China Seeks Free-Market Revolution
For more than 2000 years, China had a ‘self-reliance’ policy that caused China’s economy to lag far behind advanced economies. In 1978, China adopted a new policy of economic reforms that are transforming one of the poorest economies in the world into one of the fastest growing.
The rural economy is central to China’s economic reform because about 70 percent of its population lives in rural areas. In the past, farmers worked collectively in people’s communes. The government told the farmers what to produce and how much to produce. They could sell their products only to the state at a price fixed by the government, rather than in markets.
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The get-rich-quick mentality has soaked up so much precious cash that hundreds of millions of farmers have been paid government-backed IOUs for their crops for two years running. Riots farmers fed up with that system have been reported in 11 provinces.
Now Beijing is scrambling to rein in growth before the economy – and soil unrest – spin out of control. But stuffing the genie back into the bottle might prove difficult. The flood of money has created a bubble, particularly in stocks and property, making some people in China very rich, very fast. The China Daily, China’s official English-language newspaper, recently heralded the existence of 1 million millionaires……… These millionaires, many of whom just five years ago were still wearing Mao outfits and following the party’s socialist dictates, now sport stylish western-style suits with the label ostentatiously left on the cuff.
Another article describes international trade problems.
The signs elbowing for attention on bustling Nanjing Road seem to scream in English. Coca Cola! Kentucky Fried Chicken! Motorola pagers! In most sectors, competition has grown fierce and profit margins are narrowing. Deregulation of this state...