The Chinese Political Economy Since 1949

After the Chinese Communist Party (CCP) took power in 1949, China’s economic development was determined by a complex mix of both external and internal factors. First of all, China’s economic development was largely defined by world politics in general and the evolution of its relationship with the United States and the Soviet Union in particular. For the first three decades following its establishment in 1949, the People’s Republic of China had been cast in a very unfavorable international environment. In the years after the Korean War throughout the 1960s the Sino-American conflict was the most significant feature of Cold War politics in the Far East. Most notably, after the mid-1950s when American-Soviet relations came to be seen as those of “peaceful coexistence,” China was regarded by Washington as the principal threat to peace and stability in the region. Hence the United States was pursuing a diplomatic policy of containing and isolating China through economic embargo and a military alliance system that involved Japan, South Korea, Taiwan, Thailand, the Philippines, Australia, and New Zealand. Consequently, China was effectively isolated from the world economy, denied any possibility of obtaining technology, capital, markets, and advice from the West. Starting in the late 1950s and early 1960s, Sino-Soviet relations, after experiencing a honeymoon in the early and mid-1950s, became troubled and the resultant break between the two communist giants deprived the Chinese of Soviet economic assistance.