An examination of China's economic growth and how reform initiatives relate to it

Abstract

The vast majority of models that attempt to explain democracy point to the economy as a precursor to major political liberalisation. Depending on the model, either severe economic crises or rapid economic development are seen as the primary component of the driving force behind democratic transitions. On the other hand, the leaders of the Chinese Communist Party have been able to avoid the socialist social contract with the urban working class without relinquishing their grasp on power. In addition, China's economy has been expanding at a high rate for about twenty-five years without seeing any significant political change. To get an understanding of China's post-1978 reform efforts, it is necessary to compare China to both other high-growth East Asian nations and also to other kinds of socialist transition, such as that which occurred in Russia and Eastern Europe. The manner in which and the timing of China's liberalisation of its market for foreign direct investment (FDI) will have a significant impact on the country's ability to carry out economic reform without jeopardising its ability to maintain political control. This comparative study takes into consideration a number of important elements, two of which are China's ownership diversification pattern and China's manner of integration into the global economy. This study investigates the effect that the liberalisation of foreign direct investment (FDI) has on the interactions between workers and political parties, as well as how these two elements contribute to the realisation of economic reform even in the absence of political liberalisation. When applied to China, the concept of "reform and openness" has sped up the process of developing the state, weakened civil society (especially the labour movement), and slowed down the liberalisation of democratic institutions.