Sample Economics Paper on China Development


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 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.


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 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.

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 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 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 (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 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 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 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.


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 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.


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.