ABSTRACT
The high growth rate of the 1990s was achieved within the accelerated reform aimed at moving China toward a market-oriented economy. The non-state economy became the main force in national economic development. Since China is a huge country with enormous market opportunities, the present excessive capacity is not due to a limited domestic market, but rather to the underdevelopment of this domestic market, especially the rural market. China’s prosperity, from the beginning of the reforms until today, is a result of an export-driven economy replacing an import-substitution domestic demand economy. The development of the rural areas has been the key issue for China’s development. Since the beginning of the reforms, non-farm development in the rural areas has made great progress. The Chinese economy as a whole has developed an adaptable expectation for the inflation rate in recent years.
