Evaluating China's Economy

China’s largest and most prominent success thus far has been in the economic sphere. Thanks to Deng Xiaoping’s policies, China, by opening itself up to the world, has allowed its economy to flourish and grow, becoming the second largest economy in the world in less than four decades. The Middle Kingdom has come to embody the notion of an Asian economic miracle, but can the miracle last?

Following Deng Xiaoping’s moves to decrease the cult of Mao Zedong and open up to the world, China moved first from a closed communist system to a planned economy, then to a “partial” market-oriented economy (where the Communist Party of China, CPC, is pulling the strings). China’s reforms were made gradually. The state began first by phasing out collective farming, introducing a gradual liberalization of prices and fiscal decentralization, creating a diversified banking system, and developing stock markets. Increasing autonomy was granted to state-owned enterprises (SOEs), while private sector growth and foreign investments were allowed but controlled. International trade was now becoming the basis of China’s growth. These changes resulted in improved living and working conditions, far removed from China’s dire days under Mao.

However, given the unsettled nature of today’s worldwide economy, the current Chinese economic situation is under scrutiny by many foreign observers. With growth slowing, observers around the world are wondering: What is the real pulse of the Chinese economy?

Employment

One of the factors analysts are keen to understand is the Chinese employment market. From 1980 until 2014, China’s long-term average unemployment rate was around 3.86 percent. It reached a low of 1.8 percent in 1985 and a high of 4.9 percent (both in 1980 and 1991, during global recessions). The projections for 2015-2017 are showing an unprecedentedly high unemployment rate.