of integrating both the opportunities and challenges of the nation in developing
its development policies enhanced rapid growth. More so, predicting possible challenges ensured
steady growth over the years as the government has been able to implement measures that limit
the negative outcomes and instead focus on leveraging the merits of the existing opportunities.
Economic experts describe the case of a China as a Chinese miracle that has been the specific
one in global economic growth (Huang 58). For a period of about four decades, China has
managed to realize remarkable development making it the second-largest financial power around
the globe. Globally, China has managed to top different economic-related factors such as the
primary trading nation as well as the leading manufacturing nation.
China’s notable success has enhanced the improvement of living standards by creating
opportunities for income sources, thus eliminating poverty. Specifically, through the country’s
success in both economic development and growth, China managed to get out 700million
individuals from poverty and promote their life quality (Huang 58). Despite the minimization of
the poverty headcount ratio documented from economic development, Chinese population
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segments did not benefit equally thus the growth of income disparities that contributed notable
surges in income inequality (Jain-Chandra 3). Although the levels of poverty inequality in China
appears to have picked in 2008 but increasing levels threated both the sustainability and pace
growth. Jain-Chandra 3 notes that high income inequality levels could cause suboptimal
education and health investment thus delaying growth. More so, the scholars’ ague that high
poverty levels contributed by inequality could possibly minimize support for reforms that
enhance development thus trigger adoption of populist policies and minimize development
possibilities.
Nevertheless, for over ten decades since 1840, China struggled with economic
degradation that increasingly weakened is growth and halted the appreciation of economic
opportunities. During the years nearing the establishment of reforms that facilitated positive
growth in China in the late 1970s, the rate of China’s GDP contributing to global growth has
declined to rates below 5% (Huang 58). The reform approaches introduced by China after 1979
have triggered notable growth in China which has reshaped the position of the nation among the
leading global economic powers. Recent research shows that China’s GDP in 2015 was
representing an overall global growth of about 15.5%. (Huang 58) Experts argue that China is
about to reach a reconstruction point that has never been realized before. However, the nation’s
ability to realize the great reconstruction point has been delayed due to the ongoing trade war
between China and the United States.
Conclusion
In conclusion, economic development is a primary goal for all organizations around the
world. Countries focus on employing varying economic policy approaches to introduce reforms.
Nevertheless, scholars not that economic suggestions such as the implementation of the
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necessary incentives, utilizing the market-based competition, and proper signaling does not
guarantee special policy deals. Experts such as Rodrik recommend the application of integrative
developmental policies that concentrate on both the challenges and opportunities of the specific
nation. China describes countries that have managed to utilize Rodrik’s concept in realizing
economic growth and development. For a period of 40 years since 1979, China has managed to
maintain continuous growth, becoming leading manufacturing and trading power around the
globe.
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Work Cited
Commission on Growth and Development. The Growth Report: Strategies for Sustained
Growth and Inclusive Development. Washington, DC: World Bank, 2008.
Huang, Taiyan. "Economic theory innovation and China’s development practice." China
Political Economy 1.1 (2018): 55-66.
Jain-Chandra, Ms Sonali, et al. Inequality in China–Trends, Drivers and Policy Remedies.
International Monetary Fund, 2018.
Morrison, Wayne M. "China’s economic rise: History, trends, challenges, and implications for
the United States." (2019).
Rodrik, Dani. "Growth strategies." Handbook of economic growth 1 (2005): 967-1014.