Download china-transition-Oct

Development of China
- An Economy in Transition
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3 Purposes
1. To Know China
– China matters
2. To Know China’s Development
– Development matters
3. To Know China’s Development Impacts on ‘Us’
– Are we prepared?
5 Topics
1.
2.
3.
4.
5.
Why China?
Why development?
What happened to China’s development?
What next? New challenge ahead
Summary
1. Why China?
1.1 Facts:
• Where? http://china.scmp.com/map/
• What?
http://www.asiapacificbusiness.ca/backgrounder
s/pages_contents.cfm?ID_Briefing=1
• Country Comparisons:
http://www.asiapacificbusiness.ca/backgrounder
s/compareIE.cfm
1. Why China? (cont’d)
1.2 Nicknames:
•
“Awaken Dragon”
–
•
History; Land; Population; Economy; see 2.2.2.
“Growth Engine” http://www.business-standard.com/updates/news.asp?story=3084
–
•
GDP growth 7.6% (98-02); 3 times of world average
“Top FDI Recipient”
–
•
US$52.7b/7% (2002), $57b (2003)
“Global Factory” http://news.bbc.co.uk/2/hi/business/2415241.stm
–
•
Labour cost, production chain, export
“Threaten to the World”
–
Domestic crisis (population, energy, food, economy); global integration
(trade, currency); rising powerful state (economy and military)
2. Why Development?
2.1 Long term trend
2.2 China’s position: past & present
2.1 Long-run of Economic Growth
- Selected Countries
a
Country
Period
Japan
Brazil
Canada
W Germany
United States
China
Mexico
UK
Argentina
Indonesia
Pakistan
India
Bangladesh
1890-1990
1900-1987
1870-1990
1870-1990
1870-1990
1900-1987
1900-1987
1870-1990
1900-1987
1900-1987
1900-1987
1900-1987
1900-1987
Real GDP per Person Real GDP per
at Beginning of
Person at End of
a
Period
Perioda
$1 149
595
1 815
1 669
3 063
547
886
3 676
1 753
681
564
516
476
$22 036
4 664
23 301
19 503
24 922
2 386
3 640
18 549
4 507
1 638
1 208
904
512
Growth Rate
(Per Year)
3.00%
2.39
2.15
2.07
1.76
1.71
1.64
1.36
1.09
1.01
0.88
0.65
0.08
Real GDP is measured in 1985 Canadian dollars.
Source: Mankiw, N. Gregory, et. al., Principles of Marcroeconomics, First Canadian Edition, Dryden, Harcourt
Brace & Company, Canada, p. 237.
2.2 China’s Development Position
• Fast growth
• Large scale
• Low level
Source: http://www.adb.org/Documents/Books/Key_Indicators/2003/default.asp
2.2.1 GDP and GDP Per Capita Growth Rate (PPP): 1700-1995
1700-1820
GDP Growth
China
0.85
India
0.26
Japan
0.21
Europe
0.68
US
2.57
Russia
0.86
World Ave.
0.57
GDP Per Capita Growth
China
0.00
India
0.00
Japan
0.10
Europe
0.22
US
0.62
Russia
0.19
World Ave.
0.09
1820-1952 1952-1978 1978-1995
0.22
0.54
1.74
1.71
3.78
2.08
1.62
4.40
4.02
7.85
4.27
3.46
4.75
4.52
7.49
4.63
3.21
1.74
2.47
-5.56
2.70
-0.08
0.10
0.95
1.03
1.63
1.04
0.92
2.34
1.81
6.66
3.56
2.10
3.15
2.56
6.04
2.53
2.68
1.48
1.47
-2.35
1.01
注：按每年平均复合增长率计算。
资料来源：安格斯·麦迪森《中国经济的长远未来》
，中文版，新华出版社，1999 年。
2.2.2 Share of GNP (PPP)
45
40
Share（% ）
35
30
32. 4
25
20
15
13. 2
10. 9
5. 2
10
12. 5
5
0
1800
5
1850
1900
1950
2000
Year
Chi na
Japan
Eur ope
US
Russi a
I ndi a
2.2.3 GDP Per Capita (PPP): 1700-1995
Year
China
Japan
EU
US
Russia
India
World
Average
600
1260
10645
18251
23377
600
751
2926
6565
4383
531
531
609
972
1568
604
673
2268
4382
5194
Difference between China and Others (Times)
1700
1.00
1
1.45
1
1820
1.00
1.13
1.88
2.06
1952
1.00
4.38
8.15
19.8
1978
1.00
12.85
11.09
18.64
1995
1.00
7.43
5.26
8.81
1
1.25
5.45
6.70
1.65
0.88
0.88
1.13
0.99
0.59
1.01
1.12
4.22
4.48
1.96
GDP Per Capita，1990，US$
1700
600
600
870
1820
600
675
1129
1952
537
2351
4374
1978
979
12581 10860
1995
2653
19720 13951
资料来源：安格斯·麦迪森，
《中国经济的长远未来》
，中文版，新华出版社，1999 年，第 57 页，
第 156-157 页。
Source: MOFCOM, China, at http://www.mofcom.gov.cn/table/jcktj/lszl/lszlqxt.html
3. What Happened?
• Economic Reform
• Transition to the market
• Global Integration
3.1 History of China’s Development
• First Five-Year Plan (1953-1957)
– A new economic order modeled on the Soviet Union example,
emphasizing the development of capital-intensive heavy industry
• Great Leap Forward (1958-1960)
– The break away from the Soviet model and introduction of a new
program aimed at rapidly raising industrial and agricultural
production
• Cultural Revolution (1966-1976)
– The pursuit of Mao’s own development strategy of a self-reliant
economy and political struggle
• Economic Reforms (1978- )
– To move the economy from a planned economy to one that is
more market-oriented
3.2 Economic Reforms:
• Rural reform
– Increase of agricultural production and rural income
• Open-door policy
– Turnaround from an inward-looking, self-reliant
economy to one that participates in the world economy
(foreign trade, FDI, and SEZs)
• Industrial reform
– Enterprise reform and price reform
• Financial reform
– Company’s responsible for financial performance and
borrow money from banks; raise capital at the stock
market
3.2 Economic Reforms (Cont’d):
• SOEs reforms
– Ownership/Assets restructuring
• Western China development
– Regional development
• WTO accession
– Trade policy change, legal reform, structure adjustment
• “Go Global” strategy
– Outward investment, cross-board M&As, overseas
listing
3.3 Model of China Development
• #1: Socialist planned economy:
– Government planning is basic means of allocating
resources
– Production quotas: quantity rather than quality
– Suppress consumption to increase saving: invest in
heavy industry
– Self-reliant and uninvolved in foreign economic
relation
– Results:
• Shortage in supply: production and consumption
goods
• Slow and unstable economy growth
3.3 Model of China Development
(cont’d)
• #2: Socialist market economy:
– Market is basic means of allocating resources
– State controls at the macroeconomic level
– Economic structural Reform
– Results:
• Competition: establishment of the diversified
ownership
• Efficient: profit maximization
• Open: involved in foreign economic relation
• Fast economy growth
Comparison of Two Development Models
China (1952-1977)
China (1978-1998)
10000
10
5000
5
0
0
1976
1974
1972
1970
1968
1966
1964
1962
1960
1958
1956
GDP
1954
400
400000
300
200
200000
100
0
0
GDP per capita
15
600000
1998
15000
500
1996
20
600
1994
20000
800000
1992
25
700
1990
25000
800
DPG per capita (USD)
1988
30
1000000
1980
30000
GDP (USD million)
1978
35
GDP per capita
35000
1952
900
40
DPG per capita (USD)
GDP
40000
1200000
1986
GDP (USD million)
1984
45
1982
45000
4. New Challenges Ahead
•
•
•
•
Population and environmental pressures
Employment insecurity
Growing inequality and poverty
Macroeconomic instability stemming from
incomplete reforms/transitions
• International player: economically and
politically
4.1 Population and Environmental
Pressures
Population and Urbanization in China
140000
35
Population (year-end) (10 000 persons)
120000
% of Urban
Population
100000
30
25
20
60000
15
40000
10
20000
5
0
0
19
52
19
62
19
70
19
78
19
85
19
87
19
89
19
91
19
93
19
95
19
97
80000
Persentage of Urban Population
• Large in # (1.3 b)
• Low rate (<1%)
• Low urbanization
(30%)
• Migrant labour (~100
million)
4.2 Employment Insecurity
6
5
4
3
2
1
0
1978 1982 1985 1988 1991 1994 1997
Urban
Unemploy
ment Rate
4.3 Growing Inequality
Per Capita Annual Income of Urban and Rural Household and The Related Index
Year
1978
1980
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Per Capital Annual Net Income of
Per Capital Annual Disposable Income of
Rural Household
Urban Households
(USD)
Index (1978=100)
(USD) Index (1978=100)
16.15
100.0
41.52
100.0
23.13
139.0
57.75
127.0
48.08
268.9
89.37
160.4
51.25
277.6
108.78
182.5
55.94
292.0
121.19
186.9
65.89
310.7
142.85
182.5
72.73
305.7
166.35
182.8
82.99
311.2
182.61
198.1
85.68
317.4
205.63
212.4
94.80
336.2
245.05
232.9
111.44
346.9
311.66
255.1
147.64
364.4
422.76
276.8
190.77
383.7
517.90
290.3
232.90
418.2
585.11
301.6
252.73
437.4
623.98
311.9
261.43
456.8
656.00
329.9
5. Summary
• China matters in many ways
• A faster developing China is better
off for all
• China strategy is a must