Ligang Song, Yixiao Zhou
Introduction
The growth performance of the Chinese economy since the early 1980s has been historically high, with an average annual growth rate of more than 9 per cent for more than three decades. No other large economies like China’s have ever expanded continuously at such rates for so long. China’s miraculous growth began with productive reforms in the rural sector in the 1980s and accelerated with reforms in urban areas, including, among others, ownership reform of state-owned enterprises (SOEs) and taxation and exchange rate and trade management system reforms in the early 1990s. This was accelerated in the early 2000s by China’s accession to the World Trade Organization (WTO), after which goods made in China had more open access to global markets, paving the way for China to become the largest trading nation and a global factory of manufactured products.
China’s domestic reforms go hand in hand with the opening of the economy, each reinforcing the other along the way. The deepening of its integration with the global economy has brought tremendous benefits to the Chinese economy, as evidenced by rapid growth in foreign direct investment (FDI), trade and flows of technology and knowledge. These linkages with the global economy facilitated China’s unprecedented levels of rural–urban migration, enabling the labour force to move from low-productivity work in the rural sector to urban employment with significant efficiency gains at higher income levels.
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