1 Lecture Two and Three Industrial Development in China Prof. Xingmin Yin China Center for Economic Studies Fudan University.

1 Lecture Two and Three Industrial Development in China Prof. Xingmin Yin China Center for Economic Studies Fudan University

2 Contents 1. Introduction 2. Industrial Structure in General 3. Industrial Development Strategy 4. Growth of Manufacturing Exports 5. Industrial Restructuring 6. The Future of China s Industry Questions

3 1.Introduction China is a developing country with huge population. Its GDP per capita in 2000 was only $950 at official exchange rate, and increased to about $3200 in 2008. During past 30 years, the big change in Chinese industry and economy was taken place and had an extraordinary influence on the world economy. It increased its share of world merchandise exports from 0.95% in 1980 to 4.12% in 2002, to 5.8% in 2003, and further to 8.7% in 2008 respectively. China s success at exporting has led to account surpluses since 1994. The volume of foreign exchange reserves has accumulated into US$ 1.95 trillion up to early 2009.

4 Historical Experience Three Stages for Structure Changes Agriculture dominance in economy The sector transformation from agriculture to manufacturing industry, and 1000 USD per capita as indicator. The contribution of science and technology to industry is increased, and service sector will expand its scale to society. Market demand is the major driving force for structural changes

5 Market Demand for Industrial Development The household income has increased greatly in the past decade. The changes of consumer behavior have a strong influence on firm s production What kind of products and service will be preferred by households?

6 Walt W. Rostow View It is possible to identity all societies, in their economic dimensions, as lying within one of five categories: the traditional society, the pre-conditions for take-off into self-sustaining growth, the take-off, the drive to maturity, and the age of high mass consumption Can we apply this point of view to analyze China?

7 2. Industrial Structure in General Industry accounts for 43 percent of total GDP; and 91 percent of exports. Industrial capacity, especially new technology- intensive sectors, has expanded rapidly and also based on huge investments. The rise of China as a major trade player and industrial power raises many issues for China as well as developing countries.

8 Development Issues The importance of macro-management in economic development. The success of export-orientation strategy or import liberalization strategy. The development targets for labor-intensive or technology-intensive industries. The role of industrial sophistication to China s integration into the world economy. Changes of industrial structure in China.

9 Growth Rates of China s GNP, Industry, Service and CPI (1978-2008)

10 Comments The industry made a great contribution to China s economy progress. The growth rate of industry was 14.8% in 2007. How to understand the lower growth rate of service sector that was taken place in the last decade? Is it sustainable for China s economy growth? Can the central government control the growth rate in development?

11 Macroeconomic Management The macro scorecard for China is remarkably strong on an absolute as well as on a relative scale. Three aspects of China s performance are especially worthy to note. Its GDP growth rate over 30 years is among the highest one on record. Although the pace of expansion was unusually rapid, inflationary pressure was largely absent in the most years. Industry has remained the leading sector since 1984. During the past two decades, industry has grown by above 12 percent per annum.

12 Composition of GDP and Employment by Sectors in China YearAgricultureIndustryConstructionServices Composition of GDP 197828.444.73.923.0 199027.137.04.631.3 200312.840.55.541.2 200711.343.05.640.1 Composition of Employment 197870.715.42.211.7 199060.017.14.318.6 200349.116.15.529.3 200740.826.8 32.4

13 Industry is the largest sector in terms of GDP. The role of agriculture to GDP has decreased from 27.1% in 1990 to 11.3% in 2007. The rural labor force still accounts for 40.8% of the national employment, by decreasing 30 percentage points in the past 30 years, and will further to reduce under a new urbanization policy.

14 Discussion At present, the contribution of employment provided by service sector is very limited due to its support share in GDP, showing the absolute underdevelopment. There exists a huge gap between China s capacity to produce goods and its ability to provide economic and social services. Aside from the economic development, the raising of people s standard of living should be the main way to expand the employment in services sector in the coming decades.

15 3. Industrial Development Strategy Most Latin America countries posses more advanced industrial sectors. But in the 1970s and 1980s, economies like Singapore and Republic of Korea greatly accelerated the growth of their manufacturing output. Does China follow this strategy? In terms of sheer size, China has the largest manufacturing sector in the developing countries, but this sector is nevertheless relatively small in relation to the nation s enormous rural population.

16 Industrialization strategy in China Can you define the major features of China s industrialization strategy?

17 A. Growth of Industrial Output Industry has been the most important driver for China s economic growth. The value of industrial output was only RMB160.7 billion in 1978 and RMB685.8 billion in 1990. Industrial output increased 3.24 times over the period 2001-2007. By the first quarter 2009, industry output (including construction) reached RMB3.2 trillion, accounting for 48.62% of GDP.

18 Growth of Industrial Value-added Billion RMB

19 Discussion The higher growth rate of manufacturing industry, the higher of GDP growth rate emerges in China s industrializing process. Do you have any comments on China s industrial development in the past decades? How do you understand the role of industrialization to developing countries?

20 Recent Case Discussion: Industrial Output and Labor Growth

21 Business Cycle and Industrial Growth Will Chinese economy be recovery through traditional industrialization during the global downturn caused by the US financial crisis? Discussion on historical case.

22 B. Growth of Industrial Assets The growth rate of industrial assets has been lower than that of industrial output. The growth of industrial assets was not as high as expected in comparison to industrial output. Industrial assets increased 1.15 times, from RMB7923.4 billion to RMB13540.3 billion over the period 1995-2001. However, industrial asset has increased its growth rate since 2003, which shows the new feature of industrial fixed-asset investment.

23 Growth of Industrial Assets RMB Billion

24 More fixed-asset investments have been flowed into steel production, machinery, electronics, and transportation equipment industries. General trends for manufacturing investment booming in the past eight years.

25 C. Growth of Labor Productivity Explanation on productivity The rising of industrial competitiveness is strongly related with the growth of labor productivity in manufacturing sector. Different growth rates for industrial output and labor

26 Growth of Labor and Output in Some Manufacturing Industries Industry or Products19952000 2007 Textile labor, 0000 persons673.00327.00626.26 Yarn (10,000 tons)542.20657.002068.17 Apparel labor, 0000 persons175.00120.00414.19 Steel industry labor, 0000 persons346.00222.00304.43 Rolled steel (10,000 tons)8979.801314656561 Transportation equipment industry370.00244.00408.59 Passenger cars33.7060.70479.78 Electronics& Telecommunication172.00138.00587.92 Integrated circuit (trillion units)5.5175.88041.12 Micro-computer (10,000 sets)83.57672.0012073.38 General machinery labor, 0000 persons405.00222.00420.71 Metal-cutting machine tool (10,000 units)20.3417.6664.7 Manufacturing labor, 0000 persons5439.003240.007875.20

27 Discussion Industrial products increased more rapidly than labor force in all manufacturing industries over the surveyed period. Comparison on industrial output and labor productivity between China and US over the period 1998-2007.

28 Growth of Industrial Outputs 19982005 Changes (fold) US China US,% China Manufacturing 3987 708 3993 2659 0.16 2.76 Textiles 91 53 61 155-33.45 1.93 Chemicals 422 82 478 283 13.45 2.44 Base metals 172 67 172 359 -0.25 4.39 Machinery 279 54 255 204 -8.58 2.75 IT products 443 59 338 330-23.74 4.58 Transportation 637 51 599 192 -6.97 2.77 US$ billion.

29 Labor Productivity 19982005 Changes (Fold) US China US, % China Manufacturing 80868 3786 95524 12779 18.2 2.78 Textiles 42219 2123 56252 6693 33.3 2.12 Chemicals 164561 3414215297 15769 30.8 3.62 Base metals 81964 3975117990 24530 44.0 5.17 Machinery 78124 2476 85824 10199 9.86 3.12 IT products 93788 7300 92603 15889 -1.26 1.18 Transportation 86590 3866 83822 13269 -3.20 2.43 US$ per person/year.

30 Discussion Difference of growth rates in manufacturing sectors. China s labor productivity in manufacturing increased 2.78 folds, while that of US increased 18.2% over the period 1998-2005. Furthermore, labor productivity in China s manufacturing increased 52.71% from 2005 to 2007.

31 However, the productivity of the US has much higher than that of China in manufacturing industries. Thus, the productivity gap between USA and China is still very large.

32 D. Output of Major Industrial Products Assessments on the achievement of industrialization in China. Analysis of industrial products.

33 a. Energy Product 197819922007Growth (times) 78-92, 92-2007 Coal, billion tones 0.621.122.53 0.81 1.26 Crude Petro-oil Million tones 104142186 37% 31% Electricity Billion kwh 25.6675.39328.16 1.94 3.35

34 b. Intermediate Products 197819922007Growth (times) 78-92, 92-2007 Chemical fiber, million tones 0.292.1324.14 6.49 10.33 Yarn, million tones 2.385.0220.68 1.11 3.12 Cloth, billion meters 11.0319.0767.53 0.73 2.54 Paperboard, mil tones 4.3917.2577.92 2.93 3.52 Sulfuric acid, mil. tones 6.6114.0954.13 1.13 2.84 Aluminum, mil. tones 0.400.8512.28 1.13 13.45 Steel, million tones 22.0866.97565.6 2.03 7.45

35 Growth of Steel Products 10,000 tones

36 Growth of Aluminum 10,000 tones

37 c. Capital Products Products197819922007 Growth (times) 78-92, 92-2007 Metal-cutting machine tools, 000 18.322.964.7 0.25 1.83 Motor vehicles, mil. units0.151.078.89 6.15 7.33 Passenger cars, mil. units0.050.164.80 28.94 28.67 Air-conditioners, mil. sets /1.5880.14 / 49.71 Micro-computers, mil. units /0.13120.7 / 956.00

38 Growth of Automobiles 10,000 units

39 Discussion Industrial output in China has been experiencing a rapid wave of increases since 1992. What we can learn from the expansion of industrial capacities in the developed countries?

40 d. International Comparison on Industrial Products The potential demand for industrial products will be larger than our expectation today. The case of Japan may be useful for the estimation of China s industrial capacity. Value of per capita: to estimate China s industrial capacity in the coming decades.

41 Electricity, % of the World (Billion kwh) 19781991/9220052005, per capita World768812034181842824.6 kwh USA29.125.623.314301.1 Japan7.37.46.28875.3 EU15.816.615.17506.0 Soviet/Russia15.614.76.34944.9 India0.152.43.7620.3 Brazil0.152.02.22172.2 China3.345.613.61879.1

42 Steel, % of the World (Million tones) 19781991/9220052005, per capita World, mil. tones 7136871132176 kg USA17.412.78.3315 Japan14.316.09.9877 EU18.719.814.4537 Soviet/Russia21.220.45.8462 India1.42.42.628 Brazil1.73.32.8171 China3.110.331.2270

43 Motor Vehicles, % of the World 19781991/922005 unit/10,000 persons World: mil. units43.5847.2066.53103 USA29.5520.6117.92402 Japan21.2026.6316.23845 Germany9.6411.108.65698 Soviet/Russia4.764.061.9189 India/0.722.0913 Brazil/2.073.49125 China0.342.268.5844

Discussion A growing economy is real good news for industrial growth. Growth of affordable income: GDP per capita in China will increase from US$3,200 in 2008 to US$5,000 in 2015. By 2020, China will continue to drive the global demand and possibly produce 25 million vehicles, accounting for 20% of global production.

45 e. International Comparison on Sectoral Employment Is it possible for China to create more jobs for its huge population? What lessons can be learned from the developed countries?

46 Employment Structure by Industry (Labor force, 1999) IndustryChinaUSAJapanGermany Employment, 10,000 705861334964623642 Primary33493341335102 Mining66756616 Manufacturing810920071345853 Public utility2851473831 Construction3412899657315 Service24620989940812325

47 Employment Structure by Industry (%,1999) IndustryChinaUSAJapanGermany Employment, %100.00 Primary47.452.565.182.80 Mining0.940.420.090.44 Manufacturing11.4915.0320.8223.42 Public utility0.411.100.590.85 Construction4.836.7310.178.65 Service34.8874.1663.1563.84

48 Observations In view of percentage, Germany and Japan provides more jobs in manufacturing industry in comparison with that of the USA. China still needs to create more jobs for rural labor force in non-primary sector. The USA is a service-oriented economy. In which year, will China enter into the middle- income country with GDP 10,000(USD) per capita?

49 4. Growth of Manufacturing Exports China s sudden rise as a global trading power has been greeted with a curious mixture of both admiration and fear. As an open economy and a large importing country, China has opened its door for foreign firms to develop new markets for their goods and services, especially high-value-added products such as aircraft, software, industrial design, advanced machinery, and components such as semiconductors and integrated circuits.

50 It is estimated that China would be the largest exporter within a short period such as ten years, even five years in the world market, both developing and developed economies. If it is true, what is a real effect on the global pattern? What can we learn from the past experience? Brief discussion on trade strategy

51 A. Trade Liberalization China s trade liberalization was part of a wider strategy of achieving stability and efficient resource allocation in the past 30 years, especially in the last 10 years. The pursuit of a policy of industrialization took a gradual liberalization in tariffs and import quota controls as a means of integrating into the world economy. China s import/GDP ratio back in 1978 was 5.17 percent. Since 1978 or so, the figure has been in excess of 35 percent (in 2007). Trade has been substantially liberalized in the 1990s. The average tariff has been brought down from 55.6 percent in 1982 to 44.1 percent in 1991, and further to 13 percent for industrial products in 2001. The average tariff has been lowered to 5.4 percent in 2007.

52 The Timetable of Trade Liberalizations Tariff1982199119982005 2007 Categories1721 22 Maximum104.9%90.8%28.7% Average55.6%44.1%17.1%9.4% 5.4%

53 Discussion It is well-known proposition that reducing certain tariffs, as opposed to eliminating all of them, is a more practical way for China to join the world trade system. The above table gives an impression of the openness of the Chinese economy. The import tariffs on various categories has been decreased in the China s entry of WTO, such as the tariffs on vehicles and its parts had been reduced to 25% and 10% respectively by 2005. After joining the WTO, China decreased the tariffs on IT products to zero.

54 B. Trade as Powerful Driving Force By reducing tariffs and increasing industrial competitiveness, China has converted itself from an importer to an exporter of certain technological products, for example, until the middle of the 1990s, China imported household electric appliances, but it is gradually turning into an exporter of these products since around of the late 1990s. From 1992 to 2000, China s trade grew by 12 percent per annum, since overall growth in GDP was about 9 percent per year, this implies that trade became substantially more important to the Chinese economy. During the period 2002-2008, China s exports grew by about 20 percent, while economic growth was 12 percent per annum.

55 External Trade Performance in China (1978-2008) US$ Billion

56 C. Contribution of FDI to Trade The high level of FDI created numerous manufacturing joint venture. These enterprises expected their products to the global market very rapidly. Amid China s industrialization under the support of FDI, products are diversified, becoming more value-added, and technology- oriented so quickly that the composition as exports is about to undergo a major change as the share in world trade is significantly raised.

57 A close look at the breakdown of China s economic rise in perspective. Foreign-funded enterprises accounted for 55 percent of China s exports last year. In this respect, China diverges from the typical Asian success story. George F.Gilboy. The Myth Behind China s Miracle Foreign Affairs July/August 2004, Volume 83, No.4 Can we agree with this statement? If yes, what is our reason?, If not, how can we explain it?

58 The Flow of FDI into Manufacturing Industry Until the 1980s China received the small amount of foreign direct investment (FDI) The dominant sector invested by foreign capital has been Chinese manufacture industry, by accounting for about 60%- 70% in the last decade. Major international makers of high-technology products are accelerating the shift of production to China since the second half of the 1990s. The movements of foreign capital and technology into China are making China s industry towards the sophistication of structure and increasing technological competitiveness in the world market.

59 The Growth of Foreign Direct Investment in China (1984-2008) US$ Billion

60 Comments on FDI FDI is one method of resolving technology gap issue in economic development. Major technology source comes from the developed countries. The establishment of new industries must get outside supports for developing countries. With the emergence of new technological products and industries, FDI may continue to play the important role in the global economy. If the decline of FDI inflow into China, what will be happened to China s industry?

61 Major international makers of high-technology products are accelerating the shift of production base into China since the second half of the 1990s. The movements of foreign capital and technology into China are making China s industry towards the sophistication of structure and increasing technological competitiveness in the world market. New industries, new players

62 D. The Change of Export Competitiveness in Different Sectors The share of manufactured products increased from 37% of merchandise exports in 1985 to 91% in 2002, and within manufactured goods the composition shifted toward capital goods, which are usually more technology intensive than light manufactures such as textiles, food processing and garments. The implications of China s entry into the WTO suggest that China can benefit from the expansion of labor- intensive industries such as textiles and garments, in which its global market share is expected to increase significantly. The export of textiles increased from $49.83 billion in 2000 to $165.80 billion in 2007, increasing by 3.3 times; however, the export of machinery and electronic goods increased by nearly 6 times, from $82.60 billion to $698.61 billion, at the same period.

63 In 2002 the ranking of machinery and electronic products grew to the top with $126.98 billion, higher than that of miscellaneous products (such as garments and footwear) with $101.15 billion. This statistics shows just how rapidly the exports expanded in the machinery and electronics sectors in China. In 2007, the machinery and electronics accounted for 47.39 percent of the total exports. Learning through importing and exporting activities in China s technological industries

64 Trade in Major Products US$ Billion

65 Technology Diffusion through Trading It is clear that the international diffusion of technology provides a crucial ingredient in the debate on technological locking out of under development. Through the use of imported technologies, China can acquire some comparative advantages in low-tech mature products and related industries.

66 Learning Effects Technological catching up will only be achieved through acquiring the capacity for creating and improving as opposed to the simple use of technology. This means being able at some stage to enter either as imitator or as innovators of new products or processes. Learning effects in trade of manufacturing products.

67 Technology Deepening The structure of China s external trade has been undergoing a significant change with the broadening boom of investment in China from overseas during the last decade. It is distinguished feature that the export of machinery and electronic goods increased dramatically from $0.84 billion in 1980 to $7.15 billion in 1991, and to $187.77 billion in 2003, $268.26 billion in 2004. At the same period, the import of these industrial products also increased from $5.12 billion to $19.6 billion, and to $192.83 billion and $252.83 billion. Obviously, the gap between exports and imports in the machinery and electronic goods is getting narrowed bit by bit. It is learning effects

68 Changes of Machinery & Electronics Trade Structure

69 The Case of Machinery & Electronics It is a distinguished feature that exports of machinery and electronics goods increased dramatically in the last 18 years: US$5.59 billion in 1990 US$82.60 billion in 2000 US$268.26 billion in 2004 US$352.23 billion in 2005 US$577.05 billion in 2007 Changes of China s comparative advantages.

70 The ratio of export of machinery and electronic goods to its import was 36.48 percent in 1991, and changed into 97.38 percent in 2003, and further into 139.9 percent in 2007. This comparison clearly implies that the availability of imported intermediate goods and of technology, whether licensed or embodied in imported capital goods, is an important source for improving export capability in China s manufactured products. The contribution of imported technology to industrial restructuring has been significant.

71 5. Industrial Restructuring It is major task for Chinese economies to expand its manufacturing capacity, especially in technological industry. How to assess the technological levels for Chinese economies? Which direction for China s industrial restructuring has been taken?

72 A. Big Changes of China s Manufacturing Industry Textile & GarmentsMachinery & Electronic OutputShare of M.(%)OutputShare of M.(%) 1992358.0714.42565.3626.43 2004 2007 1322.66 2633.37 8.10 7.45 5883.99 13515.29 36.05 38.22 Unit: Billion yuan. Will China keep its labor intensive industries for many years? If yes, how long? Electronic & electric industries accounted for 19.31 percent of manufacturing output in 2004, which is the largest share to manufacturing industries for all developed and developing countries.

73 What Can China Learn from International Lessons? Electronic and communication sector has been enlarged to be the major industry in 2003. Is it a similar phenomenon with other East Asian economies? Clearly, electronic industry is highly globed. Is it an international division of labor or just the reflection of industrial competitiveness, particularly labor costs?

74 Difference of Manufacturing Structure: Lessons from Global Comparison IndustryDevelopedChinaDeveloping 199620071996 1.Mining7.815.7932.10 2.manufacturing83.9487.2860.99 Food. beverage8.789.0112.69 Textile2.294.624.07 Clothing & leather1.613.153.07 Refinery & chemicals12.1812.5912.90 Metallurgical industry5.2212.773.74 Machinery electronics40.0533.3615.48 others13.8112.789.04 3.Public utility8.256.976.91 Total100

75 Discussion Different features of manufacturing industries between China and developed countries. Case studies: The USA, the European Union and Japan still have very powerful production capacities in machinery, electric and electronic industries. Brief discussion: the case of automobile industry.

76 B. Automobile Industry China s auto industry continues to grow, registered an average of 20 percent per annum over the period 2002-2007. China s auto sales increased 5.2 percent in 2008, and surprisingly rose 12 percent (2.67 million vehicles) for Q1, 2009. Why does China s auto sales keep rise in this global economic downturn?

77 The Global League Table 2007 Vehicles( 000) Share(%) 2000 Vehicles( 000) Share(%) 1. Japan 11596 15.851. USA 12800 21.93 2. USA 10780 14.742. Japan 10141 17.37 3. China 8882 12.143. Germany 5527 9.49 4. Germany 6213 8.494. France 3348 5.74 5. Korea, Rep. 4086 5.595. Korea, Rep. 3115 5.34 6. France 3016 4.126. Spain 3033 5.20 7. Brazil 2971 4.067. Canada 2961 5.07 8. Spain 2890 3.958. China 2069 3.54 9. Canada 2578 3.529. Mexico 1936 3.32 10.India 2307 3.1510.UK 1814 3.11 Others 17834 24.38Others 11630 19.89 Global Total 73153 100.00Global Total 58374 100.00

78 China s Share of Global Auto Production %

79 Capacity Expansion in Auto Industry A big shift in the global auto industry While global players are turning to the emerging markets such as China for profits they can no longer realize in the United States, Europe and Japan, domestic manufacturers in China are building up their own auto industry with technology transferred by the multinationals through joint ventures.

80 Currently, about 65 percent of cars made in China are manufactured by non-Chinese companies. But multinational auto makers also face keen competition from homegrown manufacturers in China. Can Chinese homegrown auto makers survive in their competition with leading multinationals?

81 Very significantly, both the production of automobiles, and in the related auto- parts industry, China s auto makers are pushing for influence both within China s expanding domestic market and through exports, particularly through partnerships with foreign companies. It is possible to judge that homegrown auto makers will grow up in the booming markets.

82 China s Auto Ex-Imports US$ Million

83 Ex-Imports of Auto Parts US$ Million

84 The export amount of vehicles from USD1.34 billion in 2000 to USD9.6 billion in 2008. It is noticed that one of the biggest China- related shifts thus far is not in the production of automobiles themselves, but the exports of parts and components. China s exports of auto parts continue to increase from USD1.12 billion in 2000 to USD14.82 billion in 2008. This performance is better than that of vehicle exports.

85 Vehicles in Use: International Comparison CountryYearPer capita Vehicles in fleet 000 V/P(%) Passenger Cars 000 C/P(%) China2000840 15761 1.24 8537 0.67 20072500 43584 3.30 29617 2.24 Japan200035420 72653 57.27 62438 49.21 Korea20009010 12040 25.61 8084 17.20 Brazil20003630 28975 17.03 23242 13.66 Germany199925690 44874 54.66 42324 51.56 USA199932260214775 77.07132432 47.52 India1998440 8120 0.81 5056 0.51

86 Discussion Possession ratio of vehicle to population increased from 1.24% in 2000 to 3.3% in 2007. Possession ratio of passenger cars also increased from 0.67% to 2.4% over the same period. As for Japan, this ratio is at 49.21%, higher than that of the US (47.52%). Will China catch up with Brazil and Korea s level of vehicle in society use? If China s GDP per capita will be as high as that of the developed economies, can more vehicles be sold out in coming years?

87 The Estimation of China s Automobiles ( 000) 200020072020 GDP per capita (USD)9502,50012,000 Auto Production Vehicles20708888.925000 Passenger cars6074997.818000 China s share of global (%) Vehicles3.5412.3220.00 Passenger cars1.488.5218.28 Global auto production Vehicles Passenger cars 5839.24 4098.79 7217.85 5630.11 124500 95712

88 Can China become the largest auto producer in the world? It is reasonably forecasted, that the China s auto production and sales will be around 25 million units in 2020. It s going to be much more important to see how Chinese consumers there are thinking about or rethinking their purchases of cars and looking for the next five years or so. The estimation of strong demand for autos can be drawn from the growth of per capita production rate over the past decade.

89 6. The Future of Chinas Industry It is worth to note that the ranking of world economic power will be changed very often due to the different growth rates of major countries. The rise of China as an economic giant is a new phenomenon in the 21st century, but, China s GDP per capita is still very low. Economic growth is not a pure economic issue, it refers to many aspects of economy as well as society.

90 New Global Industrial Player Chinese economy will continued to be based on the industrialization. Industry will develop the new technology sectors and upgrade the manufacturing industry in the coming decades. Globalization of industry is a good way for China s improvement of technology competitiveness: global competition. Is it possible for China to be the largest industrialized country in the long run?

91 Challenges and Opportunities The world economy will be prosperous in the coming years, which provides many opportunities for both developed and developing countries to increase their exports. China will continue to experience the high growth rate and expand its industrial capacity, which may be beyond today expectation. China is facing many challenges and issues, which may be turned into the opportunities for development. What prospect for the future of China s industry?

92 Questions 1. Briefly describe the changes of economic structure by output and employment in China. 2. Please briefly describe the main features of China s industrialization. 3. What is the main difference of industrial structure between developed and developing countries?

93 4. Can you analyze other common characteristics of developing economies not mentioned in the lecture? List four or five. 5. Of what relevance is the high growth rate of china s economy in the past two decades?

94 Thank You!

1 Lecture Two and Three Industrial Development in China Prof. Xingmin Yin China Center for Economic Studies Fudan University.

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