Perils and Challenges of Chinese Economic Development

The aim of this paper is to discuss the reasons behind the rapid growth of the Chinese economy during the last more than three decades. China has been growing fastest in human history, which has an impact on the global economy and also various challenges that China faces. China is seen as heralding a major shift in the international division of labour through changes in output and employment pattern. China is described as becoming “work-shop” of the world through the expansion of manufacturing production. Its impact on other Asian economies and also on the world economy would be enormous. China's rapid development within a short period of time has shown us one of the most striking phenomena in global economy, which was not experienced before. Market reforms and open to trade and foreign capital since early 1980s have unleashed their entrepreneurial energies. These reforms took place at a time when global economy was going through huge changes proved to be beneficial to China by increasing growth and in turn massive reduction in the number of poor people. China's development policies can be understood if we look through institutional economic perspective. This means that more attention is needed to look at the economic, political, institutional, historical and cultural context in which the economic development has taken place.