China's Economic Reforms in the 1980s and their Consequences

Abstract China's economic reforms in the 1980s have stimulated rapid economic growth, but the gradualist reform approach has also resulted in some significant structural and institutional problems. These cause an imbalanced structure of rural and urban industries, an increasing growth gap between three macro regions, a market-planning dualist price system and a mismatch between a partially market-directed micro-economy and an administrative-tools-dominated macro management, as well as the worsening of environmental problems. These consequences of the half-way reforms have had far-reaching effects on the long-term development of the country. It is stressed in this article that, in the process of market-oriented reform, creation of healthy structural and institutional conditions leading to sustained and stabilized growth is much more important than growth itself.