Assessment of the Current State of China's Economic Reforms

The World Bank in its World Development Report 1996 outlined three challenges for countries in economic transition: (1) liberalization, stabilization, and growth; (2) property rights and enterprise reform; and (3) social policies that address the ill effects of transition on particular groups. ¹ China scores highly on liberalization, stabilization, and growth, the core reform package. By the mid-1990s China’s economy had largely been liberalized: China’s economy enjoyed mostly market-determined prices, current account convertibility, falling import tariffs with few remaining export controls, free entry to many sectors, a rapidly growing private sector, and a sharply reduced number of state monopolies. The most recent period of overheating with a short inflationary bout (1993 to 1994) ended in a soft landing, and real economic growth throughout the reform period averaged 9.5 percent per annum. The first item in the World Bank’s list of challenges for transition economies thus no longer poses a challenge to China.