Since December 1978, the Chinese mainland has embarked on an ongoing journey of market-oriented reforms, transitioning from a planned economy to a market economy. Over the decades, these reforms have continuously advanced, strengthening the role of market mechanisms in resource allocation and propelling exponential economic growth.
The emergence of domestic enterprises, individual businesses, and foreign-invested institutions has transformed the economic landscape. Notably, the private economy, once humble in its beginnings, has become a significant contributor, accounting for over 50 percent of the country’s tax revenue, more than 60 percent of its GDP, over 70 percent of technological innovations, more than 80 percent of urban employment, and over 90 percent of all businesses. These remarkable achievements underscore the success of China’s persistent efforts in improving its business environment.
A shining example of this transformation is Wenzhou city in Zhejiang Province. Once poverty-stricken due to its landlocked location and scarcity of arable land—approximately 353.34 square meters per capita—Wenzhou seized the opportunities presented by the reform and opening-up policies. In December 1980, Wenzhou’s municipal administration issued the first business license to an individual, Zhang Huamei, marking a significant milestone in China’s market economy.
Wenzhou pioneered several market-oriented reforms, establishing the first specialized market and the first “peasant city” of Longgang, where peasants were permitted to establish rural enterprises. Through household industries and specialized markets, Wenzhou overcame geographical and resource disadvantages, leading to rapid economic development, a thriving commodity economy, and significant improvements in living standards.
From 1978 to 2000, Wenzhou’s GDP skyrocketed from 1.32 billion yuan ($182 million) to 82.8 billion yuan ($11.4 billion), achieving an average annual growth rate of 15.6 percent. This remarkable growth became known as the “Wenzhou Model,” highlighting the impact of market-oriented reforms at the local level.
China’s commitment to market reforms is an ongoing process, always evolving and adapting to new challenges and opportunities. The success stories of cities like Wenzhou illustrate the profound impact of these reforms on economic development and societal progress. As China continues to deepen its reforms and advance modernization, the journey of market-oriented transformation remains a driving force behind its growth.
Reference(s):
China's market-oriented reforms: Always ongoing and never completed
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