Download Lec1 The Emerging Chinese Economy

PubPol 751-001
Chinese Economy and
Economic Policy
Dr Liu Yunhua
Snow on Nov 1, 2009
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Lecture 1 The Emerging Chinese
Economy
1.1 The Emerging Chinese Economy
1.2 A Review of the China Model
1.3 A Historical View of the Chinese
Economy
1.4 Geographical Conditions and
Natural Resources
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1.1 The Emerging Chinese
Economy
The Miracle of Chinese Economy
Thirty six years high growth rate: 1978-2014
average growth maintained more than 8%.
China has become the world second largest
economy in 2010 in GDP, second largest in
PPP GDP.
In human beings history, the miracle of
Chinese economy is the largest one which
changed the life of 1.37 billion population.
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1.1 The Emerging Chinese Economy
China is now the world largest exporting
country. 2014 Export: US$2344 billion.
China has the world largest foreign
exchange reserve. By the end of 2014,
US$38433 billion.
In 2009, China becomes the world largest
auto producer and auto sale market. In
2014, total auto output reached 23.7
million, more than the sum of US and
Japan.
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1.1 The Emerging Chinese Economy
The world fastest high speed train between
Beijing-Shanghai started construction on 18
April 2008, and started operation on 30 June
2011, designed speed 380 kilometer per hour.
China’s high speed train is now testing for
500.
China has been the world largest
manufacturing country in 2009. “Made in
China” is a commonly thing met in people’s
daily life .
After 2008 world economic crisis, China still
maintained a high growth rate.
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The Growth Trend 1978-2010
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http://www.stats.gov.cn/english/
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2013 GDP Rank by World Bank (Current Price)
Rank
1
2
Nations
United States
US$ billion
16800
China
Japan
9240
4902
Germany
3635
2735
6
7
8
9
France
United Kingdom
Brazil
Russia
Italy
10
India
1877
3
4
5
2522
2246
2097
2071
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2012-2014 GDP Rank by IMF（PPP）$Billion
United States
China
India
Japan
Germany
Russia
Brazil
United Kingdom
France
Mexico
Italy
2012
16,244.6
12,255.9
4,785.5
4,558.7
3,167.4
2,486.2
2,333.9
2,314.7
2,238.1
1,796.0
1,814.6
2013
16,799.7
13,395.4
5,069.2
4,698.8
3,232.5
2,556.2
2,423.3
2,390.9
2,278.0
1,842.6
1,807.8
2014
17,528.4
14,625.2
5,425.4
4,835.0
3,338.0
2,629.7
2,505.2
2,497.3
2,336.6
1,926.6
1,846.9
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WTO data: Leading trade nations and regions,
2013, US$, Billion
Exports
Imports
1
China
$ 2,210
1
United States
$ 2,273
2
United States
$ 1,575
2
China
$ 1,950
3
Germany
$ 1,493
3
Germany
$ 1,233
4
United Kingdom
$ 840
4
United Kingdom
$ 782
5
Japan
$ 697
5
Japan
$ 766
6
France
$ 578
6
France
$ 659
7
South Korea
$ 557
7
South Korea
$ 514
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Netherlands
$ 551
8
Netherlands
$ 477
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Russia
$ 515
9
Canada
$ 471
10
Italy
$ 474
10
India
$ 467
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CNN news: Chinese high-speed train set a new
record, December 28, 2009, is testing a higher one.
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1.1 The Emerging Chinese Economy
Of course, not all things are rosy, many
negative things also happened in the
course of China’s development, such
as poison milk and toys, environment
damage, corruption, the rising income
distribution gap, high housing price in
urban areas, and so on.
But, one thing is clear: Now, the
sleeping lion is awakened.
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Reactions from the World toward
Rising China
China Daily 2006-07-07:
European Parliament (EP)
President Josep Borrell
hailed the rapid economic
growth of China "Napoleon
said China is a sleeping
lion, but I think now China
is a lion awakening”.
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John Naisbitt (b. January
15, 1929), an American
author and public speaker
in the area of futures
studies.
published his new book, China’s
Megatrends, questioned the
conventional way of thinking of the
west regarding how to understand
China.
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Slavoj Žižek, a world renowned
philosopher and psychoanalyst,
a senior researcher at the
Institute for Advanced Study in
the Humanities, in Essen,
Germany.
His books:
China’s Valley of Tears
and
Is authoritarian capitalism the future?
Also question the current capitalist system.
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1.2 A Review of the China Model
Is there a China Model for economic
growth?
Glasshouse Forum seminar, held in Paris in
February 23–24, 2009, produced the
Glasshouse Forum film "Is There a China
Model?"
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The Nature of A Transition Economy
Thirty six years high economic growth,
a historical miracle.
The economy has experienced
substantial transition and the process
is still continuing.
The transition in China is however,
not only in economy, but also in
ideology, political institution, legal
institution, and in value judgment and
social order.
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1.2 A Review of the China Model
A few challenging questions about
the rising Chinese Economy
How will the rising Chinese economy
affect the world and in what way?
What are the driving forces behind the
fast growth of the Chinese economy?
Is there a “China Model” for
development? If yes, what does it mean?
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The Forecast by Economist Intelligence Unit on
Chinese Economy
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1.2 A Review of the China Model
Some supportive explanations for
above questions:
China’s central government political system
has a strong pushing power for growth, and
it can accommodate very well of the impact
of world economic crisis.
Chinese economy is at the high growth track
as a developing economy.
The dominant State Owned Enterprises
played some role in stabilizing the economy.
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1.2 A Review of the China Model
Review of the observable microdriving forces in Chinese economy
in the initial three decades
Export
Domestic demand
FDI
Fiscal policy (domestic investment)
Technological improvement
Abundant cheap labor supply
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1) Exports
2013 Exports accounted for about one fourth of the GDP,
played a very important role in employment since the
labor intensive nature of the exports.
Imparts and Exports of Goods, 2009-2013 , US$100 million
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2013 China’s Exports and Imports with Major
Countries and Regions, US$100 million
Country or region
Exports
Increase
over 2012
(%)
Imports
Increase
over 2012
(%)
European Union
3,390
1.1
2,200
3.7
United States
3,684
4.7
1,525
14.8
ASEAN
2,441
19.5
1,996
1.9
Hong Kong, China
3,848
19.0
162
-9.3
Japan
1,503
-0.9
1,623
-8.7
Republic of Korea
912
4.0
1,831
8.5
Taiwan, China
406
10.5
1,566
18.5
Russia
496
12.6
396
-10.2
India
484
1.6
170
-9.6
Source: China Statistical Bureau
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1.2 A Review of the China Model
2) Domestic Demand
With the per capita income level
passes $1000, now around US$8000 in
2014, consumption structure upgrades
to demand more for:
Housing
Cars
Education
Communication,
Urban infrastructure
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3) FDI inflow in China, US$ billion
1991
11.5
2003
56.1
1992
19.2
2004
64.0
1993
38.9
2005
63.8
1994
43.2
2006
67.0
1995
48.1
2007
78.3
1996
54.8
2008
95.2
1997
64.4
2009
91.8
1998
58.5
2010
108.8
1999
52.6
2011
116.0
2000
59.3
2012
111.7
2001
49.6
2013
117.5
2002
55.0
2014
119.6
Source: China Statistical Bureau
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1.2 A Review of the China Model
4) Fiscal policy
The strong central government control
of the economy, and the local
government incentive to develop.
5) Technological improvement and
applications
The technological application in all
fields provided a big push for
productivity raise.
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In 2009, the final
consumption,
investment and net
exports account for
GDP and for the total
growth rate are the
following respectively
Contribution to GDP
growth rate
Contribution to GDP
total
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Year-end number of Broadband Users,
2010-2014, by 10,000
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6) The abundant cheap labor supply
With 1.37 billion population, China has
more than 100 million surplus labor in
rural areas. After the world crisis,
about 20 million jobs lost in coastal
areas. Now China is experiencing labor
shortage, but the average level is still
low at US$2.3 per hour.
Before 2009, labor wage increased
slowly in coastal areas.
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After the world crisis, a 4000 billion
Yuan stimulation plan was passed.
National level infrastructure like high
speed railroad, clean energy, highways,
and other infrastructures are all in the
domain of development.
At the same time, China is facing the
serious challenge of transition of the
economy from export oriented to an
internal and external demand balanced
economy.
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1.3 A Historical View of the
Chinese Economy
China, with five thousand years
continued history, had been the most
advanced society in the world for
thousand years until a few hundred
years ago.
The most noted characteristic of
China’s history is its 2132 years long
empire reign era (211 B.C. to 1911).
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1.3 A Historical View of the Chinese Economy
Economic Achievement in Ancient
China
Market economy had been developed two
thousand years ago, labor division raised
the productivity.
Most developed agriculture technology in
terms of tools and climate knowledge.
Gunpowder, compass, printing, paper
making are the well known four main
ancient inventions of China.
By the 14th century, China had laid the
foundation for industrial revolution.
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1.3 A Historical View of the Chinese Economy
When did the China power start to fall?
The first turning point occurred in the 14th
century when the Western capitalist
started to grow.
The second turning point occurred in the
first half of the 19th century, when the
Opium War took place.
Why did the industrial revolution not
appear in China?
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1.4 Geographic Conditions and
Natural Resources
The potential of development of a
country is constrained by its resources
endowments
Population
Location
Land
Energy
Water
Mineral deposits
Climate
The Population Distribution in China
Distribution of Cities with more than a Million
Population
The Climate Map of China
Comparison of Resources between China and
Three Other Large Countries
National land
areas 10000skm
Population
density /1000skm
Per capita
productive land
Hectare
Per capita water
resources
Cbm/person
Russia
Canada
China
USA
1.74
997
960
937
8.6
3.2
131.0
27.5
1.39
2.5
0.21
1.64
30599
98462
2292
9413
Source: United Nations, 2005
Tutorial questions:
1. Why can China endure the world
crisis hit?
2. Does the China’s development pattern
really mean a new model of economic
development?
3. What are the challenges and
opportunities for developed countries
facing rising Chinese economy?
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