The purpose of this research is to examine the economic reforms in the Peoples Republic of China (PRC). These reforms began in the late 1970s, and are continuing in the late 1980s. The extent and character of the economic changes occurring in the PRC are such that they have been referred to as an economic revolution by some observers, although retrenchments in 1988 have dulled some of their revolutionary luster. In this research, a particular emphasis is placed on foreign participation in the Chinese economy, which is provided for through the reforms.
CHINESE ECONOMIC DEVELOPMENT
For most of the first three decades of the PRC's existence the country came into being on 1 October 1949 (Paxton, 1988), it adhered strictly to Marxist theory in the management of its domestic economy. Mao Ze Dung's denunciation of market economic theory as being the "capitalist road" (Feuchtwang, & Hussain, 1983, p. 1), did not deter the PRC from following, initially at least, a relatively liberal economic policy with respect to international trade. In the beginning, the PRC was prepared to deal with all other countries, regardless of political orientation, so long as those dealings were mutually beneficial, and as long as no political strings were attached. As time passed, and as western countries, particularly the United States, tended to shun economic intercourse with China, however, the PRC came to rely more heavily on other socialist countries for its international trading needs.
When Chairman Mao died, and the last of the "Red Guard" influence was purged from the Chinese political environment, however, a government with more pragmatic economic views gained power. In 1978, this new government initiated a series of economic changes in the PRC, which were referred to as readjustments. These economic readjustments, which were continually expanded through early 1988, brought about, and continue to cause th...