Since the implementation of the Open Door Policy and economic reforms, economic growth in the PRC has been rapid. Graph 1 depicts economic growth in the PRC since the 1950s, and presents a corresponding view of Australia's economic growth patterns.
China's Economy After 1978 (circa 1992)
After its defeat of the Nationalists in 1949, the PRC faced the immediate problem of rebuilding an economy that had been ravaged by civil war and Japanese aggression.
The PRC's Industry Structure
Domestically, modernisation and economic growth has been the focus of the reformist policies introduced by Deng Xiaoping, and in attempting to achieve this, the leadership has implemented the Four Modernisations Programme that lays special emphasis on the fields of agriculture, industry, education, science and technology, and defence.
International Trade After 1978
After the PRC government adopted the open door policy in 1978, its foreign trade grew rapidly as exports rose to promote economic growth and pay for the increased volume of imports.
Direction of Trade
China's distribution of foreign trade is focused primarily upon the Capitalist countries. Obviously, this is because it is mainly the Capitalist countries that have the funds and technology which China needs for its industrialisation - the most notable examples being Japan, the US and Hong Kong. Along the way to industrialisation, the PRC has established trading contacts with most countries - regardless of ideology.
The PRC's Financial System
The PRC's financial system is highly regulated and relatively underdeveloped, but has recently begun to expand rapidly as monetary policy becomes integral to its overall economic policy. As a result, banks are becoming more important to the PRC's economy by providing increasingly more finance to enterprises for investment, seeking deposits from the public to mop up excess liquidity, and lending money to the government.
The PRC has a dual currency system. The value of the local currency - Renminbi (RMB or Yuan)- is fixed by the People's Bank of China on the basis of movements in a mixed basket of the currencies of its major trading partners. The RMB is non-convertible, and its export is prohibited without official permission. Purchases of imported goods are permitted only in special stores in exchange for foreign exchange certificates (FECs).
Savings and Investment in the PRC
One of the most prominent characteristics of the PRC's economy has been its people's high propensity to save. This has occurred more as a result of a lack of consumer goods than a genuine desire to save, however. During the 1980s average gross domestic saving as a percent of GDP was 32.5% - higher than any other country in Asia - and during its peak in 1990, gross domestic saving in the PRC reached 39.2%. Coupled with this as been a high propensity for the government and TVEs to reinvest in capital construction projects.
The PRC's 'Four Modernisations' programme has resulted in an effort to attract foreign investment and the promotion of joint ventures with foreign enterprises and governments.