What Makes China an Economic Success?

'Those viewing Chinaâ??s model often point to the powerful Chinese government and its centralized authority as the key in propelling the development of the Chinese economy. They argue that centralization of forces makes it possible to launch major undertakings and minimize internal frictions.

However, this conclusion does not hold water when examined from a historical point of view. When the, Chinese government controlled everything at the start of the reform and opening-up drive in China, China did not prosper. On the contrary, Chinaâ??s national economy fell to the brink of collapse during this period due to extreme political and economic leftism. It is obvious, therefore, that policy stability and the exercise of government power are not the key to economic transformation. In fact, the biggest hurdle blocking Chinaâ??s course of development has been its stagnation in political reform and the transformation of government, as well as the governmentâ??s control over resources. Because its political reform has lagged, the Chinese government has become too involved in economic affairs and its officials have received unfettered powers over the distribution of land, capital and other economic resources. By getting directly involved in project examination and approval, licensing standards for market access, price control, and the execution of other types of administrative measures, the government not only frequently interferes with micro economic operations, but also commits many types of malpractices such as rent seeking to throttle market economic vitality.

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