Over the last twenty years China has undergone transition from a
planned to a market-oriented economy. Reforms have brought about
remarkable economic growth, through transformations in the agricultural
sector and rapid export growth. However growth until 1997 has not been
accompanied by significant state-owned enterprise reform or labour
market reforms in the urban sector. During the initial stages of economic
growth such lack of structural change is not so serious, but as incomes
rise further reform is essential. Due to the current East Asian financial
crisis it seems unlikely that exports will make a large contribution to
growth in the near future. Whether China can sustain its rapid growth
rate will depend heavily on the government's willingness to pursue
further internal structural reforms including the necessity for further
labour market reform.