China in the Global Economy: Market Socialism and its Pitfalls

Abstract

Since the reforms instituted by Deng Xiaoping in the 1970s and 1980s, mainland China has progressively grown closer to the free-market system touted by Western powers, though its transformation has been carefully monitored and controlled by the state along the way, giving rise to the description "Socialism with Chinese Characteristics. "China in recent decades has seen the growth of township village enterprises (TVEs), which gave local farmers the freedom to sell their surplus in an open market. Chinese controls on foreign investment and ownership have eased while at the same time China has also eased its pricing system from a plurality of goods whose prices were set by the state to a system in which the prices of most goods now fluctuate with the market prices. Over the past two decades China has displayed an incredible rate of growth, with real growth of its GDP at 9.1% in 2004. There still exist however, major flaws in the system such as: the contention that China deliberately uses an undervalued currency to gain the upper hand in international trade, a bloated bureaucratic system that is threatened by the shift towards a less regulated economy, a widening generation gap between youth raised in a commercial age and their elderly elites, and the continuing struggle with maintaining socialist ideals in a country that is taking on a larger and larger role in the global economy.