China’s journey of market-oriented reforms, initiated in December 1978, continues to shape its economic landscape and significantly influence the global economy. As the Chinese mainland convenes the third plenary session of its 20th Central Committee from July 15 to July 18 in Beijing, the focus remains on deepening reforms and advancing modernization.
This ongoing transformation, often referred to as China’s second revolution, has revolutionized various sectors including the economy, politics, society, and ecology. The shift from a planned economy to a market economy has empowered market mechanisms in resource allocation, fostering the rapid growth of domestic enterprises, individual businesses, and foreign-invested institutions.
The private sector has emerged as a powerhouse in China’s economy, contributing over 50 percent of the country’s tax revenue, more than 60 percent of its GDP, over 70 percent of technological innovations, more than 80 percent of urban employment, and over 90 percent of all businesses. These figures highlight the critical role that the private economy plays in China’s sustained economic development.
Wenzhou, a city in Zhejiang Province, exemplifies the success of China’s market-oriented reforms. Once a poverty-stricken area due to its landlocked location and limited arable land, Wenzhou spearheaded the exploration of a market economy in the early 1980s. On December 11, 1980, the Wenzhou Municipal Administration for Industry and Commerce issued the first business license to an individual since 1978, marking the dawn of Wenzhou’s market economy.
Wenzhou continued to innovate by establishing the first specialized markets and the first \"peasant city,\" where peasants were allowed to establish rural enterprises. These initiatives laid the foundation for the renowned Wenzhou Model, characterized by household industries and specialized markets that overcame geographical and resource limitations.
The economic transformation in Wenzhou was astounding. The city’s GDP soared from 1.32 billion yuan ($182 million) in 1978 to 82.8 billion yuan ($11.4 billion) in 2000, achieving an average annual growth rate of 15.6 percent. This remarkable growth not only elevated Wenzhou’s economic status but also significantly improved the living standards of its residents.
China’s persistent efforts to enhance the business environment and foster private sector growth continue to drive its economic success. The story of Wenzhou serves as a testament to the effectiveness of China’s market-oriented reforms and underscores the ongoing journey towards comprehensive modernization.
Reference(s):
China's market-oriented reforms: Always ongoing and never completed
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