Despite China's phenomenal success over the past 60 years, problems will accumulate unless national economic reforms are thoroughly implemented. It could be hard to avoid falling short of success during the last big push despite great accomplishments during the 31-year period of reform and opening up. If this happens, China's economy will lose a dependable foundation. China's economic reforms have already waded into deep waters. If it is said that in the early days of reform all society benefited, then now at this new stage of reform it can be said that certain entities including the government may lose certain vested interests. But now, there is no turning back. And there is reason to expect that more practical and effective reform plans will be push the country forward. —— Caijing editors
Taking Root
China as a nation has experienced great challenges as well as adversity since 1949. Success in dealing with these challenges can be attributed in no small part to the market reforms introduced over time. And the reform process is not complete. Only if China draws on the lessons of 60 years can the country permanently overcome today's challenges and realize the dreams attached to China's rapid rise on the world stage.
The sound of a firearms salute on Tiananmen Square during the nation's October 1 anniversary celebration welcomes a new era. Nonetheless, the success has a dark side. China's great economic recovery has caused some to grow boastful and think rashly, overestimating their abilities.
The process of hurriedly adopting a socialist transformation by implementing the Soviet model for a centrally planned economic system did not stimulate the country's creative enthusiasm. On the contrary, it created a situation without proper incentives and lacking vitality. As a result, reform rose to a high place on the national agenda.
China, like the Soviet Union and East Europe socialist countries, attempted some economic adjustments starting in the 1950s to reduce inefficiency in their centrally planned economic systems. To inject vitality into China's economy, an "economic management system reform" plan was put forward in 1956. It aimed to implement some policy adjustments while maintaining the framework tenets of public ownership and a planned economy.
More than 20 years later, after much trial and error, the correct path to instituting market reforms gradually became clear. Even still, there were diverse opinions when questions were raised about how – and what kind of -- market economy to establish.
Now, China has successively adopted numerous measures to transform its planned economy into a fully functioning market economy. These measures have roots in different schools of thought in terms of economic theory. Over the years, goals and directions of the measures were often very different -- sometimes even contradictory.
In this article, China's primary reform measures will be used as benchmarks of the decades-long process. Economic reforms will be separated into three stages, the merits and faults of each reform measure discussed, and the effects of reform on China's economy and development path analyzed.
During the first phase, from 1958 to '78, the government implemented a decentralized command economic system. The focal point of reform was the central government's delegation of power and yielding of profit-making to lower levels of government.
The second phase stretched from 1979 to '93. This was a phase of increased reform that saw a greater focus on promoting the economy in areas beyond state-owned entities. Private enterprises grew in strength, which moved forward the entire national economy.
The third phase began in 1994 and continues today. It is a push-forward phase, with the goal of establishing a market economy and carrying out comprehensive reforms.
In China's reform process, elements of each phase are intertwined. Reforms implemented in the early phase often contained elements that were seen in measures during later phases, and vice versa.