Russia and China adopted two different paths of market economy.
• In Russia the concept of market economy was brought forward by IMF and World Bank and the Russian government was not allowed to take part in this process. In china the state played and continues to play a central role in setting up a market economy.
• In Russia, the transition from communism to capitalism was sudden and complete. It meant rooting out completely any structure evolved during ** **. China on the other hand, followed their own path of market economy. It did not go for ‘shock thearpy’ but opened its economy step by step.
• The shock therapy brought ruins to the Russian economy. Their large state controlled industrial complex collapsed as about 90 percent of its industries were put up for sale to private individuals and companies. Since restructuring was carried out through market forces and not by government directed industrial policies, it led to the virtual disappearance of entire industries. The new economic policies helped the ** economy to break away from stagnation. The ** economy, including Industry and agriculture grew at a faster scale.
• China has become the most important destination for foreign direct Investment anywhere in the world. It has large foreign exchange reserves that now allow it to make big investments in other countries. As a result of ‘shock therapy’, the value of Ruble, the Russian currency declined dramatically. The real GDP of Russia in 1999 was below what it was in 1989.Ten years after the introduction of Shock therapy, Russia could revive its economy.
