CHINA'S ECONOMY AFTER FIFTY YEARS: RETROSPECT AND PROSPECT

Thomas G. Rawski
University of Pittsburgh
September 1999

As the People's Republic of China celebrates its fiftieth anniversary, economists look back on a remarkable kaleidoscope of events and policy shifts that, despite episodes of vast suffering and waste, have brought enormous material benefits to China's teeming masses. The economy inherited by China's new Communist leaders in 1949 was overwhelmingly agrarian, ravaged by twelve years of warfare, and wracked by hyperinflation. Despite the strains imposed by China's participation in the Korean War, the new government quickly resolved difficult short-term economic obstacles and embarked upon a long-term process of socialization and development.
China's experience of socialist planning, which roughly coincides with the period from 1949 until the death of Mao Zedong in 1976, left a mixed economic legacy. Like other socialist regimes, China's new leaders poured resources into activities and industries linked to the expansion of national power. Production of steel, machinery, and building materials multiplied prodigiously. China succeeded in fabricating nuclear and thermonuclear weapons. Although these advances relied initially on technical and financial support from the Soviet Union and its East European allies, China's success in penetrating new industries and mastering new technologies following the withdrawal of Soviet aid demonstrated that a succession of Five-Year Plans had propelled China to a new level of development.
In addition to steel and locomotives, socialism delivered important material benefits to China's citizenry. Although economists are still struggling to map out the exact dimensions of national product and other economic aggregates, demographic figures tell a remarkable story of improved welfare. Comparison of the census results for