Economic Reforms in China: What Lessons for India?

Abstract

China started its market oriented reform process in 1978. Reforms have covered all major sectors of the economy including agriculture, industry, finance, international trade and investment. The major characteristics of reforms are managerial autonomy, decentralized decision-making and the opening up of the economy. Reforms have resulted in higher productivity and higher economic growth. China became the fastest growing economy of the world through the reform process. The entry into the WTO will further deepen the reforms. Recent years have witnessed dramatic rise in India's interest in China, mainly because of the poor performance of Indian economy as compared to China. India has lot of lessons to learn from China's reform process. Some of the lessons are: (i) India should give emphasis on agricultural sector which has been neglected so far in the reform process, (ii) efforts should be made to attract more FDI, (iii) trade should be liberalized more removing restrictions so as to integrate the economy with the world economy, and, (iv) attention towards the development of high quality infrastructure is essential. Precisely, India should push her second-generation reforms forward to catch up with China.