|Introduction of Economy Growth in China
Since the implementation of the Open Door Policy and economic reforms, economic growth in the PRC has been rapid. Graph 1 depicts economic growth in the PRC since the 1950s, and presents a corresponding view of Australia's economic growth patterns.
China's Economy After 1978 (circa 1992)
It was on December 1978 that Deng Xiaoping launched China on a policy of opening up to the outside world, known as 'The Open Door Policy'. It was this policy that has made China stronger both in economy and policy.
The PRC's Industry Structure
Due to the reformation of Deng Xiaoping's opening-up policy , the PRC's industry structure has been changed dramatically. In this article you will see the huge changes since 1950s.
International Trade After 1978
After the PRC government adopted the open door policy in 1978, its foreign trade grew rapidly as exports rose to promote economic growth and pay for the increased volume of imports.
Direction of Trade
China's distribution of foreign trade is focused primarily upon the Capitalist countries. Obviously, this is because it is mainly the Capitalist countries that have the funds and technology which China needs for its industrialisation - the most notable examples being Japan, the US and Hong Kong. Along the way to industrialisation, the PRC has established trading contacts with most countries - regardless of ideology.
The PRC's Financial System
The PRC's financial system is regulated and underdeveloped, but has recently begun to expand fast as monetary policy becomes integral to its overall economic policy.As a result, banks are becoming more important to the PRC's economy .
The PRC has a dual currency system. The value of the local currency - Renminbi (RMB or Yuan)- is fixed by the People's Bank of China on the basis of movements in a mixed basket of the currencies of its major trading partners. The RMB is non-convertible, and its export is prohibited without official permission. Purchases of imported goods are permitted only in special stores in exchange for foreign exchange certificates (FECs).
Savings and Investment in the PRC
One of the most prominent characteristics of the PRC's economy has been its people's high propensity to save. This has occurred more as a result of a lack of consumer goods than a genuine desire to save, however. During the 1980s average gross domestic saving as a percent of GDP was 32.5% - higher than any other country in Asia - and during its peak in 1990, gross domestic saving in the PRC reached 39.2%. Coupled with this as been a high propensity for the government and TVEs to reinvest in capital construction projects.
The PRC's 'Four Modernisations' programme has resulted in an effort to attract foreign investment and the promotion of joint ventures with foreign enterprises and governments.