1 - Economic Reforms in China and Their Impact on China-ASEAN Economic Relations

Summary

I. Introduction

Since its inception in 1978, China's economic reforms have attracted world-wide attention. Their successful implementation is not only crucial to the development of China's domestic economy, but also highly significant in promoting China's economic ties with foreign countries. The ASEAN countries are China's close neighbours, with whom China sincerely aspires to promote vigorous economic relations on the basis of equality and mutual benefit. This relationship hinges upon numerous factors, the most important of which are: firstly, the economic policies, structures, and development of China and the ASEAN states; and secondly, the pattern and development trends in the world economy. China's economic reform, a most assiduous, complex, and time-consuming undertaking, constitutes a long-term factor that will affect the economic relations between China and the ASEAN nations. What is the nature and trend of China's economic reform? And what impact will it have on prospects for China-ASEAN economic relations? These are matters of general concern to the ASEAN countries.

This paper is divided into three parts: first, an overview of China's economic reforms; second, China's economic structure and related policy reforms; and third, an analysis of the impact of China's economic reforms on China-ASEAN economic relations.

II. An Overview of China's Economic Reform

The economic reforms in China involve two interrelated aspects of structural and policy reforms, with focus on the former. The original economic structure characterized by centralized economic planning took shape in the late 1950s. The merit of such a structure lies in its centralized and unified planning which facilitates the mobilization of vast human, material, and financial resources for major projects vital to the national economy and the people's livelihood. It played a significant role in laying the foundation for China's socialist industrialization and in setting up an independent and comprehensive system for the national economy. Yet it also had serious flaws, manifested mainly in: excessive concentration of economic decision-making power; over-emphasis on mandatory planning; neglect of the development of the commodity economy and the regulatory role of the market; and lack of enterprise vitality and low economic returns.