Political leadership and structural transformation in China: trade dynamics and economic change from Mao to Xi Jinping

Abstract This study analyzes China’s structural economic transformation from 1960 to 2024, focusing on the role of successive political leaderships in shaping growth trajectories and trade dynamics. Employing autoregressive models, structural break tests, polynomial trend analyses, and cointegration techniques, the research identifies three major turning points: 1980, reflecting the effects of Deng Xiaoping’s gradual market-oriented reforms; 2006, associated with Hu Jintao’s deepening global integration following China’s WTO accession; and 2012, corresponding to Xi Jinping’s shift toward centralized, innovation-driven governance. Unit root tests indicate that key variables in levels—exports, imports, trade, and GDP per capita—are non-stationary, reflecting persistent long-term trends linked to China’s structural transformation, while first differences are stationary and suitable for dynamic modeling. Johansen cointegration tests reveal a stable long-run relationship among trade variables, confirming the enduring role of international commerce in China’s economic expansion. The findings show that prior to Xi, external trade was the primary driver of structural transformation, promoting industrial modernization and sustained GDP growth. Under Xi, however, growth increasingly relies on domestic innovation and state-led strategies. By precisely dating structural breaks and empirically linking leadership transitions to macroeconomic and trade outcomes, this study provides a novel, policy-relevant perspective on how political leadership and institutional evolution influence long-term economic development in emerging economies.