Opening Up One Step At A Time

During the second half of the twentieth century, China’s position in the global economy could be described as a social awkward teenager that matured into a responsible and social adult. China’s transformation was gradual but each step along the way had great significance on the country. China’s economy became very lucrative for foreign business enterprises and investments.

One big step that proved the very fruitful for China’s economic growth and prosperity was when China expanded the number of countries it had connections with. In the 1970s and 1980s, China began to open its door and expand its list of nations that it had established ties with. “The number of countries that established diplomatic relations with the country rose from 57 in 1970 to 137 in 1989”. ^[1] The most important diplomatic relation for the Chinese was establishing a connection with the United States. The Taiwan question slowed down the diplomatic process for both nations until the Shanghai Communiqué was created in 1972. However, full diplomatic relations didn’t begin because of domestic problems in both nations until Deng visited the United States in 1979. The first corporate agreements from Coca-Cola and Boeing were only the beginning as the number of “U.S.-based firms greatly expanded their operations in Chinese investments and trade”. ^[1] To capture even more attention from foreign investors, China “provided low tax rates, convenient transportation networks, new industrial plants, and a well-trained, cheap labor force”. ^[1]

A second big step for China’s prominent emergence onto the global economic stage was when China sought to join international economic organizations. The World Bank, the International Monetary Fund, and the Asian Development Bank were all international economic organizations that provided low-interest loans and technical and economic advice. China would gain entry into the World Bank and the IMF after both organizations expelled China. With China’s new entry into the World Bank and the IMF in 1980, China had to abide by international guidelines and more open about its economic realities.

By opening up to more foreign nations, China was able to attract more business and investments, due in part to the many perks that investors enjoyed. China’s willingness to become a part of the international economic system brings prestige to their economy and could open the door to many more economic opportunities. I think that it is because of these two factors that China’s economy has morphed into powerhouse that it is.

1. Schoppa, R. Keith. East Asia: Identities and Change in the Modern World, 1700-present. Upper Saddle River, NJ: Pearson/Prentice Hall, 2008.
2. “Deng Xiaoping in Cowboy Hat.” Deng Xiaoping in Cowboy Hat. Accessed May 03, 2015. http://english.cri.cn/6909/2011/08/11/1781s653051.htm.