Has China developed because of state planning or the market mechanism?
China's economy, after the extensive reforms of Deng Xiaoping, is described as a socialist market economy. This constitutes an economy with private-run businesses while being centrally planned. Considering the recent 'development' of China, the question of what has driven this is key: has China developed because of state planning or the market mechanism.
One must consider that there is much debate over the extent of this development. China's economy has seen, over the past two and a half decades, a phenomenal annual growth of 8-9%. This is more than any other economy at present and even in the past this record of growth is challenged by few. China's $1.3 trillion economy is the second largest in Asia and figures released by China's National Bureau of Statistics in 2005 revealed that the country grew an amazing 9.5% from a year earlier to $379 billion in the first quarter. However this growth is to be expected from a country of such massive size and actually development in terms of human standards of living varies massively between different regions, especially between urban and rural areas. For example, Guangdong has GDP of $665 billion, equivalent to that of Indonesia whereas Tibet has a GDP equivalent to that of Malta. HDI, a measure of standard of living which takes into account life expectancy and education as well as economic progress is consequently incredibly varied because of this disparity of income. In evaluation, these low HDI measures may even be overestimated because of the censored nature of China's development and the rural areas are even excluded from the measurement.
However, given the context, China's economy is relatively booming compared with the period of economic devastation and low living standards before 1978. This massive improvement is often attributed to the economic reforms led by Deng Xiaoping which occurred in two stages. The first stage, in...