China – Development in Progress, How a shift in the Political System is Changing China’s Economic Path

Abstract: This paper is arguing that China’s political and economic opening in 1978, also referred to as China’s open door policy, was initiated by a change within China’s institutions affecting the political as well as the economic system. Since the opening in 1978 up until today (2012), constant economic reforms and developments as well as political progress can be observed. Domestic examples of China’s political and economic developments can be found by looking at the increase of property rights, the establishment of a private sector economy, the development of a democratic system on the grassroot level for village elections, the increase in the Human Development Index (HDI) and the massive reduction of poverty. Global examples can be seen in the fast increase in China’s total trade volumes since 1978 and the interconnections of the global and the Chinese marketplace, as well as China becoming the second largest economy worldwide and its joining the World Trade Organization (WTO) in 2001. All these developments can be traced back to institutional progress in the political sector, setting off a process of liberalization, also referred to as “Federalism Chinese Style”, which directly correlates to China’s rapid economic growth.