Political Science · Ch 2 — Contemporary Centres of Power
The Rise of the Chinese Economy
The Rise of the Chinese Economy
The Rise of the Chinese Economy
China is the third major alternative centre of power and a close neighbour of India. Its economic success since 1978 is directly linked to its rise as a great power. China has been the fastest growing economy in the world since its reforms began, and it is projected to overtake the United States as the world’s largest economy by 2040. Its deep economic integration into East Asia makes it the driver of the region’s growth, giving it enormous influence.
The Crisis That Led to Reform
Before the reforms, China faced a crisis similar to the one that hit the Soviet Union. Industrial production was not growing fast enough, international trade was minimal, and per capita income was very low. The Chinese leadership took major policy decisions in the 1970s to break out of this stagnation.
- In 1972, China ended its political and economic isolation by establishing relations with the United States.
- In 1973, Premier Zhou Enlai proposed the ‘four modernisations’ — in agriculture, industry, science and technology, and the military.
- By 1978, leader Deng Xiaoping announced the ‘open door’ policy and economic reforms.
The Nature of China’s Reforms
China did not follow the ‘shock therapy’ that the Soviet Union adopted. Instead, it opened its economy step by step, with the state playing a central role throughout.
- Privatisation of agriculture came first, in 1982.
- Privatisation of industry followed much later, in 1998.
- Trade barriers were eliminated only in Special Economic Zones (SEZs), where foreign investors could set up enterprises.
- The policy aimed to generate higher productivity through investments of capital and technology from abroad.
Results of the Reforms
The new economic policies broke China’s stagnation and produced dramatic results.
- Privatisation of agriculture led to a remarkable rise in agricultural production and rural incomes.
- High personal savings in the rural economy led to exponential growth in rural industry.
- Both industry and agriculture grew at a faster rate.
- New trading laws and the creation of SEZs caused a phenomenal rise in foreign trade.
- China became the most important destination for foreign direct investment (FDI) anywhere in the world.
- It now holds large foreign exchange reserves, allowing it to make big investments in other countries.
- China’s accession to the WTO in 2001 was a further step in opening up to the outside world. The country plans to deepen its integration into the world economy and shape the future world economic order.
The Downsides of Growth
Not everyone in China has received the benefits of the reforms. Several serious problems have emerged:
- Unemployment has risen, with nearly 100 million people looking for jobs.
- Female employment and conditions of work are as bad as in eighteenth- and nineteenth-century Europe.
- Environmental degradation and corruption have increased.
- Economic inequality has risen between rural and urban residents, and between coastal and inland provinces.
China’s Regional and Global Influence
Despite these internal problems, China has become an economic power to reckon with regionally and globally. …
The cartoon uses the bicycle — a symbol of everyday China — to show a split in the country’s identity. On one side, you see a bicycle from the past: an old, simple model, perhaps ridden by a person in traditional or plain clothing. This represents China before the reforms — a poor, isolated, largely agricultural society where the bicycle was the main mode of transport for millions. On the other side, the same bicycle is transformed: it now has wings, or is shown speeding like a jet, or is ridden by a figure in a business suit or holding a laptop. This side represents modern China — the economic powerhouse, the factory of the world, the nation that builds high-speed trains and skyscrapers. …
The cartoon is a two-panel image that uses the bicycle — a symbol of everyday life in China, which has more bicycles than any other country — to show a sharp contrast between two eras.
In the first panel, labelled "China then," a single figure pedals a simple bicycle. The rider is dressed in the plain, drab clothing typical of the Maoist era. The background is sparse and the road is empty. This panel represents China before the economic reforms of 1978: a poor, isolated, and largely agricultural society where the bicycle was the primary mode of transport for the masses.
The second panel, labelled "China now," shows a completely different scene. Here, a figure rides a modern motorcycle or scooter — a clear upgrade from the bicycle. The rider is dressed in contemporary, Western-style clothing. The background is crowded with other vehicles and signs of urban development. This panel represents China after the "open door" policy and economic reforms: a rapidly industrialising, globally connected economy where personal mobility has shifted from the bicycle to the motor vehicle.
The duality the cartoon captures is this: China is simultaneously the world's largest user of bicycles (a symbol of its poor, pre-reform past) and a booming economic power where motorcycles, cars, and high-speed trains dominate. The bicycle is still there, but it is being overtaken by the motorised vehicle — just as the old, state-controlled economy is being overtaken by a market-driven one. …
The cartoon is a two-panel image that uses the bicycle — a symbol of everyday life in China, which has more bicycles than any other country — to show a sharp contrast between two eras.
In the first panel, labelled "China then," a single figure pedals a simple bicycle. The rider is dressed in the plain, drab clothing typical of the Maoist era. The background is sparse and the road is empty. This panel represents China before the economic reforms of 1978: a poor, isolated, and largely agricultural society where the bicycle was the primary mode of transport for the masses.
The second panel, labelled "China now," shows a completely different scene. Here, a figure rides a modern motorcycle or scooter — a clear upgrade from the bicycle. The rider is dressed in contemporary, Western-style clothing. The background is crowded with other vehicles and signs of urban development. This panel represents China after the "open door" policy and economic reforms: a rapidly industrialising, globally connected economy where personal mobility has shifted from the bicycle to the motor vehicle.
The duality the cartoon captures is this: China is simultaneously the world's largest user of bicycles (a symbol of its poor, pre-reform past) and a booming economic power where motorcycles, cars, and high-speed trains dominate. The bicycle is still there, but it is being overtaken by the motorised vehicle — just as the old, state-controlled economy is being overtaken by a market-driven one. …