Special Report

How China's Economy Became the Largest in the World

Source: Keystone / Getty Images

Fifth Plan (1976-1980)

Following the death of Mao Zedong in 1976, China’s economy began a major transformation. Under Chinese leader Deng Xiaoping, the nation decentralized its economic management and allowed industrial supervisors greater autonomy in terms of determining production goals. Farmers were also permitted greater control over their enterprises. Deng’s reforms extended into China’s political and social spheres as well and included China’ controversial one-child policy intended to control the nation’s population.

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Trade with the United States

China is currently the United States’ largest trade partner, trading nearly $700 billion worth of goods and services in 2018, with imports of $120.15 billion and exports of $539.68 billion. The resulting U.S. trade deficit with China of $419.43 billion — up by around $45 billion from previous years — helps explain China’s impressive economic growth in recent years.

The United States and China established trade relations in 1979, trading $4 billion that year. Opening China’s border to trade allowed foreign capital and Western companies to enter China.

Source: H. Grobe / Wikimedia Commons

Sixth Plan (1981-1985)

China’s sixth five-year plan looked to consolidate the gains from the reformation of the Chinese economy that began under the previous five-year initiative. Agricultural reforms during the prior five-year plan were yielding results by 1981. Reform initiatives helped to strengthen China’s trade and cultural links with the West, and foreign companies began to invest in Chinese enterprises. China’s export volume rose to 10th highest in the world in 1984 from 28th four years earlier.

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