socialist market economy, command economy, planned economy, huge population, economic reforms
In the 1950s China’s Communist government began bringing a majority of economic activity under state control and determining production, pricing, and distribution of goods and services. This system is known as a planned economy, also called a command economy. In 1979 China began implementing economic reforms to expand and modernize its economy. The reforms have gradually lessened the government’s control of the economy, allowing some aspects of a market economy and encouraging foreign investment; however, the state-owned sector remains the backbone of China’s economy. China refers to this new system as a socialist market economy. As a result of the reforms, China’s economy grew at an average annual rate of 10.2 percent in the 1980s and by 10.3 percent annually in the period of 1990-2000. This was among the highest growth rates in the world. However, the reforms also have caused problems for China’s economic planners. Income gaps have widened, unemployment has increased, and inflation has resulted from the extremely rapid and unbalanced development.
In 2000 China’s gross domestic product (GDP) was $1,079.9 billion. The size of the country’s economy, which is comparable to that of Canada($688 billion), makes China a significant economic power; despite this, it remains a low-income, developing country because it must support a huge population of more than 1.2 billion. In 2000 China’s per capita GDP was just $860, compared to $22,370 in Canada. Industrial activity (manufacturing, mining, and construction) contributes the largest percentage of the country’s GDP, amounting to 51 percent in 2000. Transportation, commerce, and services together accounted for 33 percent. And agriculture, together with forestry and fishing, contributed 16 percent.
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