Chinese economic systems before and after 20th century Essay

Chinese economic systems before and after 20th century - Essay Example They exported tea and porcelain products to various countries but after the 16th century, they lost their position on account of the closed door economic policies of their governments. By the 1950’s, China was producing only 10% of the world’s GDP. However, with the formation of the People’s Republic of China, there was a concentration on export oriented growth and China opened doors to the world. Early Chinese was an agriculture based economy. The economy was mostly centralized and was dominated by the bureaucratic class. The bureaucracy and gentry of imperial China were quintessential rent seekers (Maddison 2007). The bureaucracy was totally controlled by the various rulers but the bureaucrats had full freedom to run the show in the provinces they were in charge of. Thus, there was complete dominance of the urban life by this class. The lucrative business activities were impeded by the red tape. Hence, most of the big businesses were owned only by the government enterprises. There was to protection for investment by the private individuals. China’s merchants, bankers and traders did not have city charters or legal protection and international trade and intellectual contacts with the western world was completely restricted (Maddison 2007). From the beginning of 18th century till the mid 19th century, the country was plagued with many internal disorders. These rebellio ns and wars devastated the economy. Some of them were – The Taiping rebellion, the Muslim rebellions in Shensi, Kansu and Sinkiang, wars with France, UK, Japan and Russia (Maddison 2007). The financial sector of the country before 1978 was not developed much. There was only one bank, the People’s Bank of China (PBOC), which was completely controlled by the government (Brandt, Rawski and Lin 2005). This bank received budget from the government and was the sole supplier of money to all government agencies. All government units, military units and cooperatives