ABSTRACT
China formally started its strategy of economic reform and opening up to the outside world in 1978 in order to achieve the objective of modernisation. On the domestic front, local experiments in the household responsibility system (HRS) in the agricultural sector were extended across the nation, and town and village enterprises (TVEs) were rapidly expanded. The success in economic reforms in the agricultural sector provided a strong impetus for reforms in the price system, state-owned enterprises, and banking and finance. On the external economic front, China formulated the Joint Venture Law in 1979, permitting foreign direct investment (FDI) for the first time since 1949, and the foreign trade and exchange rate systems were liberalised. In response to the progress in economic reforms and opening-up in the past two decades or so, the Chinese economy has achieved a spectacular annual growth rate of over 8 per cent, and China is now among the top trading countries and a major host for FDI inflows in the world. The entry into the World Trade Organisation (WTO) makes it necessary for China gradually to establish an economic regime with economic mechanisms that are more harmonised to those of the advanced market economies, and this will promote further reforms and opening-up, and will accelerate economic growth.
