Read the passage and answer the questions:
China’s Economic Trajectory
The Chinese leadership took major policy decisions in the 1970s. China ended its political and economic isolation with the establishment of relations with the United States in 1972. Premier Zhou Enlai proposed the ‘four modernisations’ (agriculture, industry, science and technology and military) in 1973. By 1978, the then leader Deng Xiaoping announced the ‘open door’ policy and economic reforms in China. The policy was to generate higher productivity by investments of capital and technology from abroad. China followed its own path in introducing a market economy. The Chinese did not go for ‘shock therapy’ but opened their economy step by step. The privatisation of agriculture in 1982 was followed by the privatisation of industry in 1998. Trade barriers were eliminated only in Special Economic Zones (SEZs) where foreign investors could set up enterprises. In China, the state played and continues to play a central role in setting up a market economy. The new economic policies helped the Chinese economy to break from stagnation.
Which of the following was the change brought by China in its economic model?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Gradually opening the economy.
Option (1) Complete Economic Liberalization — Incorrect. Complete liberalisation would remove trade barriers everywhere. In China trade barriers were eliminated only in Special Economic Zones, and the state kept a central role.
Option (2) Implementing a shock therapy. — Incorrect. Shock therapy was a total and sudden shift to capitalism; the Chinese did not go for ‘shock therapy’.
Option (3) Gradually opening the economy. — Correct. China opened its economy step by step: agriculture was privatised in 1982 and industry in 1998.
Option (4) Not allowing foreign investors at all. — Incorrect. In the Special Economic Zones foreign investors could set up enterprises, and the open door policy sought capital and technology from abroad.
NCERT (2025-26): “The Rise of the Chinese Economy … The Chinese leadership took major policy decisions in the 1970s. China ended its political and economic isolation with the establishment of relations with the United States in 1972. Premier Zhou Enlai proposed the ‘four modernisations’ (agriculture, industry, science and technology and military) in 1973. By 1978, the then leader Deng Xiaoping announced the ‘open door’ policy and economic reforms in China. The policy was to generate higher productivity by investments of capital and technology from abroad. China followed its own path in introducing a market economy. The Chinese did not go for ‘shock therapy’ but opened their economy step by step. The privatisation of agriculture in 1982 was followed by the privatisation of industry in 1998. Trade barriers were eliminated only in Special Economic Zones (SEZs) where foreign investors could set up enterprises. In China, the state played and continues to play a central role in setting up a market economy. The new economic policies helped the Chinese economy to break from stagnation.” |