Question

Which measure was adopted by China to solve its economic crisis ?

• A. Like USSR, China also followed ‘Shock Therapy’.
• B. China ended its economic isolation with the establishment of relations with most of the developing countries of the World.
• C. China opened its economy for privatisation step by step for the development of its economy.
• D. Chine focused more on export as compared to import.

Hint:

China avoided 'Shock Therapy'. Instead, it adopted a gradualist step-by-step model: Agriculture privatisation (1982) $\rightarrow$ Industry privatisation (1998) $\rightarrow$ WTO Accession (2001).

Answer 1

The Correct Option is C

Concept: The Chinese model of economic reform differed fundamentally from the Soviet Union's reform model. China chose a phased, pragmatic, step-by-step approach to market liberalization rather than an abrupt transition.

Step 1: Understanding China's Economic Reform Strategy.
China did not follow the rapid, painful 'Shock Therapy' prescribed by Western financial institutions that disrupted the Soviet Union. Instead, Chinese leadership under Deng Xiaoping introduced gradual economic reforms:
• 1972: China ended its political and economic isolation by establishing bilateral relations with the United States.
• 1978: Premier Deng Xiaoping announced the 'Open Door Policy' to introduce market principles and capital investment.
• 1982: Privatisation of agriculture was introduced, allowing farmers to own land produce and boost agricultural output.
• 1998: Step-by-step privatisation of state-owned industrial enterprises was initiated.
• Creation of Special Economic Zones (SEZs) to attract foreign capital and technology without immediately exposing the whole domestic economy to global shocks.

Step 2: Conclusion.
China systematically opened its economy for privatization and international trade step by step (gradualism), which successfully generated high economic growth without causing structural breakdown. Thus, Option (C) is correct.