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 path did China rely on to embrace market economy?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → China developed its own path in introducing market economy.
Option (1) ASEAN Economic Model — Incorrect. ASEAN is a grouping of Southeast Asian countries, and China, not a member, followed its own path, not a regional model.
Option (2) China developed its own path in introducing market economy. — Correct. China followed its own path in introducing a market economy.
Option (3) Western economic model. — Incorrect. The Western-guided way of moving to a market economy was shock therapy, a total and sudden shift. China did not go for shock therapy; it opened step by step, and the state kept a central role.
Option (4) US Economic Model — Incorrect. A US-style free market leaves the economy to private players. In China the state played and continues to play a central role in setting up the market economy, so it did not copy the US model.
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.” |