r words, China has changed from a centrally based country in a regionally based country, in which different provinces produces different goods and servies. This change has encouraged the development of small enterprises, which are the main driving forces of Ch

inese growth. In 1978, China has liberalised its economy and start participating in the world economy. With its new market reforms in every sector, China's door has opened its economic door to foreign investors and freer trade in special economical zones. Beginning in 1994, China's economic structural reforms have begun new breakthroughs. Major changes have been made to sectors like personal enterprises, taxation, finance, foreign investment and foreign trade. At the same time, the Chinese government is speeding up its establishment of a socialist market economy system. Hopefully, this socialist market economic system can be in place by 2010. (Roy 1-5) Major Structural Reforms Reforms already launched: 1. Reform of the state-owned enterprises has been furthered. „h Some adjustment and reorganisation have been carried out in industries like textile, coal, oil and weapon-makings. 2. The social security system has made huge changes. „h People established re-employment centres that can help laid off workers to find jobs in other economic sectors. Almost 99% of the laid-off staff and workers who were fired from the state-owned enterprises are using this re-employment service centre. Reforms to be launched: 1. Financial reforms will be undertaken „h To achieve the perfect management system, sectors like banks, securities, insurance and trust businesses are becoming independent from each other for clearer financial supervisions. „h Government is speeding up the reform of state-owned commercial banks, in order for the banks to operate independently. „h In case when companies have bad credit and unpaid debts, banks are reinforcing strong policies to ensure the quality of bank loans. „h To safeguard financial assets and eliminate corruption of people who have political positions. 2. To increase export to maximize the economy „h People are expanding export productions. „h People are improving the development of international tourism to increase non-trade exchange earnings. (Online) Economic Activity GDP/GNP China must have annual GDP growth greater than 5% to maintain social stability and political survival. Economic freedom has increased China's prosperity. With its Real GDP of US$960.91 billion, it seems that is has increased its output by 7.8% from 1997. Within the GDP, primary industry increased by 3.5%, secondary industry up by 9.2%, and tertiary industry enlarged by 7.6%. The social labour productivity rose by 6.9% over 1997. In the first half of 1999, GDP grew at the rate of 7.6%. (Morrison) Beginning in 1979, China launched several economic reforms. To improve the standard of living of farmers, government is now allowing them to sell a portion of their crops on the free market. The government also established four special economic zones to attract foreign investment and boost exports and imports. The decentralisation of economic control of various enterprises was given to provincial and local governments. This allowed enterprises to operate more freely and competitively, rather be controlled by the central government. Some coastal regions and cities were designated as open cities and development zones, which allowed people to experience free market reforms and to attract foreign investment. Therefore, the state price controls on good and services were gradually eliminated. Starting from the introduction of economic reforms, China's economy has grown proportionately faster than during the pre-reform period (see Table 1). This Chinese statistic shows the growth of real GDP from 1979 to 1998, which is making China one the world's fastest growing economies. According to the World Bank, China's rapid development has driven 200 million people out of poverty. Table 1. China's Average Annual Real GDP Growth: 1960-1998 Time Period Average Annual % Growth 1960-1978 (pre-reform) 5.3 1979-1998 (post-reform) 9.8 1990 3.8 1991 9.3 1992 14.2 1993 13.5 1994 12.7 1995 10.5 1996 9.7 1997 8.8 1998 7.8 Sources: Official Chinese government data repor

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