To what extent does international trade explain the remarkable success Essay - 1

To what extent does international trade explain the remarkable success of the East Asian economies since 1945 - Essay Example Deng Xiaoping, at the Third Plenum of the 11th Party Congress of the Chinese Communist Party (CCP) in 1978, criticized the Cultural Revolution and insisted that CCP should prioritize economic growth (Hess 22). This incident is widely recognized as the beginning of China’s financial reform period and undeniable economic wonder, as an outcome of which China became the second biggest and most vigorous economy in the world. This paper discusses the evolution of China’s financial reform. In 1978, Deng Xiaoping and his peers from the Party’s Central Committee gathered in Beijing and agreed that financial reform was the only solution to the political and economic problems confronting China (Tam 83). China, during that time, was an impoverished, strictly regulated agrarian economy on the brink of failure. The initial period of financial reforms was characterized by a marked growth of financial institutions. From 1978 to 1988, leading banks, including the central bank, were founded, as well as numerous financial agencies, credit cooperatives, and trust and investment firms at municipal, provincial, and central level (Zhu 1505). In 1983, two highly significant events occurred: first, the People’s Bank of China (PBoC) took on the functions of a central bank; and, second, PBoC’s commercial banking operations were divided into four state-owned, autonomous banks, popularly called the ‘Big Four’— the People’s Construction Bank o f China, the Agricultural Bank of China, the Bank of China, and the recently established Industrial and Commercial Bank of China (Hess 25). Institution building began in the initial reform period with the formation of a two-level banking structure. In 1995, central banking experienced a new push when a new policy on the PBoC was implemented that provided the central bank the legal structure to function under the headship of the State Council in a market-driven setting (Riedel and Jin 79). At