How did the Chinese GDP increase so rapidly after 1990?

Asked 26-Dec-2022
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The Chinese economy has been one of the most remarkable success stories in modern times, with its Gross Domestic Product (GDP) rising at an astonishing rate since 1990. This is largely due to the Chinese government's commitment to market-oriented economic reform and its adoption of an open-door policy in 1978.

Before 1978, the Chinese economy was largely state-controlled, and the government imposed limits on private enterprise and foreign investment. In 1978, however, the Chinese government began to slowly but surely open its doors to the outside world and to the free market. This allowed foreign investors to enter the Chinese market and start businesses.

So, how did China's economy grow so rapidly?

  • First, China embraced market-oriented economic reforms. In 1978, the Chinese government implemented a series of reforms known as 'Reform and Opening Up,' which allowed for the creation of private businesses, foreign investment, and economic liberalization. These reforms created an environment that allowed the Chinese economy to grow rapidly.
  • Second, China's labor force experienced rapid growth during this time. As the Chinese population increased, more workers were available for employment, which allowed for rapid economic growth. Additionally, wages in rural areas increased, allowing for more money to be spent on goods and services, which increased economic output.
How did the Chinese GDP increase so rapidly after 1990
  • Third, China's infrastructure saw dramatic improvements. From 1990 to 2003, China invested heavily in transportation, telecommunications, and energy infrastructure. This allowed for goods and services to move more efficiently throughout the country, increasing economic output.
  • Fourthly, The Chinese economy also benefited from its access to the global economy. As the Chinese government opened up the country to foreign investment and trade, it allowed the country to benefit from technological advances and the increasing demand for its products and services. This access to global markets enabled Chinese companies to become competitive in international markets and to increase their exports and revenues. 
  • Finally, China's manufacturing sector boomed during this time. The Chinese government implemented policies to encourage foreign investment and technology transfer, which allowed for increased productivity and efficiency. As a result, China became a major producer of goods, creating vast export markets and increasing economic output.

All of these factors combined to create the perfect conditions for the Chinese economy to rapidly increase its GDP. From 1990 to 2010, the Chinese GDP increased by an average of 10% per year. This growth rate was unprecedented, and it helped to make the Chinese economy one of the most powerful and dynamic economies in the world.