Better relations with the USA, help from international bodies and investment from Hong Kong and Taiwan made the open door work.
Better relations with the USA came first. After Nixon's visit in 1972, the two countries established full relations on 1 January 1979. In 1980 the USA gave China normal trading status, renewed each year.
China joined the IMF and the World Bank in 1980, which brought loans and advice. Japan began lending China large sums from 1979.
Hong Kong was China's window to the world. Its factory owners moved production to nearby Guangdong, and most foreign investment in the 1980s came from Hong Kong. Taiwanese investment followed from the late 1980s.
The global shift of manufacturing helped. Firms across East Asia were looking for cheaper places to produce, and China's huge, low-cost workforce attracted them.
International events also caused setbacks. Western sanctions followed Tiananmen in 1989, but most were short-lived. In 1999 China and the USA agreed terms for China to join the WTO, which it did in 2001.
- US relations
- 1 January 1979.
- IMF and World Bank
- China joins in 1980.
- WTO
- Terms agreed with the USA in 1999; China joins in 2001.
Worked example: Weighing international factors
How far did the outside world drive China's growth?
- Access: US relations opened markets and technology.
- Capital: Hong Kong, Taiwan and Japan supplied investment and loans.
- Timing: firms were already moving production to cheaper places.
- Limit: China chose to open; others had the same chances.
Watch out for this
China's growth was simply a gift of the world economy.
Outside conditions were favourable, but China's own decisions to reform and open explain why it used them so well.
Check your understanding
Where did most foreign investment in China come from in the 1980s?
- Hong Kong
- The Soviet Union
- Western Europe