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Question

In what ways does the present Chinese economy differs from its command economy?

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Solution

The differences between the present Chinese Economy and its Command Economy are presented in the table below.
Present Chinese Economy Command Economy
a. In 1978, under the leadership of Deng Xiaoping, China announced the ‘open door’ policy and brought about major economic reforms that sought to encourage the inflow of private investment and technology. After its inception in 1949, China followed the Soviet economic model with a planned economy under the control of the a State. which established complete control over industries.
b. It introduced the model of market economy and gradually brought about changes, encouraging privatisation of agriculture and industries. It followed the policy of import substitution and export promotion to receive foreign exchange.
c. This model opened up the Chinese Economy to the rest of the world and eliminated trade barriers. It also increased the role of private entrepreneurs. This model established strict control by the State, with no room for private entrepreneurs or investment.
d. Special economic zones were created to encourage private investment. It enhanced personal incomes and provided greater choice to the consumers. It ensured social welfare, education and health to all. The State also ensured employment to all.

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