Since Deng Xiaoping's wide-ranging reforms in the late 1970s, China has transformed from an impoverished largely agricultural economy to a formidable industrial superpower, second only to the US. In that time, the Chinese economy has grown by a factor of 42, millions have been lifted out of poverty and the country has established itself as the world's premier exporter. How has China done it? We reveal the secrets behind China's remarkable success and the lessons the West could learn from its meteoric rise. 

The values espoused by the 5th and 6th century BC chinese philosopher Confucius, who is often quoted by current Chinese leader Xi Jinping, have underpinned China's economic miracle, and are crucial to understanding the country's transformation. An emphasis on Confucian social harmony, hard work, education, collectivity, frugality and peaceful development have helped to drive the Chinese economy and contributed to making it a global force to be reckoned with.

Taoism, founded by philosopher Laozi in the 6th century BC, is another school of thought that pervades Chinese society and focuses on accepting and embracing change. In an economic and business context, going with the flow and adapting to changing conditions can make for dynamism and success. The Tao concept of yin and yang is particularly relevant to Chinese economic success, as it encapsulates the idea that two opposing ideas such as communism and capitalism or centralisation and decentralisation needn't be in conflict and can actually complement each other.

The Chinese government, which is authoritarian and can't be voted out, plays the long game. Authoritarian regimes have numerous disadvantages and infringe on fundamental human rights, but the downside to democracy is that it fosters short-termism.

Election cycles in the West are short and administrations change frequently, so five-year economic plans and more far-reaching strategies such as Made in China 2025 and the Belt and Road Initiative, are difficult if not impossible for Western governments to organise and execute.

The stability the Chinese system engenders enables the state to plan far into the future. Liberal democracies could emulate China by engaging in consensus politics, but the trend in many Western countries is towards increased adversarial politics and populist governments. The Trump administration, for instance, has reversed many reforms enacted by the previous government. In a nutshell, political instability is costly to a country and can harm its economic growth.

Officials in China generally have a lot more expertise than politicians in the West, and are better placed to manage a complex economy. They have to pass rigorous exams in order to rise to the top. The system is based on meritocracy rather than popularity.

Though Western politicians have career civil servants to advice them, they are increasingly elected due to their popularity rather than their intellect, and can reject expert advice, meaning that their ability to oversee their respective economies can be relatively lacking.

China pursues a non-interventionist foreign policy and limits its involvement in the affairs of other nations, unlike the US, UK and other Western powers, which have a tendency to intervene in conflicts overseas.

This policy of non-interference has resulted in better relationships with the governments of developing countries, particularly those in Africa, which has benefited China's economy greatly.

Unlike Western governments that in the most part have transitioned from Keynesian economics, which advocates intervention during downturns, to neoliberalism and now avoid intervening in the market, the Chinese state props up companies.

This governmental support is most pronounced in the manufacturing sector where the state offers subsidised loans, cheap raw materials, and other advantages, giving the companies on the receiving end a distinct competitive advantage over their counterparts in the West.

China spends more on infrastructure than the US and Europe combined, according to a study by the McKinsey Global Institute. Most recently, the Chinese government has approved funding of $163.2 billion (£126.1bn) for 16 megaprojects.

Investing in infrastructure stimulates economies and boosts growth, creating jobs in the short-term and raising the productive capacity of an economy over the long term. President Trump knows this, hence his grand infrastructure plan, though it is yet to come to fruition.

One particular example of China's focus on building up a strong infrastructure is the subway systems that have been developed in Shanghai and Beijing. Now the longest and second longest urban railway networks in the world respectively, overtaking New York and London, and the quick growth of the subway lines in order to adapt to the cities' growing populations aids productivity and the economy.

Urbanisation and city growth is important to China, with the country focused on building skyscrapers. In fact, China built over half the world's skyscrapers last year in record time, using a machine (pictured) that has been called a "wall climbing monster" that acts as a moving platform for construction workers. The machine has most recently been used to build the Wuhan Greenland Center in the city of Hubei.

Under the Made in China 2025 plan, the Chinese government is investing enormously in a range of technologies, including artificial intelligence, with a view to establishing the country as the world leader in advanced technology.

Contrast this with the US, which has reduced research and development (R&D) spending as a share of GDP over the past few years. If the trend continues, China will soon overtake America in R&D spending as a percentage of GDP.

Likewise, Chinese businesses are pumping serious money into R&D. According to a report published in January by PricewaterhouseCoopers, Chinese companies are leading global R&D spending growth.

By way of example, Huawei, which is much-maligned by some in the West for its alleged links to the Chinese government, splashes $20 billion (£15.5bn) a year on R&D, double the expenditure of its two leading Western competitors, Ericsson and Nokia.

Read more about Huawei and why it's so controversial

Not only that but China has started to overtake America in the electric cars race. In the US Tesla is the brand that most people associate with electric vehicles, but in China several companies are churning out the environmentally friendly transportation including Zhidou (pictured), Kandi and BYD. The latter is actually backed by American billionaire Warren Buffet, and is already outselling Tesla in terms of vehicle volume. How? In China many of these companies are state-backed or at least benefit from state support.

One of the secrets to China's stellar economic success is the creation of special economic zones (SEZs) with favourable tax regimes, lower tariffs and other breaks to attract foreign direct investment (FDI).

Though the first SEZ was actually created in Shannon, Ireland, China has perfected the concept. Right now, the EU is advocating the creation of SEZs in Greece and other European nations with depressed economies.

While some aspects of China's economy are centralised, others are decentralised, another seemingly contradictory yin and yang approach, and this allows for controlled experiments on a local level.

The experiments that work best are then rolled out to the rest of the country. Much of China's economic growth has been attributed to these controlled experiments. The West could learn a lot from this dualistic approach.

Tying in with the Confucian concept of collectivity, copying was never seen as morally wrong in Chinese history and was actually elevated to a 'noble art'. Great ideas belonged to the group, not the individual.

Chinese companies excel in taking existing technologies and improving them, a practice that is sometimes looked down upon in the West. In fact, the relatively few Western businesses that do this such as Apple have become massively successful as a result.

Four times as many students in China graduate with science, technology, engineering and mathematics (STEM) degrees compared to the US, and a third of Chinese students major in engineering as opposed to just 7% in America. STEM subjects are essential for a buoyant economy.

Hard work, another Confucian concept, is especially admired in China. Many observers in the West reject the 996 ethos (working 9am to 9pm, six days a week), which is championed by Jack Ma and other tech leaders.

A slew of Western commentators believe it can lead to burnout and decreased productivity. Though they have a point, there's no denying that the willingness of Chinese workers to toil extra hard and put in long hours has helped the economy to thrive.

Frugality, which is yet another basic tenet of Confucianism, is ingrained in the Chinese psyche. The net household saving rate in China has been more or less 38% for several years now. During the same period, the household rate of saving has fluctuated around 18% in the US and just 4% in the EU.

The lion's share of the money Chinese people save is deposited in the co-called Big Four state banks, and the profits the money produces are recycled into the country's many and extensive infrastructure projects. Almost 85% of these initiatives have been funded this way.

Now discover 28 'Made in China' initiatives that show why it's leading the world