Final answer:
The Chinese government introduced new economic policies in the 1970s under the leadership of Deng Xiaoping to modernize the country's economy, encourage private enterprise, and open up to foreign investment, which led to improved living standards and the development of a market-oriented economy.
Step-by-step explanation:
In the 1970s, the Chinese government implemented new economic policies to modernize the nation's economy and improve standards of living. This shift was largely initiated by Deng Xiaoping, who introduced the "Four Modernizations" targeting agriculture, industry, defense, and science and technology.
Deng's reforms broke away from collective farming, encouraged entrepreneurship, invited foreign investment, and signaled the opening of China to global trade. Moreover, the blend of socialist-market economy allowed for a controlled approach to economic production, integrating elements of free markets. These amendments were essential to transition from a planned economy towards a more market-oriented structure to compete internationally, which was further encouraged by the Soviet Union's collapse and the need to prevent the economic stagnancy that occurred during the "Great Leap Forward".
By enacting these reforms, China aimed to elevate its position in the global market, which involved encouraging private management of some state industries and introducing aspects of capitalist economic practices. The outcome was a significant improvement in the Chinese standard of living and the emergence of a new middle class.