The Rise of the Chinese Dragon: How China Became So Rich?

Napoleon once said, "Let China sleep; when she wakes she will shake the world." After seeing today's modern China, we can definitely say that she has awakened. In 1990, the size of the Chinese economy was only about 394 billion USD while in 2022, it reached a point of 18.46 trillion USD making it the world's second largest economy after the US. In just three decades, it has transformed itself into a leading economic power despite not having any major sources of natural resources like other big countries.

Historical Background

After the second world war, the Chinese economy was mainly dependent upon agriculture. In the 1970s, under Mao Zedong, the government took some policies like 'Great Leap Forward' and 'Backyard Furnaces' to boost up its economy. But, due to poor execution plan, poor technology and lack of expertise these policies failed miserably.Additionally, this brought up large scale destruction,famine and poverty all over the country. As a result, thousands of Chinese citizens died due to starvation which resulted in great instability in the whole social,economic and political system.After Mao's death, Deng Xiaoping came to power and reversed all the policies of Mao. His government introduced a large range of reforms in China in the 1990s which later played a key role in the massive economic transformation of the country.

Key Policies

A bunch of well-planned and futuristic reformation policies played key roles in this economic revolution of China. Let's discuss some of them here.

1. Agricultural Reforms

Under previous policies, the lands were directly controlled by the government and the peoples were victims of the forced labour system. The government used to take away all the profits and the farmers were left with only a little wage fixed by the government. The new government understood that this policy was not sustainable so, they released government control over agricultural lands and encouraged private farming. This worked out positively as the farmers now could sell their crops at a high price in local markets after giving a little tax to the state government.Thus, the agriculture sector got boosted up and very soon it became a food surplus country after overcoming famine and starvation.

2. Township and Village Enterprises (TVEs)

After the agricultural reforms, still a large number of low-skilled workforce was unable to contribute to the main economy.So, the government initiated a new policy named 'Township and Village Enterprises' or TVEs. Under this policy, the government started transforming these low-skilled population into a high-skilled workforce and also established many macro and mini manufacturing units for them under local governments.As a result, thousands of new jobs got created and more people from local villages and towns got the opportunity to directly contribute to the country's economy.

3. The Textile Revolution

The commercialization of agriculture boosted the cash crops and China became the largest producer of Cotton in the 1990s.This led to the massive growth of textile industry in China.Additionally, under 'Open door policy' China started exporting textiles and her economy got integrated with the world economy.

4. Education And Skilling Reforms

After the integration with the world economy, China aspired to become 'World's Factory'.So,the requirement for a more educated and skilled workforce increased gradually. To meet that requirement, several education and skilling policies were initiated.For instance,under reform measures, 9-year-schooling with vocational education was made constitutionally mandatory. For specific skill developments,lots of technical and vocational education and training systems were established all over the country.

5. Shift To Electronic Goods

In the late 90's electronic companies like Sony, Panasonic, LG, Samsung etc. wanted to expand their businesses, but was unable due to shortage of land and labour in their respective countries.Then,Huge amount of free land and massive cheap skilled workforce of China attracted the investments from manufacturing companies of Japan and South Korea which were facing land and labour shortage.Also, the local entrepreneurs utilised the available technologies from these companies and set up manufacturing plants for electronic consumer goods like telephone,VCR, television etc.Thus, the journey of China's dream to become world's factory initialized.Later, after the technology boom in US in early 2000, technology companies like HP, Intel, Dell, Apple etc. also established their factory plants in China due to its huge amount of cheap but skilled workforce.

The local entrepreneurs soon identified the technologies and started building their copied cheap versions and started dumping it to third world countries which got highly accepted. Later on,with that profit and already known technology they started to build their own brands of electronic goods like smartphones, laptops etc. known as Lenovo, Xiaomi, Huawei etc.

Finally we can say, making human resources the backbone of the economy, shifting priorities from one industry to another according to the need of time, futuristic thinking, political stability, strong leadership etc. played key roles to achieve this spectacular economic growth of China.