40 Years Of Reforms And Gold

The economic development of China is one of the most important events in the history of the world. In an unprecedentedly short time, millions of people have been taken out from poverty. But, as no country has ever developed so fast, that great story raises important worries. We invite you to read our today’s article about the great progress China made in the last forty years and find out whether it’s too good to be true and it must end with some catastrophe, triggering rally in the gold prices.

One of the biggest risks for the global economy which can materialize this year is the slowdown of China’s economic growth. So, it is wise to analyze the current state of the Chinese economy – its implications for the gold market and what will happen next. As December 2018 marked the forty years of market reforms in China, we will adopt a long-term perspective, explaining how China transformed itself from a poor, backward and isolated country to the world’s economic power. We will examine what the global economy and the precious metals market can expect in China’s fifth decade of reform and development.

Emancipate the mind, seeking truth from facts and unite as one to face the future” – these are the famous words Deng Xiaoping said in December 1978, triggering China’s economic reform and opening to the international economy. Initially, the changes were rather modest, in line with the “bird-cage economy”. The market was compared to a bird, which had to be contained, as otherwise, it would fly away. The planned economy was still in force, but with market experiments. The reforms were implemented gradually, often started in only a few regions – the leaders expanded them upon proven success, in line with the country’s motto “crossing the river by feeling the stones.”

But when the Soviet Union collapsed, China decided to speed up its transformation. The government did not merely reform the socialist economy, but it opened the economy and included market mechanism wherever possible. The next turning point was in December 2001, when China joined the WTO. The country then received a new powerful impulse for modernization, rapidly changing its status of a developing state into a reviving power. In 2009, China became the largest exporter on the globe (and in 2014 the largest trading state) and one year later, the second economy in the world.

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