Development paths of China and Pakistan

India, China and Pakistan began their journeys at almost the same time: India and Pakistan became independent in 1947, and the People's Republic of China was set up in 1949. All three chose to plan their development. India's first five year plan ran from 1951 to 1956; China began planning in 1953, and Pakistan in 1956.

China took a very different road:

• The Great Leap Forward (1958) aimed to industrialise quickly. People were encouraged to set up backyard industries (small furnaces at home), and farming was organised into about 26,000 communes, where people farmed the land collectively. The campaign failed badly.
• The Cultural Revolution (1966-76) sent students and experts to the countryside to work and learn.
• From 1978, China reformed its economy, on its own initiative. Land was divided among households for household farming, and families could keep what they grew above a fixed share. Township and village enterprises (TVEs), owned and run by local collectives, grew fast. A dual pricing system was used: part of the output was sold at fixed prices, the rest at market prices. Special economic zones were set up to attract foreign investment.

Pakistan followed a mixed economy, like India: import substitution to build industry, and the green revolution in farming. In the 1970s, it nationalised capital goods industries; in the 1980s, it denationalised them again, and relied heavily on remittances (money sent home by Pakistanis working abroad). It began reforms in 1988.

India reformed in 1991. The reforms in India and Pakistan were made partly under the conditions of loans from the World Bank and the IMF; China's were its own choice.