Why China's Economy Consistently Experiences Wide Fluctuations

Since the founding of the People's Republic more than forty years ago, China has experienced numerous economic cycles and economic readjustments. One of the characteristic regularities of China's economic development is the cyclic fluctuation manifested as the rise-fall-rise again-fall again of the economic growth rate, which is accompanied by a recurrent vacillation of expansion-retrenchment (readjustment)-expansion again-retrenchment again (readjustment again) in economic policy. The wide fluctuations are one of the most distinctive features of China's economic development, as well as one of the direct causes of contradictions and conflicts in Chinese society. The fluctuation coefficient of China's economy is considerably higher than it is in the Western countries, and far higher than the world average. Between 1960 and 1989, the fluctuation coefficient of China's economy was 1.8 times those of Yugoslavia, Britain, and India; 2.2 times that of the United States; 2.6 times that of Japan; 3.0 times that of South Korea; 3.4 times that of the former Soviet Union; and 4.3 times the world average. A large body of data and many facts indicate that the cyclic fluctuations in China's economy have been painfully obvious, that economic growth has been extremely unstable, and that these violent and frequent cyclic oscillations have seriously impeded any sustainable economic development in China.