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. China focused more on export as compared to import.

Hint:

To remember China's strategy: think of Deng Xiaoping's famous motto of reform --- “crossing the river by feeling the stones.” This denotes step-by-step, cautious pragmatic transition over sudden shock therapy.

Answer 1

The Correct Option is C

Step 1: Contrast with the USSR model:
Unlike the Soviet Union, which underwent a rapid, overnight economic transition called “Shock Therapy” (which led to the collapse of industrial structures and hyperinflation), China adopted a gradual, highly pragmatic, and sequenced reform pattern. Thus, Option (A) is false.

Step 2: Breaking Isolation:
China ended its economic isolation in 1972 not by engaging with developing countries first, but by establishing diplomatic and commercial relations with the United States of America under President Richard Nixon. Thus, Option (B) is false.

Step 3: Analyzing Step-by-Step Economic Opening:
The Chinese leadership chose a phased, step-by-step path:
• 1978: Deng Xiaoping introduced the “Open Door” policy to allow foreign capital and technology inflow.
• 1982: Privatization of the agricultural sector occurred through the household responsibility system.
• 1998: Step-by-step privatization of the industrial sector and lifting of trade barriers took place.
• Special Economic Zones (SEZs): These were designated to experiment with free-market capitalism without disturbing the entire national socialist framework. This highly systematic approach corresponds precisely to Option (C).