ABSTRACT

China was one of the poorest countries in the world before its transition from a planned economy to a market economy in 1978. In 2014, Chinese gross domestic product (GDP) measured by purchasing power parity overtook that of the United States, making China the largest economy in the world. China wanted to build the most modern industries to increase per capita GDP and strengthen national defense. China, however, enjoyed stability and continuous economic growth, while other countries suffered from economic collapse, stagnation, and frequent crises. The growth of consumption is the reason why the country has managed to maintain a growth rate of around 7 percent per year. China, along with other developing countries, needs to complete a transition to address domestic structural problems. A pragmatic approach to step-by-step development according to a country’s evolving comparative advantage is of great value for developing countries.