The Underlying Factors of Economic Growth in China in the 1990s

East Asian Economies have experienced an outstanding record of high and sustained economic growth over the period of 1990s. In the period of 1965 to 1990, East Asia’s twenty three economies grew faster than other economies of all other regions. Most of this success is attributable to seemingly miraculous growth in just eight high performing Asian economies (HPAEs). Among these high performing Asian economies, China ranks as the world's 2nd largest economy after the United States since 2010. It has been the world's fastest-growing economy with consistent growth rates of around 10% over the past 30 years. A major contributor to China’s extraordinary growth has been its economic reforms coupled with the implementation of unorthodox policies.

China’s success was first observed after it experienced a key change in the political and economic structure, when Deng, a pragmatic leader, came into power. He consolidated his power and began to put his realistic policies to work, in order to bring China back from the destruction that the Cultural Revolution had brought. Since 1978, China has begun to make major reforms to its economy. Political and social stability, economic productivity, and public and consumer welfare were considered paramount and indivisible.

In 1978 China’s majority of the peasantry was still structured in communes, work brigades, and production teams. Production costs were not even covered by procurement prices which were too low, and ceilings were placed on the quantity of grain that producers could retain for consumption. When Deng came to power, he permitted farmers to produce individually and authorize the sale of excess production and additional cash crops in recently liberalize markets. Prices for various agricult...

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