Starting from the eighties of the 20th century, China undertook a slow and complex process, which contributed to the affirmation of the country among the main agents on the world market. The government therefore initiated the necessary reconversion and opening up of the economy, with the aim of reducing poverty, promoting growth, ensuring the development of human resources. With an amendment to the Constitution, in 1999 the key role played by the private sector in growth was formally recognized, even if in practice the private entrepreneurial fabric was faced with a scarcity of infrastructures, difficulties in accessing credit and a lack of managerial and technical training. The declared desire to gradually reduce the role of the state in the economy was expressed through measures to reduce the public sector. In particular, in an attempt to improve and make more correct the management of public enterprises, in those years staff reductions were made, company restructuring was facilitated, supervision and recourse to bankruptcy procedures spread, management incentives multiplied to guarantee efficiency. The State adopted measures aimed at favoring the transformation of the ownership structure of small and medium-sized companies, favoring their progressive transition to widespread shareholding, and promoted the introduction of modern entrepreneurial systems. At the same time, the government continued the slow process of liberalizing prices, while maintaining direct control over those of strategic goods (eg oil) and widespread products (eg wheat). The difficulties in decisively embarking on a development path were also linked to the delicate structure of the real economy, characterized by strong imbalances – both social and territorial – consolidated over the years. Particularly, the problem of strong income disparities between the various regions of the country was tackled with an effort to rationalize and refine the fiscal tools to support the economy. In order to ensure the development of rural regions, the income of agricultural workers was increased thanks to the reduction of the tax burden, and employment opportunities in the sector were encouraged. To cope with the tensions in the labor market, the social security system was reformed, ensuring an increase in pensions, an increase in the contributions paid to the unemployed and the strengthening of assistance programs for workers seeking new employment. The government also promoted the creation of jobs in small and medium-sized enterprises and removed some regulatory constraints on mobility.
However, the criticalities on the labor market represented a problem destined to persist, due to the protracted process of restructuring of the public sector, the excess of rural workers and the strong annual increase in the workforce (which was expected to be around 10 million people until 2010). The monetary and credit sectors were the subject of an articulated reform, which revised the structure of the central bank, allowed the bankruptcy of insolvent institutions and the establishment of management companies to entrust bank bad debts. The state also promoted the reorganization and recapitalization of two of the four largest public banks, while the process of aggregation of numerous smaller urban credit institutions was accelerated. A new regulation was passed on the subject of prudential supervision, and an attempt was made to reduce the incidence of bad loans on the assets of banks. During the second half of the 1990s and well beyond China’s entry into the World Trade Organization (WTO), which took place in December 2001, the government’s activity was aimed at ensuring the achievement of adequate standards of regulation and supervision on the capital market. Therefore, the gradual removal of customs barriers was started, while the competent authorities implemented the guidelines of the WTO regarding the updating of the regulatory framework on international trade. In addition to launching these interventions of a more structural nature, the State worked to cope with the contingent situation; during 1999, maneuvers were added to respond to the slight slowdown in production growth and the consequent rise of deflationary pressures attributable to the financial crisis in the Asian markets. The government enacted fiscal and monetary policy measures aimed at promoting the development of productive activity and exports. In particular, infrastructure expenses were increased and the salaries of public employees increased, interest was reduced and the compulsory reserve charges for banks were made less burdensome. In 2000 thanks to appropriate economic policies and a favorable external environment, growth resumed vigorously. Both the increase in domestic demand, prompted by an expansive orientation of fiscal policy, and the increase in exports contributed to an 8 % growth in GDP. During 2001, the slowdown in foreign demand for Chinese products and services and in domestic consumption, despite the continued expansion of state investments, caused a slight halt in growth. Deflationary pressures reappeared towards the end of the year.
According to PROEXCHANGERATES, the five-year plan launched in 2001 was characterized by the importance attributed to the demands of quality in growth and sustainable development. The main economic policy guidelines concerned the desire to continue on the path of market-oriented reforms, the emphasis on the need for technological innovation, the promotion of the development of the non-public sector, the intensification of environmental protection and improvement measures. quality of life in terms of poverty reduction and strengthening of the social security system. During 2002, the government pushed on economic reforms aimed at stimulating the competitiveness of the Chinese economy on international markets. Numerous legislative and regulatory interventions were made, with the aim of facilitating the inflow of foreign capital into the country, favoring the private sector and promoting the efficiency of public enterprises. Investments from abroad in some sectors (such as telecommunications, insurance, etc.) were favored, access to the national securities market was allowed to qualified international institutional investors, some restrictions on the operations of foreign banks were removed. In 2003 the government set itself ambitious economic policy objectives: to promote rapid GDP growth, reduce unemployment, ensure price stability, consolidate the balance of payments surplus. Greater vigor was consequently given to structural reforms. In early 2004, the government implemented an economic policy that was careful to check that the strong growth of the country was aimed at resolving the strong imbalances that still characterized the internal market. Therefore he adopted a restrictive monetary policy: financing in some industrial sectors was rationed, stringent compulsory reserve obligations were put in place for the banks, the discount rate was kept high. At the same time, administrative protectionist measures were introduced to protect the financial, steel, aluminum and cement sectors, while investments in the energy and communications sectors were encouraged.