International Economic Development

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How does the government type of China affect its economic system?

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The political system of China has evolved substantially over the half century of its rule by the Chinese Communist Party. During that period, China has seen substantially economic, if not political, liberalization. One factor that has remained consistent over the period is a great degree of central economic planning.

The first distinctive feature of the Chinese economy is that it follows a series of five-year plans. The initial focus after the Chinese revolution was redistribution of feudal landholdings to farming collectives and intensification of agriculture to create food independence. 

The next distinctive feature of the Chinese economy is that what are considered strategically or nationally important economic activities are dominated by State Owned Enterprises, rather than by private individuals.

Next, both the flow of capital and information is restricted by the state, often leading to extreme forms of economic protectionism. 

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