ABSTRACT
This chapter examines the main changes in the economic policy after 1978 will be highlighted and their domestic and external implications. It provides an overview of the features of Mao's economic policy and then the economic policy in the reform era. The chapter also examines the implications of the economic policy in the reform era for domestic politics and institutions. It devotes to the linkages of China's economic reform with global institutions, such as the World Bank, the International Monetary Fund and the World Trade Organization. China's economic reform was first launched in the countryside, before spreading to opening, non-state enterprises and SOE reform. Later, decentralization, pricing reform, fiscal and financial reform, and other reforms were undertaken. The sectors thus have become the primary contributor to China's phenomenal economic growth in the reform era. Since 1998, the People's Bank of China has frequently used the interest rate as an instrument for macro-economic management.
