The Rise of China as the Industrial Nation.docx

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THE RISE OF CHINA AS AN
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TABLE OF CONTENT
1. Introduction ........................................................................................................................... 3
2. Literature review ................................................................................................................... 3
2.1. Theorical framework for industrialization. ........................................................................ 3
2.2. Theories on industrialization in China............................................................................... 7
2.3. Process of China’s industrialization .................................................................................... 8
2.4. Rethinking about China’s path of industrialization .........................................................10
2.4.1. The reasons for the intervene of government in economic development....................11
2.4.2. The role of government in the post development of China ........................................11
2.5. Comparison of the level of industrialization between China and India.............................12
2.5.1. The phenomenal growth of China and India.............................................................12
2.5.2. China’s achievement.................................................................................................12
2.5.2.1. Overall economic growth...................................................................................12
2.5.2.2. Growth in agriculture and productivity.............................................................12
2.5.2.3. Poverty reduction..............................................................................................13
2.5.3. India’s achievement..................................................................................................13
2.5.3.1. Overall economic growth...................................................................................13
2.5.3.2. Growth in agriculture and productivity ............................................................13
2.5.3.3. Poverty reduction..............................................................................................14
2.5.4. Difference, similarities and prospects of China and India.........................................14
2.5.5. Similarities between China and India. ......................................................................14
2.5.6. Difference between India and China.........................................................................15
2.6. Comparison of the level of industrialization between China and India.............................17
3. Some lessons drawn from experience in industrialization of China............................... 19
4. Conclusion............................................................................................................................ 21
5. Reference .............................................................................................................................. 21

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1. Introduction
Chinese industry has been developing rapidly for 60 years, especially 30 years recently.
China has change from a backward economy to one of the economic leader in the world. In the
last 20 years of XX century, China reached highest growth rate in their history, and also the
leader of the world, annual growth rate at 9.8% per year, in 2007 growth rate was 11.4%,GDP
was 2,200USD and stood 4th
in the world in 2007. Those achievements set up a channel of
questions and stimulate economist and policy makers in all over the world to investigate and it is
worth for the world to learn and apply in a creative way. It is the reason and purpose of the topic:
The rise of China as an industrial nation.
2. Literature review
2.1. Theorical framework for industrialization.
According to Szirmai (2009), industrial development is considered the driver of changes
in the structure of organization which has been key in the process of developing economy.
Moreover, Szimai also stated that most of recent research suggested that the development of
economy has required that there are the changes of activities from low to high productivity and
industrial sector becomes the important factor of growth in the process of development.
Regarding to modern economic development, all situations with high and rapid growth rate in
economy have associated with industrialization, especially in the process of manufacturing and
producing. Hence, as stated by Szirmai (2009), there exists the relationship between
industrialization and economic development.
 Theories and models
Rostow’s Model on five stages of Economic Development
According the development theory in Rostow’s Model on five stages of Economic
Development, industrialization has involved into the process of economic development at the
stage 3 named Take Off (Figure 1, p. ).

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Figure 1: Rostow’s Model – Five Stages of economic development
Source: Potter et al (1999, p. 5)
The first stage is Traditional society. In comparison with other following stages, this
stage achieves the lowest level of productivity because the economic system in this stage has
been dominated by the agricultural cultivating forms (Potter et al, 1999).
The second stage of economic development is The Precondition for Take-Off in which
the investment amount has been increased and nations in this stage will initiate the dynamic
economic growth. The development of economy in this stage has been considered the result of
industrial revolution. As the result of the transformation from tradition stage to higher stage, the
agriculture has still developed while the workforces are redundant under the influence of the
progress of The Precondition for Take Off.
The next stage is Take Off. In this stage, the nation has achieved the dynamic economic
growth. And the most important factor of this kind of development is self sustainable growth

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without any support from external inputs. As summarized from other countries which have spent
this stage Take Off, this stage lasts about two to three centuries.
The fourth stage of economic development is The Drive to Maturity. There are some
main events happening in this stage such as continual investment up to sixty percent, the
progress of economy and technology dominating this stage and some new forms of industries
such as mechanical engineering. Along with the economic progress, social prosperity has
increased. This stage usually starts about 60 years after the third stage – Take Off.
The last stage is named as the Age of high mass consumption. In this stage, society lives
as well as living standards become redundant and in the multiple of choices.
The Lewis Dual Sector Model of Development
This theory has been used with the purpose of explaining the drivers of changes in
structure of underdeveloped countries from agriculture to modern industry. During the period of
1960s and 1970s, this theory was applied and used popularly as the general theory for the
economic development. From this meaning, this theory comprises two sectors in the economy
such as agriculture and modern sector.
Regarding to traditional sector, with the continual increase of labor in this industry, the
marginal productivity will be zero. In this situation, labor with zero productivity has been
withdrawn from this industry while this action has no influence on the output. Hence, Lewis
named this industry as the surplus labor sector.
On the other hand, modern sector has achieved the high productivity than traditional
sector. Hence, labor from traditional sectors will move or be transferred to modern sector. With
higher productivity, this transfer of labor helps increase output as well as employment. The
expansion speed of this sector depends on some factors such as the growth rate of investment and
capital accumulation and the difference in wage between agriculture and modern sector.
Summary of some economic arguments from two models mentioned above
Firstly, there is the relationship or correlation between industrialization and capital
income in developing countries. As stated by Szirman (2009), the positive correlation of 0.79 is
for this relationship. However, there are some exceptions , firstly, some developed countries

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which are Norway, Canada and Australia have shown the correlation between industrialization
and development in economy; secondly, some developing countries such as Thailand, Brazil
have ranked higher in aspect of industrialization than in terms of economic development (Table
1, p. )
Table 1. Industrialization and per capita gross national product in 2000.
Secondly, with the higher productivity of industrial sector than agricultural sector, there
is the transfer of resources from traditional sector to industrial sector which can create the bonus
of structural change. This transfer can increase the overall productivity and income. Hence, it
plays the important part of economic development in developing nations.
Thirdly, in comparison with the agricultural sector, industrial sector has offered many
changes to accumulate capital in developing countries. Moreover capital has been accumulated
in industrial sector more than in agricultural sector. Hence, in developing countries, industrial
sector played the very important part of economic development. Especially, in some industries
such as mining, utility and transport, the level of capital accumulation is so high. However, in
developed countries, there is some different things. In developed countries, capital accumulation

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has concentrated into some small part of agriculture so there is the industrialization of agriculture
and the level of capital accumulation in agriculture is higher than manufacturing.
Fifthly, the industrial sector can give more chances for economic scale which has not
been available in some sectors such as agriculture and services.
Lastly, according to Cornwall (1977), the industrial sectors give more chances to apply
and embody technological process. In the real environment, technology advance has been
concentrated into the industrial sectors more than agriculture and service.
2.2. Theories on industrialization in China
In China, some socialists call industrialization a fight between conflict and harmony, to
some extent. In the battle, industrial policies have play crucial part in making economic
development, in case of China, according to Su Jing 2002, industrialization is defined mostly in
1970s. He analyzed China’s economic growth in terms of science and technology. Arthur
Kroeber( 2006) discussed how successful China’s industrial policies are. It described economic
growth models that are used in China and showed that policies have made success in creating
revenue and profit. His analysis noted that China shared some same figures as other neighbours
and her rapid economic growth was driven by transfer from agriculture to manufacture and
export- oriented industry. According to Chen and Shi, in 1980s, China focused on making the
reform of science and technology. Z.Tang ( 1997) noted that industry policy was effective in
changing the industrial structure and driving industrialization. There have been many researchers
who believe that FDI affect China’s economic quickly. They insisted that the inflow of FDI was
the main key for economic booming in China. But not only for FDI to create aggressive change
in economy, it is due to advanced technology. While there are some economists in China doubt
that FDI can bring back positive effect on China’s industrialization in particular. Sanjyaya Lall,
2003 said that there are links between competitiveness and FDI and domestic technological
effort. And there also statement that FDI and industrialization are two factors to push social
change. According to the synthesis of OECD9 (2007), the growth of expenditure is a signal that
reveals the government realized a close relationship between technology and industrialization
and so they show the determinants to improve the industrialized process.

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2.3. Process of China’s industrialization
Although there have been many difficulties in the process of industrialization, China has
gained worthy achievement in industrializing the economy. Those achievements are shown in
many sectors, especially the change in industrial sectors and GDP growth. Let us have a look at
the chart below to see how successful industrialization have been.
Chart 1. Industrial structure of China in 1978 and 2008
Data source : National Bureau of Statistics of China
The chart above illustrated the change in industry sectors in the last 30 years since
reformation and open- up policy was carried out. In 1978, the proportion of GDP was 24.4% and

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this figure increased to 40.1 % in 2008, which was a dramatic change. in fact, China has carried
out industrialization since 1949, at that time, People’s Republic of China was founded. The first
stage when China was founded, it was blocked out by Western countries, Soviet model set China
a good example, from then, China adopted planned- economy system. The unbalance between
heavy industry and light industry lead to a serious condition, that is overdevelopment of heavy
industry and underdevelopment of light industry. Although there is unbalance between heavy
industry and light industry, among primary industry, secondary industry and tertiary industry, it
is admitted that industrial growth in that period was base and preparation for further
industrialization in the future.
In 1970s, China carried out strategy of reforming and open up the economy and adopting
the market economic system, it was the beginning of second stage of industrialization. The
consequence in that period is positive, China no longer close its door to the international market
and gradually attract more and more FDI to create economic growth. Since the time of reforming
and open- up, China’s manufacturing industry has experienced rapid development and made
gradual progress. In 1990s, almost all the industry, especially textile one, made aggressive
development and high- tech industry in this time also enhanced, China’s manufacturing industry
ranked third in the world, after only US and Japan.
 Industrial policies do affect China’s industrialization
In order to enhance effectiveness of industrialization and protect local enterprise from
bad effect, Chinese policy makers applied powerful industrial policy, according to Greg Linden (
2004), the measurement is accepted as the government intervention play an important role in
promoting economic growth in high- performing economies of East Asia. Since 1978, China
started her way to establish socialism society with many Chinese characteristics, the
characteristics of industrialization in this period can be summarized as: it aimed at optimizing
economic structure, improving economic growth and increasing people’s prosperity and it
focused on developing strategy of balancing light industry and heavy industry and develop
agriculture productivity( according to Lian Li and Keang Zheng 1993).
The process of industrialization can be divided into 2 stages, the first stage from 1978 to
mid- 1990s, focused on correcting structure and the second one is to make light and heavy

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industry develop synchronously and advance heavy industry. With the positive intervention of
the government, the strategy went into effect with the priority to develop heavy industry in the
long term. But it abandoned the strategy of developing only heavy industry, the strategy seemed
to be more complex with the aim of enhancing quality of citizens’ live quality, in this stage,
policy makers made more attention to local demand, and put priority to satisfy them, it is the
purpose of developing light industry. This period can be divided into 2 sub steps including
industrial growth led with agricultural products and with non- agricultural products. The
mechanism of state-owned enterprises has been improved by encouraging multiple ownerships
such as domestic private firms and foreign firms and MNCs. The industrialization was brought to
a higher level when the rapid expansion of foreign trade brought back new source of capital and
varied ownership make change to consuming structure. Light industry have priorities for supply
raw material, fuel, and electricity, mortgage, investment in infrastructure, foreign exchange and
importing technology and for transportation. Second, the next stage of industrialization start from
1990s and characteristics of this period is that heavy industry grew so fast that it dominated the
pattern, after the new strategy was carried out, the light industry took off and expanded and the
market booked. When the demand for food, clothes was satisfy, people tend to seek for other
demand such as car, house, or jewelry, heavy industry had to increase to another step, that is why
it develop strongly in this period.
In the process of industrialization, the development of individual economies has become
an important force and helps to accelerate the industrial process, the reform of urbanization and
decentralization improved system of state-owned enterprise. In fact, the enter of big foreign
enterprises with new huge source of fund and capital, technology, channel made space for
Chinese industrial development, and China is famous for excellent policy to attract FDI to
support for the improvement of industry sectors. Up to now, China experienced change and
revolution and she is known as transforming economy, in fact, China make up for one fifth of
world’s population and large land area, it is not suitable for the government to carry out the same
policy for all the region at the same time, so the experiment methods were born, with experiment
zones, this explains why there exist economic special zones and they make the first priority in
the whole industry.
2.4. Rethinking about China’s path of industrialization

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As stated by Maddison (1970), the economic theory has explained who industrial
countries have grown from tradition sectors and start the process of industrialization. However,
in the reality of society, there has been no universal part in the process of industrialization among
countries. The reason for this difference is that there is the intervene of government into the
process of industrialization. In detail, governments can use some policy instruments to influence
into the allocation of resources to transform and shape for the economic development.
2.4.1. The reasons for the intervene of government in economic development
There are some reasons for the government’s intervene in the economic development
such as the interests of such state, the concerns of national security and the desire to become the
developed countries. According to Gerschenkron (1962), the root reason for intervention of the
government is the backwardness of economy when the country states its process of
industrialization. Moreover, countries always care about the increasing the role of government
to the backwardness of economy with the process of industrialization. Backwardness of economy
has influenced to goals of the society as well as the motivations of political entities
(Gerschenkron, 1962). The reason for the increasing concern of economic backwardness is that it
plays the important role on the process of industrialization. Historically, the intervene of
government was known among the post Second World War because the industrialization at that
time was pushed to purview the catch-up. However, as mentioned by Ito and Krueger (1995), the
intervene of government was not studied by researchers while it has been concerned aout the
national security, the improvement of society welfare.
2.4.2. The role of government in the post development of China
There is many studies with the concern of policy issues and the role of government in
economic development (Ezirmai et al, 2011). These studies have been divided into two
categories such as the category focusing on the polity and the category orienting measurement.
Firstly, policy-focused studies focus on explaining the changes of important policies and stating
impacts to the changes of future policies. Secondly, the studies focusing on the measurement has
emphasized data sources to plan to put the industrial policies and the role of government into the
process of industrialization. Hence, though the measurement-focused studies on the development

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of economy. However, there are still some mistakes in the process of industrialization such as the
difference in some major source, the real growth state, the change of structure (Wu, 2011)
The role of government in the development process in China has been explored through
using the benchmark as India. The reasons for choosing India as the benchmark are firstly, India
has the comparable size and the same stage of development in economy, secondly, India and
China adopted the planning economy of Soviet style.
2.5.Comparison of the level of industrialization between China and India
2.5.1. The phenomenal growth of China and India.
China and India have total population of 2.3 billion people and 37% of the world total.
Statistics show that 100$ increase in capital income of the two countries would lead to 230
billions dollar in additional demands for commodities. There has been numerous writings on
economic and industrialization of China and India recently. The two countries have experienced
significant economic growth and received notable achievement, especially reduction in poverty.
Both China and India faces many challenges in agricultural and economic sectors to meet
Millennium Development Goals, which, indeed, are worthy for other nations to learn about.
2.5.2. China’s achievement.
2.5.2.1.Overall economic growth
In the early reform period (1879- 1984), increase in economic growth began with the sharp
rise in GDP in agriculture. Rising income encourages domestic consumption and high savings
and savings transferred into physical capital investment in non- agriculture sector. Since 1980,
average annual growth in the GDP has reach 10% annually. Non- agriculture income has
exceeded agriculture income in many places. During 1990s, reforms have got better in trade and
market liberalization, fiscal and financial expansion, devaluation of exchange rate and from 2000
up to present, China has become one of leading countries in attracting FDI in the world.
2.5.2.2. Growth in agriculture and productivity.
Agriculture growth decelerated after 1985, but then the rise in population still helped to
create dramatic agriculture growth rate. Before 1980, it has contributed about more than 30% of
GDP but in 2000, the figure fell to 16% and the same case in share of employment, from 81% to

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59%, which lead to the share of primary products, especially those from agriculture fell from
50% to only 10%. On the same period, share of food fell from17% to 5%.
Export growth has increased aggressively in the world market share, base on cheap labor and
subsides infrastructure. As a result of market and trade liberalization, there has been a gradual
change from land intensive commodities to high- value labor intensive commodities such as
livestock and fishery. Reforms in trade policy has given further boost to production of export
agriculture in recent years.
2.5.2.3.Poverty reduction
Poverty reduction has showed light sign with poverty decline from 33% to less than 3 %
of the total rural population. Township and village enterprise ( TVEs) has contributed
significantly to the process of reducing poverty in China. However, since 1980s, effect of
economic growth on poverty reduction has fainted. Not only economic growth but agriculture
growth also contributed to poverty reduction.
2.5.3. India’s achievement
2.5.3.1. Overall economic growth
In contrast with China, the reform period of India did not aimed at agriculture sector and
agriculture sector did not make impressive effect on economic growth of the country. After
independence in 1960s, the economic growth was moderate with 5.5.% annual in 1979s. But
after reformation in 1990, the figure which show economic growth reached 6.8 % in 1992. From
1993 to 2004, the average annual growth rate was 6.2%. Compared to China, this development
seemed to appeared later but it has created encouraging results. Unlike China, India ‘s growth
economic growth covered service sector such as communication service, hotel, restaurants,
finance, real estate, especially information technology.
2.5.3.2. Growth in agriculture and productivity
It was the fact that, in 1960s, India depended much on imports and food aids to satisfy
domestic demand but the severe drought in 1995 and 1996 showed that Indian leaders could not
depend on foreign imports and food aid any more. They had better draft a program focus on
production of cereal grains and food grain self sufficiency ever since has shaped Indian

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agriculture policy. Experts call this reform India’s Green Revolution, which began with the
decision to import high quality seeds of wheat. After a lot of research and experiment, the total
food production fulfilled the local demand by 1970s. Several improvement made in seed quality,
canal irrigation and fertilizer has been made by national research system to bring back more
success. The agriculture sector in India, as in China, has faced many structural changes. From
1997 to 2003, the GDP in this sector fell from 43% to 22%, which calculated 3.6% annual in
Green Revolution. The fact is that agriculture change made decrease in poverty. The greatest
increase in productivity from 1970s to 1990s has made the biggest contribution to cut down on
poverty ever since.
2.5.3.3.Poverty reduction
In the late 1960s, there was a significant decline in poverty. From 1970s to 1980s the ratio of
poverty fell from 51% to 39% due mostly to gains in agriculture and productivity. Besides, the
reduction in poverty also due to continued shift of labor out of agriculture sector. But due to
rapid population growth, absolute numbers in poverty increased from 351 to 357 million in
1990s. Thus, to conclude, poverty reduction in India depends much on a relative egalitarian path
of growth, increases in agricultural productivity that helps raise wages and keep food price under
control, another one is expansion in non- agricultural employment, including in rural areas and
the last but not least, direct public action in the form of poverty eradication programs aimed at
generating product employment for the poor.
2.5.4. Difference, similarities and prospects of China and India.
2.5.5. Similarities between China and India.
Compare India and China is an activity of long history, both of the countries, by virtue of
their size, have the potential to be the dominant economic powers in Asian and globally. They
have major effect on global economy and all financial relations.
We can see on the chart below, the balance of world economic activity and influence, the
output share of the G7 countries ( the US, Canada, The UK, France, Italy and Japan) has
decreased significantly from over a half to over a third. At the same time, the share of China,
India has doubled in the last 30 years, and the trends seem to be continued in the future. To make
a clearer look, China in 2010, in comparison with 3 decades ago, its economy was 7 times larger

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and in India, the figure nearly doubled. Those evidence can make it clear for us that China and
India have created huge effect in balance of the world economy
Chart 2. Changing world economy
2.5.6. Difference between India and China
China and India had the same level of per capita GDP ( at market exchange rate) in 1980 but
in the early 1990s, China grow much faster and overtaken India, due to rapid growth of China, its
per capita income is more than three and a half of India. We can see in the following chart to
make clear comparison about India and China speed of growing in the past decades. To support
more for the situation, we can point some difference in economic policy between two countries
as follow:
 China focused on industrial production while India focused on service, which means
China launched its economic transformation by using abundant, low wage labor to
establish manufacturing for export industries while India developed a service export
sector focused on IT and BPO, so investment in India was lower than in China.

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 China got substantial benefits from foreign direct investment, and India did not do the
same case. They attracted more and more FDI by setting up export- oriented
manufacturing operations and benefit from foreign intellectual property, India, in
contrast, follow an import policy and depend on economic resource mobilization.
 China reformed earlier and more aggressive than India. The fact is that China reformed
its centrally planned, non-market economy since 1978 while it is not until 1980s did India
start reforming after long time of large private sector. Only after experiencing serious
macroeconomic crisis in 1991, did the reform effort become more determined, and it is
said that the difference in politics play main role in deciding pace of reform for the two
countries.
Chart 3. Per capita GDP
Besides, there is a severe difference in business climate and role of state in the economy.
India has a entrepreneurial and dynamic business environment whereas China is dominated by
large state-owned enterprise, which account for a large chunk( around 40% of economy asset).
But such enterprise only present 5% of the total number of enterprises and China has a poorly

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measured private sector. India’s economy is dominated by large incumbent conglomerates, this is
legacy of the country’s inward looking development approach. About politics, China is said to be
more conductive to rapid economic development and that of India is messy, unstable and slow.
2.6.Comparison of the level of industrialization between China and India
Before making comparison between level of industrialization between two countries, it is
necessary to review history of industrialization of India and some special areas of economic
policy such as : human factors for industrialization, structure of foreign investment and the
process of privatization. The Indian policy makers think that in order to develop industrialization
and technology change, it is necessary to invest in human capital, current average adult literacy
is low, at 52% and there is large inequalities between males and females, between urban and
rural areas and between social classes, women are expected to spend most of their time doing
domestic work and caring children, so the level of literal women is lower than men. So it is vital
important to make balance between man and women in the process of industrialization. In
foreign investment policy instrument, years ago, investment was restricted to any industry where
investors think that foreign technology is important or promise of export was convincing. The
leading investors in India are US, UK, Germany,…most of the investment has been in
telecommunications, oil refining, automobile and transportation sector. In addition, India has
been a trading nation, now exposed to international competition, Indian companies are forming
alliances with each other to face challenge.
In order for the comparison of industrialization between China and India clearer and
more convincing, it is necessary to compare on following criteria:
 Growth of national income
From 1960s to 1990s, the national income in GNP per capital in India was about 1.4%,
and success of reform in 1980s was reflect in following figures : average GNP increased from
1.4% to 3.25 and in 1990s ,the number was up to 3.8%. In China, growth has accelerated since
1980s and in 1990s, the number of growth stood highest in the world, 9.9% , from 1980 to 2002,
the compound annual growth rate was 11.3% and the share of industry increase from 35% in
1965 to 46% in 2004 ( World Bank 2006) . Let us have a look at the two chart below :

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Chart 4. Chinese real GDP growth from 1979 to 2013
Chart5. Annual GDP growth of India from 1984 to 2008
On looking at the two chart above, we can conclude that China had a more aggressive
growth rate than India, showing in annual GDP growth rate, often stood over 8% , especially in
1980s.
 Alleviation of poverty
In the early 1950s, about half of India’s population was living in poverty, but since then
the poverty was declining slowly, and showed the bright sign, falling from 55% in 1979 to under
35% in 1994, in 1980s and 1990s, the level of poverty fell under history. However, the
population of India grew so fast that the reduction of poverty was not sufficient. In China, due to

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economic growth, the number of people living in poverty has declined significantly, and the
industrialization in agricultural sectors helped much in reducing poverty. World Bank estimated
that one dollar per day consumption is the measure of poverty, and from1990s to 2000s the
number fell from 33% to 16%. However, there are inequalities between regions and rural and
urban areas of the country.
 Health
Life expectancy, used as an indicator of health, in India, has increase gradually, in the
period from 1960s and 1980s, it increased from 43 to 52 years, until 1995 it was 62 years, it
means that life quality has increased and improved year by year, and there was certain
improvement in the reduction of infant mortality, from 1960s to 1995, it reduced by 25%, which
is due to better education of mother and better economic condition of families. In China, life
expectancy in 1960 was 43.47 years and this number increased to 67.02 in 1980 and in 2000 was
72.14. Compared to India, it is clear that life expectancy in China was higher, which means life
quality in China was much more considered and enhance in the period of industrialization.
 Technology development
Both the two countries, by developing country standard, the investment in research and
technology development in agriculture are low, both the countries have set up well established
research system and those systems have capability to exceed that of other countries.
So, industrialization and economic development of China and India were aggressive and
impressive, however, for many reasons, industrialization in China is considered to be deeper and
cover all sides of the society, which means a more perfect industrialization process.
3. Some lessons drawn from experience in industrialization of China
China has the prospects to continue fast economic growth in the future, from her
experience in industrialization, several lessons can be drawn. After rate30 years of
industrialization, in the late 1970s, she focused on strategy to open market to accelerate inside
strength on nature resources and human resource, in the meantime taking advantage of outside
sectors such as international trade, investment and abroad studying, all of which concentrated on

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learning new knowledge, breakthrough on science, technology to encourage industrialization of
the nation. In order to expand international trade, Chinese government abandoned the policy of
closing trade and step by step carrying out free trade, they are always active in opening the
economy. In order not to depend too much on that market, they operate industrialization on
diversity of products and markets. Those changes in policies promoted trade relationship
between China and other economies quickly. In 2002, on Japanese market, China overtook US to
make the highest proportion of total trade of this country. In ASEAN, from 1992 to 2002,
China’s total trade was 7 times higher. About structure of export, industrial and high- tech
products made the first priority. Second, in order to expand investment, they open the economy
to attract more and more foreign investment with a lot of favored policy together with a lot of
changes of business forms. In addition to attract numerous foreign contracts, China also took on
a new source of technology and worthy management skill. Third, in order to encourage studying
abroad, China used the way of inheriting breakthrough on science and technology from European
countries with 3 purposes : modernized- oriented education, future oriented education and
worldwide- oriented education. Those emissions and statements helped China opened widely to
take advantage of opportunities and keep traditional value themselves.
Industrialization process of China has brought back excellent result in changing overall
face of economy. It is the change from closed economy where people made product they needed
to an open economy with international trade and foreign investment. Grade of China in the world
today shows clearly that what they did in the process of industrialization provides the world
valuable lessons.

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4. Conclusion
In conclusion, this report concentrates on analyzing several aspects around
industrialization of China. The report will give the reader overview of Chinese industrialization
including : primary framework and theory on industrialization, models on economic
development, and make comparison between Chinese and Indian industrialization to illustrate
similarities and difference in the characteristics and nature of industrialization of 2 countries,
from which reader will have more briefly understanding on Chinese industrialization process.
Moreover, analysis in process of Chinese industrialization with bright breakthroughs and creative
economic policy has stated that it is worth for other countries to look up and consult lessons of
industrialization of China. The evidence is the rank of China in the world in all fields of
economy, society and education…
5. Reference
United Nations University, Rethinking China’s path of industrialization,( 2011),WP no 2011/76.
Australian government, Benjamin Ford,(2011), China and India, difference, similarities and
prospect.
Delong, J.B ( 2001), India since independence: an analytic growth narrative.
Mason, S.E (1960), The role of government in economic development, American economic
Review.
Maddison, H.X.Wu (2008), Measuring China’s Economic Performance, World economics.
Rostow, Walter W.(1960), The stage of Economic Growth : A non- Communistic Manifesto
Cambridge: Cambridge University press.
Maddison, A. (1970), Economic Progress and Policy in developing countries. London, Norton,
and New York: Allen and Unwin.
Maddison,(1995), Explaining the economic performance of nations : Essay in Time and Space.
Cheltenham: Edgar Elgar.

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Maddison, (1998), Chinese Economic Performance in the long run.Paris : OECD, available at
www.ggdc.net/Maddison.
Maddison, (2001), The world economy: A Millennial Perspective. Paris: OECD.
Maddison, (2003), The world economy: Historical Statistic. Paris :OECD.
Mason, S.E (1960), The role of Government in Economic Development, American Economic
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Ren, Wei (2008). Empirical Analysis on International Trade Effect of China’s FDI, Hainan
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Riskin, Carl ( 1987), China’s political Economy : The quest for development since 1949. Oxford
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Naughton, barry( 2007), The Chinese Economy : Transitions and Growth, The MIT Press.
Zhang Jun, (2003), China’s Industrial Reform and economic growth: problem and explanations.
Shanghai: Sanlian Bookstore and Shanghai People’s Publishing House.
Lin Justin Yifu, Fang Cai and Zhou Li, (1999), The China Miracle: Development Strategy and
Economic Reform, revised version.
Sijian Peng, (2010) ,Comparing Industrialization between Japan and China. Why China chose a
different way, Lund University.
Benjamin ford, Senior Economist, (2011), China and India: Difference, Similarities and
prospects.
FAO corporate document repository, rapid growth of Asian economies, http://www.fao.org/
Chen, Jiagui ( 2009), Research on China’s industrialization and Modernization, Economic
Management Publishing House.
Chen. Jianxun, (2005), High- tech Industries in China, Edward Elgar Publish.

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