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China's Economic Policy in the Context of the Asian Finanacial Crisis

  • Economics
  • Medicine
  • Political Science


s165 97..108 /3d/journals/per/5-1/s165/s165.3d Pacific Economic Review, 5: 1 (2000) pp. 97–107 PERSPECTIVES ON PUBLIC POLICY CHINA’S ECONOMIC POLICY IN THE CONTEXT OF THE CURRENT ASIAN FINANCIAL CRISIS Gregory C. Chow� Princeton University, USA Abstract. This paper is based closely on the author’s Y. C. Jao lecture presented to the Hong Kong Economic Association in November 1998. Since economic reform began in China two decades ago, the rate of growth in real output has averaged over 9.5 percent per year. This remarkable achievement has attracted much attention all over the world. Two conclusions can be drawn from this experience. First the change from a centrally planned economy to a more market-oriented economy improves economic efficiency. Almost all other formerly socialist planned economies have since adopted market institutions. Second, well-functioning market economies can take different forms. In many respects China’s market economy has its own characteristics. The fact that it has performed well suggests that different forms of market institutions may fit different social and economic environments. Even the developed market economies in different continents are different. By studying the Chinese economy as an important case we can better understand the market economy and formulate economic policy. As the Chinese economic institutions have been evolving, gradually by the standard of shock therapy but very rapidly as judged by the great adjustments required for the changes made, the study of the Chinese economy has emphasized institutional reform rather than economic policy. As the institutions become more matured and as the financial crisis beginning in Asia creates serious economic problems for China and the rest of the world, the study of economic policy in China receives more attention. From the viewpoints of the Chinese government and observers of China’s long-term development, economic reform still takes priority and serves as the basis on which economic policies ar

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