Economic Development of China Research Paper Example | Topics and Well Written Essays - 2500 words

Economic Development of China - Research Paper Example It however remains to be termed as a growing economy since its per capita income is still low compared to the other developed economies and its market reforms are still not complete. Many challenges have as well resulted from its rapid economic growth and these include urbanization, high levels of inequality, external imbalance and challenges on the sustainability of the environment. It is also faced with internal labor migration and demographic challenges, which are associated to a high population of an aging population. It therefore requires policy adjustments to see sustainability in growth of China (The World Bank Para 6). The economy of china has attained a significant change over the decades and this was marked by its beginning of economic reforms that took place in 1978. Before these reforms, China had a command economy. This form of economy is also referred to a centrally planned economy whereby all or the major output from economic activities were controlled by the state. The state was responsible for setting the goals of production for the firms, allocated resources throughout the economy and set the operating prices. The individual firms of the households were in the 1950s were joined collectively into communes. In support of industrialization, the government undertook investment in human and physical capital in 1960s and 1970s. Three quarters of the entire industrial production at this time was from enterprises that were owned or controlled by the state and at this time, private businesses and foreign investment firms, which are the multinational companies, were barred. The government at this time had an aim of making the economy of china to be self -sufficient. The government policies held at this time held the economy of China into a state of economic stagnation and inefficiency. Companies, firms and the employees lacked incentives for working hard and improving