Global Economy and Changing Policy

In recent years China has risen to become one of the largest contributors in the World Trade Market. This has created both concern and awareness of the policies that currently govern China as a world power. The main political concern is the remaining fact that China, a communist state, could overpower the democratic ruling of many other world powers and reestablish communism in the global economy. With China holding such a large stake in the global economy, the People’s Republic of China has been making changes to the foreign trade policies and political structure that has governed the country since post-Mao reform.

Why have these changes that have been, and are still currently being, made within the government and economic policies of the PRC in order to change the perception that the global community has in regards to its rising power, contributed to the development of China’s economic power thriving in the World Trade Market? The political structure of China has given rise to a flourishing country, but at what cost does this amount of wealth cost its people? China continues to reform and adjust current policies that have been in place for years and continually increases in wealth. With this wealth, it has helped other countries, including the United States, in the reestablishment of commerce, foreign aid, and political affairs despite the governmental differences.

In order to understand why China has become so successful with its current political structure, it is important to understand exactly what the basic structure was and how it was put into place. In its early years as an empire, China as a young country was not always under the rule of a communist state. In the pre-nineteenth century and prior China was governed by the ideology of Confucianism.  This early form of government led China into an age of great prosperity and growth and it was able to rise to become a great empire. The basic beliefs of allegiance to the empire, the Emperor, and strong spiritual culture based on the beliefs of Confucianism, all contributed to the establishment of the long-standing imperial rule of China. However, all good things must come to an end at some point in time and governments are not exempt from this ruling. As the empire of China approached the nineteenth century, so did the increasing problems for the country itself.

According to Sujian Guo, a professor in the Department of Political Science and Director of the Center for U.S.-China Policy Studies at San Francisco State University, in the latter nineteenth century ”… [China] suffered a rapid decline due to internal rebellions and external invasions, encroachment, and colonization, and failed to respond effectively and successfully… “ (59). It was this inability to handle the problematic increase of internal and external turmoil that essentially caused China to take drastic reformation methodology that would lead the government to adopt communism as the main ideology for the government.

In early days of foreign trade, “Confucian China’s attempts to exclude pernicious foreign ideas resulted in highly restricted trade” (Allingham, “England and China: The Opium Wars, 1839-60”). China was not very open to the trade ideas imposed by the Westerners and it was this inability to alter trade relations that would inevitably lead to war with the West. The first and second Opium Wars were the direct results of China’s inability to adapt to the changing world ideology and proved to be disastrous for the country.  These first of these wars allowed the British Empire to force China to “…sign the Treaty of Nanking in 1842, agreeing to lease Hong Kong, open five ports to British vessels, and a war indemnity to Britain” (Guo 59). Like the first war, the second was no different for China by allowing Britain to obtain even more control over the ports and customs of the Chinese. Eventually, China would fall victim to, even more, humiliation throughout the coming years. This perpetual rise and fall of society led to failed rebellions and gave way to intellectuals and scholars attempting a reformation of the failed system of governance. It was not until the Communist Party of China was created in 1921, with the support of the Soviet Union and the Leninist party that China would finally be able to break away from the grip of the British Empire. (Chetham 95-99).

Through revolution and the aid of the Soviets, Sun Yat-sen established the Kuomintang, or what is known as the KMT or Chinese Nationalist People’s Party. The KMT formed an alliance with the newly established Chinese Communist Party and both parties set forth on the uniting of the broken Chinese nation (“History of Nations: History of China”). The main goal of the alliance was to re-establish a military presence that could take back the country and drive out the warlords and unify the government. After years of military training, an army led by Chiang Kai-shek joined with armies of the Communist Party of China and began the Northern Expedition in an attempt to begin the unification of the government. An attempt that did not fare well for the CPC, as a split between the powers, caused most party members to be arrested or killed. It was during this time called the “Long March” that the remaining members of the CPC formed a small base in the Jinggangshan Mountains, near the province of Jiangxi under the guidance of Mao Zedong and Zhu De (Guo 65). After wars and civil uprisings throughout the years that followed, Mao Zedong with the help of the Soviet armies, defeated the KMT and officially established the People’s Republic of China in 1949 (“History of Nations: History of China”).

Under the new leadership and new ideology of government the once fragmented country of China was now on the way to becoming a unified country once again. The familiar system of imperial rule was no more and the community was “defined as a coalition of four social classes: the workers, the peasants, the petite bourgeoisie, and the national capitalists.” (Poon, “The People’s Republic of China”). These four classes were led by the Chinese Communist Party, claiming a huge number of party members, all under the chairmanship of Mao.

Under the rule of the communist regime, the redefinition of the social structure of China underwent a drastic change. The traditional structure and ideology of collective society were destroyed and in “place of the authority of traditional collectives, “new units” of collective identity were introduced…” (Guo 71). It was through various movements that the communist party was able to implement these new ideas within society. One of these movements, the Five-Year Plan as it was known, placed a huge emphasis on “industrialization, collectivization of agriculture, and political centralization” (Poon) in an effort to transition into a socialistic government system and establish a stronger economy for the country. With the success of China’s first Five-Year Plan, Mao Zedong wanted to take the economy even further and surpass those of America and Britain.

To accomplish his goal of surpassing the economy of America and Britain, Mao Zedong proposed a plan known as The Great Leap Forward in 1958. It was Mao’s belief that through the development of agriculture and industry, China could achieve this dream. The country was divided and restructured into local communes in which individuals gave up their ownership of animals, land, tools, etc. Instead of working for themselves or family, people now worked for the betterment of the commune and in return, the commune provided schools, elderly care, and nurseries; enabling all adults to work without worries of these matters (Trueman, “The Great Leap Forward”).

A year after its incarnation, The Great Leap Forward movement began to see turmoil as “political decisions/beliefs took precedence over common sense…” and with these decisions “communes faced the task… they were incapable of achieving” (Trueman) leading to the movement’s downfall. The failure of the Great Leap Forward ultimately led to Mao stepping down from the leadership of the People’s Republic of China. Over the next few years, Mao launched another campaign to cleanse “the ranks and clean up politics, the economy, organizations, and ideology…” (Guo 78) which was known as the “socialist education movement” and used this to purge elements of corruption from the party and government. It was not until after the death of Mao Zedong in 1976 and the arrest of the Gang of Four, close allies of Mao during the Cultural Revolution, that major changes were made to mend the crippling economy.

The Communist Party of China remained committed to the ideologies of Marxism, Leninism, and Mao Zedong thought and continued to campaign against thoughts that deviated from the party ideas. They refocused central task towards economic development and rehabilitation of those who had been prosecuted during the political movements in years prior (Guo 81). The post-Mao reforms established the end of the Cultural Revolution, blaming the incidents entirely on the Gang of Four, and reasserted the ideology that “the fundamental task of the party in the new historical period is to build China into a modern, powerful socialist country by the end of the twentieth century” (Poon).

Reformation of post-Mao China did not happen suddenly; policies slowly changed the standards of living, encouraged arts, and allowed intellectuals to establish links with scholars in other countries. On the supplementary side of the reforms were inflation, urban migrations, and the public’s request for quicker reforms. These issues led to public protest and the resignation of Hu Yaobang, the advocate of the reform, who was blamed for the public outburst. It was not until early 1992 that interest in economic reform was once again brought about through Deng Xiaoping, who pushed for a market-oriented economy (“History of China”). Deng and his supporters disputed that managing the economy in a way that improved standards should be China’s main policy objective, even if that meant adopting some non-communistic measures.

Despite the major improvements to China’s economy and improving the state of the country, the institutional barrier of the world market remained. In order to continue to progress and fulfill the dream of sustaining a growing economy, China needed to enter the world market and adapt governmental policies to interact with the other countries of the world. As the economy in China has changed, the laws and policies have also changed to educate and teach trades to the inhabitants in order to promote a larger grouping of skilled workers. The problem arises when the lower levels of governments are inconsistent in the “implementation across the country… some provincial and local governments proactively implement the law…” providing the pool of skilled laborers for the community, while others “continue to treat vocational education and training as a low priority and make little effort or investment in improving worker’s training” (Xu & Lam 7) leaving the economy to suffer.

Currently, the state of educated and uneducated workers in the export-based and labor-intensive industries of manufacturing have been a major driving force in the growth of the economy because “the opportunity to generate value-added revenue is low and advanced technical and education requirements are therefore unnecessary” (Xu & Lam 7). This cheap labor was the cause of foreign investments, which caused an enormous stimulation of economic growth in the urban areas, significantly increasing the manufacturing sector and the need for cheap labor. Another contributing factor to this sudden growth was the influx of rural-urban migration due to wage differences in agricultural and manufacturing sectors (Xu & Lam 13). With the borders now open to foreign investments and an expanding economy, China still had barriers to overcome in the form of international expansion and competitive edge.

In order to develop the economy for the increasing expansion, the government gave support to the development of township, collective and self-employed enterprises. According to Cardoza et al. The next stage was to encourage those of the privately owned corporations; achieved through acquisitions, mergers, joint ventures, contracting, liquidation and further development of non-public areas. Finally, a law was passed that eliminated institutional barriers and promoted upgrading technology (5). They also state that despite the disadvantage China has internally in regards to their infrastructure, policy, frameworks, and protection systems for intellectual property and the over regulation of the domestic market; China is able to maintain a competitive edge by seeking the technological and other resources needed to overcome these disadvantages by establishing firms abroad (5-6).

Most recently an article by Kevin Hamlin and Xin Zhou of Bloomberg states that China has boasted bigger roles for markets “while maintaining the state’s dominance in the nation’s economic strategy…” and to do this, China is “seeking to balance finding new sources of growth with sustaining the Communist Party’s grip on power” (“China Vows Bigger Role for Markets as Party Closes Summit”). Through a decisive allocation of resources, the state will continue to remain a dominant factor while reducing the involvement of the government. Hamlin also states that since the country decided to build a socialist market, markets have a role in allocation of resources, words that have been repeated by China’s president Xi Jinping that China would “let the market play its basic role in allocation resources to a greater degree and wider scope” (Jinping, Deepening Reform and Opening up and Working Together for a Better Asia Pacific). President Xi also states in his speech that China will improve the economic system, strengthen the market system, advance institutional reform, tax systems, etc in an effort to help the Global Economy thrive and “ensure and improve people’s well-being on a priority basis, promote social equality and justice…” adjusting policies that will in turn bolster a greater economic growth for all.

Therefore since China has a large presence in the Global Economy of the World Market its policies are still continually changing. Recently President Xi boasted market allocation and less governmental influence, and the increased support for the training and support of skilled workers; China has altered internal policies greatly from the post-Mao reforms and has risen to economic greatness because of the reorganization of the way China handles internal and external policies. China has risen from the once fragmented nation crippled through various wars and foreign rule, by adapting and continually reforming its governmental policy for the betterment of not only the country itself, but the global economy as well. This continuous reformation of policy is likely why China was able to become what it is today.


Allingham, Philip. “England and China: The Opium Wars, 1839-60.” The Victorian Web. Jun 2006. Web. Nov. 2013.

Cardoza, Guillermo, et al. The Influence of Public Policies on Chinese SMEs’ International Expansion. Chinese Globalization Association. 2013. Web. Nov 2013.

Click to access Cardoza_The_influence_of_public_policies_in_the_Chinese_SMEs_national_and_inte.pdf

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