China Economic Policies

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As a developing world, China's economic policies, which have undergone many changes, are a specific developing concern. However, many people believe they are already falling short of the implementation criteria. A thorough examination reveals that they are selective. For example, they are commercial in nature and do not discuss environmental or social concerns. The capitalist class shapes the economy and decides the results of both commerce and manufacturing. Any of his policies are based on hazy topics which only address short-term failures. One of the most prominent aspects of growth problems is the processes that surround the banking industry. Wastage of state funds on unregulated projects, corruption, and absence of accountability lacks in China's development. The agrarian and environmental sector also suffer due to vague policies. Besides the country taking several steps, impacts brought about by globalization, and controversial plans make it difficult to improve sustainability.

China is now the largest economy in the world. It makes more exports than imports. It has a GDP of 111.2 trillion, and its population is 1.379 billion, therefore, realizing a per capita of $8,123.18 US. The low per capita indicates the country’s level of poverty despite the immense globalization and industrialization. Like most developing states, China also experiences unrests due to poor living and working conditions. For this reason, the administration is making substantial efforts to grow the economy and enhance social well-being. Different departments are preparing to enact recently drafted policies to enable the country to realize overall development goals. Unlike the traditional and current systems, the impending strategies address a wide range of issues in a developing society. This essay identifies the overarching development issue as economic policies. Without a doubt, Chinese lawmakers significantly impact the nation’s development.

Economic Policies in China


The gross domestic product per capita of a nation is the standard tool in classifying countries in order of development. GDP per capita is obtained by dividing a countries GDP by its populace. Economists argue that a developed nation should have at least $12,000 GDP per capita. A considerable number countries in America, Asia, and Europe meet this threshold. Most countries with advanced technology, large economy, and active military are classified as the first world, but China is not. First, its GDP per capita is too low as compared to the threshold. Second, the yields in agriculture are small compared to its population (Yao 89). Third, the country has inadequate levels of technological innovation. In light of this, some of the commodities it produces have no legal patents, and therefore they are viewed as counterfeit. Studies done in the country indicate high levels of poverty, especially among rural and slum dwellers. To give an illustration of this, the number of people who live on less than two dollars a day exceeds the total population of England. Other aspects like child death rate and reduced social services justify it as a developing country. As confirmed by the growth theory, capital buildup drives progress in developing nations, whereas technology advancement motivates growth in developed realms (Copestake 2017). The particular developing issue in China is its tight policies. As a socialist country, the government runs most of the activities, and the citizens have minimal impact on economic growth. Indeed, China's economic policies determine its entire developments.

Economic Profile

It is apparent that the country has a highly restricted economy and there are no signs of hasty modifications. The government vigilantly dominates the nation’s resources and thus baring private investors (Chen et al. 1). The economic departments are always alert in seeking intervention methods in case the economy goes slow. Likewise, the entire state is controlled by its currency behaviors. This maneuver results to currency regulation incompetence and thereby creating more debts. The communist party has an unlimited political effect, and its hazy decisions do not observe the rule of law and hence leading to economic insecurity. For this reason, the trade does not play a prime role in China's economy. As identified by studies, the aggregate exports and imports only make forty-one percent of the GDP (Wu, Tian et al.). Many government trades sway the economy, besides the States is not flexible in adjusting the financial system. It manages approximately ninety percent of the banks. Authoritarian Policies

Despite the incumbent president’s three year rule, the country has seen no appealing reforms. First, government ventures still dominate the national trade. Studies indicated that the aggregate national debt is thrice the GDP (Wu, Tian et al.). Many believe that the anti-corruption campaign has only acquired popularity and not quantifiable effects. Second, the administration possesses all land and therefore limiting personal liberty. Third, the protection of foreign scholarly assets continually wears away. In light of the three claims, the country rejects all reforms that may lead to economic freedom. For instance, presses, law enforcement agencies, and independent bodies should be given powers to support changes. China taxes a maximum duty of forty-five percent to individuals and twenty-five to corporates. Other duties exercised include VAT and reals estate tax. The total tax collected is estimated to amount to nineteen percent of the national income. The regime eases the setting of SMEs by waiving the threshold capital required. However, the entire regulations by the government appear to wipe off this privileges. Many workers and entrepreneurs feel oppressed by the labor administration. Therefore, most government funds go to waste because the government uses only finances and it does not oversee revenue management.

China economic market

Trade and industry

The economy realized twenty-one trillion—basing on purchasing power—dollars in 2016 making it the world’s largest economy (Wu, Tian et al.). Statistics indicate the Chinese population to be about 1.37 billion making it the nation with the highest number of people in the world (Poston et al. 2). Due to the low standards of living, firms exploit the Chinese workforce by offering low wages. As a result, the cost of production in China is small, and hence most international businesses target the country. The country grows its economy through cheap trading of machinery and technological components. The government is instrumental in financing its companies to produce commodities for export. It is also well-known that Chinese private firms make higher yields than those belonging to the state (Chen et al. 3-4). In light of this, most government firms obtain 5 percent profits while as private trades achieve about thirteen percent. The country develops metropolises around state factories as a way of appealing workforces. For this reason, the nation’s fourth economic overhead is real estates. Along similar lines, the administration constructs railways and road to boost growth. This is characterized by the immense importation of aluminum and copper. In the dawn of 2013, the government forecasted an economic crisis and the only sustainable maneuver to escape it was through economic reforms.


China pays close attention to farming since it is vital to economic growth. It is mostly practiced in rural regions, and it employs approximately 5 percent of the population (Yao 9). Its agricultural harvests rank number three globally with most products being grains. Despite it using only ten percent of the arable land, it yields twenty percent of the global food productions. The Chinese government has a considerable influence on agricultural outputs. First, the county’s addition to World Trade Organization considerably inspired agriculture due to lessened tariffs on Chinese agrarian exports. In 2004, the cost of China's agricultural shipments surpassed $17.3 billion. However, the unindustrialized trade has no much liberty like that of industrial commodities. In other words, foreign investors cannot access the domestic agronomic line of work. Economists consider that opening the farming trades can make China import foodstuff and probably destabilize the global food market. Correspondingly, the barriers enforced on grains appear vague because the coast-to-coast trading is carried out through a joint importation and exportation establishment.

The social revolution practiced 1950s unfulfilled China by its inability to advance countryside living standards. As a result, the republic introduced agrarian reforms in 1978, which aided in progressing the renovation of agriculture (Yao 25). This included abandoning of central planning precepts for a market-motivated scheme. Following the changes, the total value of agrarian output doubled within ten years. The growth was also accompanied by a substantial broadening in China's unindustrialized production and eating patterns. China fell in crossroads of agricultural policies in 1991. Trades in livestock products were unregulated, and therefore they created an appealing growth while as unsustainability faced yields in the regulated grain sector. Without a doubt, China should increase liberty in the grain sector in upcoming agrarian reforms.


The country dominated in 2013 to 2015 global exports, and it emerged third in the 2016 trade. Its highest exports were made to the United States with eighteen percent while as other Asian nations also procured a considerable share (Chen et al. 4). China has established trades on the African continent with its principal motive being to acquire oil in return. Chinese interests in South America and Asia has seen the United States form several acts to balance its mounting economic power. The conflict often arises because china’s policies only center on making returns and not social good. Many foreign countries and multinationals depend on China for manufactured goods. Raw materials are shipped to China in bulks, manufacturers create the final product, and then they are shipped back to target markets. Electrical components, industrial machines, tools and spare parts forms form its overarching exports. Other significant commodities are steel, fabric, and textiles.


Besides being a dominant exporter, China takes the third position in global imports. Its chief imports include copper, petrochemicals, aluminum and metal ores. Its overall consumption rate impacts the global agriculture and mining. However, excessive supplies in the Chinese market slumps products prices. Recessions in the country’s economy often result to a drop in the costs of raw materials.

Evading Recessions

The Chinese administration was successful in avoiding a recession in 2008. As identified by government figures, it guaranteed approximately six hundred billion, which signified twenty percent of its yearly economic growth (Chen et al. 7). The finance substantially lowered the cost of housing, built infrastructure, and subsidized the cost of products. Similarly, the government increased the grains prices and allowances for underprivileged city occupants. The regime cut interest rates for banks to intensify small business loaning. The step was instrumental in establishing small enterprises. Nonetheless, most businesses still struggle in reimbursing the debts. Use of unfair trade practices sometimes put China ahead of other nations. For instance, the country offers subsidies to paper manufacturers, and therefore, most of its products are cheap. This negatively impacts other manufacturers, especially in the United States. In 2007, US companies filed a case claiming they could not compete with subsidized products. In their petition, they symbolically asserted that China dumps products in the US.

Economic Growth


The last three decades have seen China steadily grow to make it the world’s largest economy. Sources credit a command economy, based on government spending for the success in China’s growth (Wu, Tian et al.). The Chinese government also sets conditions to external investors. First, they must open factories that should employ local population. Second, the investors should share their machinery the expertise that lets native firms to acquire skills on manufacturing the products. Third, the central bank of China firmly manages the Yuan’s value. This step determines the costs of shipments and therefore making them inexpensive than those produced by other countries.

Advantages of Growth

First, the economic advancements in China have lessened poverty. As identified by statistics, the country has twenty percent of the global population (Poston et al. 2). The level of consumption is directly proportional to the society’s economic status. Consequently, this may appeal more firms due to the enormous market size. And thus enterprises may also be forced to fashion their products to entice the population’s palates. Second, progressive development policies have seen China become a world leader. The nation now leads in the global production of aluminum and steel. Some Chinese technology companies have as well achieved a world-class status. The overarching creations are often mobile phones and other electronic devices. China has accordingly introduced a significant market in Asia, Africa, and South America.

Disadvantages of Growth

Several problems are associated with the rapid trade and industry developments. First, the domestic expenditure resulted in a 200 percent debt-to-GDP proportion. This also triggered unsustainability in products and property prices. Second, the events have brought about public alarm due to toxic waste, food security outranges and increases in commodity prices. Third, social and economic class imbalances rose following a group of wealthy individuals that wanted other personal liberties. Most citizens started dominating cities due to jobs availability. According to studies done in 2012, more than half of the country’s inhabitants lived in towns. This migration indicated a city population rise by 30 percent compared to 1980s (Poston et al. 623). Besides, the policies require local authorities to provide social services. However, the funds should not be obtained from local taxes. Nevertheless, the country does not offer benefits to people who move to seek employment in the city, and therefore it forces the families to make savings. Finally, low bank and savings interests do not guarantee attractive returns to the working class. Indeed, limited spending due to retirement and emergency savings makes the domestic demand to remain low.

Unsustainable Development Policies

Despite portraying a positive economic growth, China’s development is not sustainable. The administration only emphasizes on expanding the economy, but it does not address environmental issues. The harms do affect not just the individual country but also the entire globe. Several international organizations have questioned the sustainability issues and associated them with negative impacts on climate change and thereby calling for an instant response. Fortunately, the lawmakers acknowledge the pollutions, and they anticipate to handle it in the structured trade and industry reforms. Strategies laid in the 1970s by the communist party targeted at expanding state economy and not sustainability. Numerous developments have been done. However, damages resulted by them are ignored and thus dwindling economic, ecological and social good. China makes the highest spending on land and water refurbishment. Conversely, only eleven percent of its forests are regarded as sustainable. Most of the rural surface water and built-up groundwater is polluted despite the aquatic sources serving millions of individuals (Delang 16). As highlighted by the ministry of environment, approximately seventy-four cities have contaminated air an issue that resulted in the closure of some towns. For instance, Harbin—a densely populated city—was entirely closed following immense air pollution that often reduced visibility (Delang 6-7). It is apparent that some Socialist party policies are very stringent. Indeed, the nation has high levels of pollution to an extent the administration terms the facts as classified.

In recent past, the country has experienced constant protests prompted by environmental effluence (Delang 65). This has made the administration sensitive to public pressure on addressing ecological issues. Some of the key demands by the citizens are the termination of mines and a reduction in the number of registered vehicles in metropolitans. The current situation requires the country to balance sustainability with economic growth. A summary of recent administration meetings indicates that the national policies are willing to support eco-friendly practices. The party leaders ascertain their determination in curbing contamination by reducing coal and heavy industries emissions. The new systems also seek to benefit rural farmers—arable acreage will no longer be lost to state and private developers. As a developing country, China may not succeed in hastening the reforms and the ecological challenges may not vanish in a little while. Undeniably, China should boost its economy as well as create eco-friendly policies as a way of reconstructing the environment and social life.

Constructive changes in policies

In 2016, the country experienced a sluggish economic growth, which slackened to 6.6 percent. The previous years had seen a higher increase due to strategized actions. For instance, the government spurred development through financing­— it offered low rate interests, and special protection was awarded to the banking sector. These steps were accompanied by challenges like the 2011 inflation, boosts in real estate, and severe toxic waste (Wu, Tian et al.). Second, the administration’s stress on creating employment opportunities and exportations inhibits the existence of social welfares. For this reason, the citizens have to make enough saving for retirement as well as catering their needs. Most of the country’s developments only occur in the east coast towns and thus attracting millions of migrant employees. Third, it is imperative for the Chinese government to ensure more employment opportunities are created rest the country will face turbulence. Taking a glimpse on China's economic and political revolutions, one identifies numerous unrests triggered by social challenges. The policies should approve social services to lower workers extent of saving as well as enhance their spending. Without a doubt, growth in national demand can enable China to reduce its dependence on exports. Finally, it is essential for leaders to fight homegrown corruption. The country should also formulate ways of enhancing the ecological effects of industrial development. As a phase of this programs, the government has embarked on nuclear programs as way adopting clean energy sources.

Impending Reforms

Trade and industry sector

The China's economic reform is strategized to abandon a command economy for a mixed economy. The strategies may take longer, and many aspects may accompany it. Some economists believe that the latest economic slowdown is deliberate and not an indicator of a recession. In light of this, the downturn is an impact of the financial reform. In 2015, the country offered a detailed description of a five-year blueprint created in the 2013 improvements. The strategies also identify that China is aiming to make the Yuan an international reserve currency (Wu 1). The plan seeks to end some stout government policies. First, they will get rid of state-owned corporations for private ventures and industrialist innovations. Second, the regime will swap low-cost exports with domestic consumption. Third, it will reduce congestion in factories, sell some estate shares and lessen trade costs. For this reason, the country is prepared to cope with a dawdling growth rate, which is estimated to fall between 6.5 and 7 percent.

Despite China’s banks financing many state activities and individuals, there are no regulations that oversee the beneficiaries. The banking system is regulated, but its actions are not monitored. Therefore, some economists feel that the reforms may not help small businesses due to the high rate of dishonesty. In spite of the government’s properties being the pillars of the economy, most are futile due to fraud. The reforms suggest that the administration will lower costs of electricity, water, and other natural resources. However, the threshold cost should still be profitable. The plans also state that the prices should be recorded in the national stock market to enable accountability.

Banking sector

The reforms aim at restoring the realm’s competitiveness. In 2014, the government covered deposits and allowed financial institutions to increase interest rates for end-user deposits. This tactic offered investors additional cash to spend, and banks more to loan. The administration has also created smaller banks to inspire industrialists and thereby trigger competition. The public anticipates getting freedom from the reforms. In this case, individuals and companies will have the right to decide on whether to list stocks on the market. Therefore, firms will be privileged to make decisions. The administration may also allow some corporations to default and operate tax-free temporarily. This step may result in sizable losses in the finance sector, though, it can aid in avoiding insolvency.

The county is trading the Yuan in global markets like London and Singapore as a strategy of making it replace the U.S dollar. The initial target step is to open China to additional overseas investment (Wu 1). The Chinese department of finance acknowledges the steps as worthy but risky. For instance, nations like Norway and Thailand have attempted similar steps only to end up in the financial crisis. As a defense measure, China allows other individual liberties. First, as a step to increase the labor force, a family is allowed to have two children, if one partner was born a single child. Second, the law will abolish labor camps by fleeing all inmates who never underwent a court process.


It is evident that China's economy is dependent on the regime’s policies. Some of the traditional systems never made impacts on the countries trade and industry. In favor of trade, globalization, and agriculture, the country adopted new policies towards the waning of the twentieth century (Yao 140). One identifies that the plans profoundly aided in the development of trade and industry. The country managed to immensely expand its economy and acquire a recognized position in the global market. Technology also flourished making it obtain a competitive advantage in the African, American and Asian market. Its success was not only felt by the populace but also former trade giants. However, the development policies ignored sustainability entirely. This resulted in environmental pollution and high levels of poverty. The plans only address national needs and not social needs. People fail to access ordinary services like retirement benefits and welfare facilities. Farmers in rural areas have to plow their land under authority policies. The overall challenges facing China call for adjustments in economic rules. The republic should encourage additional innovative firms to enhance development. The easiest way to realize this goal is through entrepreneurship because government companies can no longer compete with the rapidly changing technology. The administration should boost demand for locally produced goods by promoting investment in its national stock market. This step can allow firms to reduce reliance on debt and rely more on trading stocks.

Works Cited

Chen, Zhao, Sandra Poncet, and Ruixiang Xiong. Local Financial Development and constraints on private firms' exports: EvACidence from City Commercial Banks in China. No. 2016-27. 2016.tate

Copestake, James. "THEORIES OF ECONOMIC DEVELOPMENT." Utd.Edu, 2017,

Delang, Claudio O. China's Air Pollution Problems. Routledge, 2016.

Poston Jr, Dudley L., and David Yaukey, eds. The population of modern China. Springer Science & Business Media, 2013.

Wu, Congsheng. "Can Chinese Yuan Become A Major Reserve Currency?." (2016).

Wu, Tian et al. "Vehicle Ownership Analysis Based On GDP Per Capita In China: 1963–2050." Sustainability, 2017,

Yao, Shujie. Agricultural reforms and grain production in China. Springer, 2016.

November 23, 2022

World Economics

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China Development Trade

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