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Posted on April 20th, 2012, by

The membership of China in the WTO faced a number of political and economic constraints, which prevented the country from the normal integration in the international economic community. Nevertheless, China has managed to achieve a considerable economic progress which allowed China to join the WTO. Speaking about the current progress of Chinese economy, it is important to underline that such a tremendous progress of China is practically miraculous, taking into consideration the fact that Chinese economy was on an extremely low level of the development until the late 1980s[1]. In fact, Chinese economy suffered from a serious pressure from the part of the Communist regime that ruled and still rules the country. The command economy that dominated in China until the 1980s practically put the country into the economic downfall, which almost resulted in the civil war and overthrow of the ruling regime. Chinese economy was in decline and by the late 1980s the economy crisis led to the growth of anti-communist movement in the country. Nevertheless, the Communist regime had managed to oppress the opposition, but the necessity of economic reforms was obvious.

In such a situation, when Chinese economy faced a real risk of the total collapse, economic reforms became the major factor that determined the progress of China within the two decades to follow. Basically, the economic reforms that had started in the 1980s led to positive changes in Chinese economy and provided the country with a considerable economic growth and the growth of GDP in the 1980s[2]. At the same time, it should be said that the economic growth of the 1980s and the high rates of the growth of Chinese GDP were, to a significant extent, determined by the depth of the economic downfall of China by the 1980s[3]. Naturally, being in a state of crisis, the national economy responded quickly to economic reforms introduced by the government and the development of business and economy at large was a response of the national economy to reforms initiated by the government.

Basically, the economic reforms laid the foundation of the rapid economic growth of China which was particularly significant in the 1990s and persists till the present epoch. In this respect, it should be said that over the last 30 years Chinese economy has grown at an average annualized rate of nearly 10%[4]. This rate is very high, taking into consideration the fact that the average annualized rate for developed countries, such as the US or the EU hardly exceeds 3-5%. In addition, since the middle of the 1990s the inflation rate in China was similar to that of developed countries, including the US [5]. At any rate, the inflation was effectively controlled by Chinese government and central bank that created conditions for the macroeconomic stabilization and, therefore, stimulated the rapid development of the economy.

On the other hand, along with positive economic trends, there is still a serious problem which have prevented China from membership in the WTO and which still represents a serious threat to the future of China in this organization as well as to the future of China itself[6]. This problem is the Communist regime established in the country, which limits human rights and liberties in the country, while the Communist Party remains the only political party which rules the country. In fact, the current political regime is undemocratic that makes the normal functioning of the open market economy highly problematic in China. In such a situation, the private capital cannot be totally safe in China.



[1] Kuotsai Tom Liou. Managing Economic Reform in Post-Mao China. Greenwood Press, 1998, p.120

[2] Rolf, K. World Economy: Past, Present, Future. London: Routledge, 2000, p.247

[3] Kuotsai Tom Liou. Managing Economic Reform in Post-Mao China. Greenwood Press, 1998, 253

[4] Wu, Jinglian. Understanding and Interpreting Chinese Economic Reform. South-Western, 2004, 219

[5] Ibid., p.196

[6] So, Alvin Y. Lin, Nan. Poston, Dudley L. The Chinese Triangle of Mainland China, Taiwan and Hong Kong. Greenwood Publishing, 2001, p.211

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