Rodrick (2006) argued that China managed to stir economic growth using experimental gradualism relying on markets, and relevant institutions within the nation. In this respect, trade was the primary driving force of China’s economy growth was international trade beginning since the 1980s. The country integrated itself globally using unconventional means like removing quantitative restrictions on imports, decreasing import tariffs and dispersing them, eliminating red tapes on direct foreign investments and change of laws among others. These aspects helped China to begin exporting specialized goods and gradually picked up sophisticated products. It placed itself at the center of global trade by producing products that poor nations would not. The focus on “not how much, but what” the country exported made it gain a comparative advantage over the other developing countries.
China’s sophistication of the economy increased profoundly after 1992, and it maintained it by focusing labor intensive and less sophisticated, but low-cost and high-volume goods in comparison to the other developed countries. However, there were exemptions such as TV that had high value than those from South Korea. The focus on particular goods such as electronic with massive markets across the globe coupled with extraordinarily cheap labor made China very attractive to foreign investors. Multinationals shifted their companies to the country something that made it grow in leaps as more people got jobs. Foreign companies brought into China technology and capital that boosted the state's exports. In the process, they also tremendously improved infrastructure that attracted more investors.
It is evident that that China’s approach has worked. It has managed to pull hundreds of millions of its people out of poverty and maintained a steady growth that developing countries could not achieve. Whether the policies are unconventional, random, and unique, they have at least propelled China to a global economic mover.
Reference
Rodrick, D., (2006). WHAT’S SO SPECIAL ABOUT CHINA’S EXPORTS? NBER Working Paper Series 11947. Pdf file.
