The Chinese Economy in the Past Three Decades: Achievements and Problems Andong Zhu Tsinghua University Beijing IDEAs Conference 2007.6.

The Chinese Economy in the Past Three Decades:

Achievements and Problems

Andong ZhuTsinghua University

Beijing IDEAs Conference2007.6

Outline

Introduction The Chinese Economy in the First Three

Decades after the Revolution The Achievements of the Chinese

Economy in the Past Three decades The Problems of the Chinese Economy in

the Past Three decades Conclusion

The Chinese Economy in the First Three Decades after the Revolution

The Initial Condition The Achievement during This Period

A Family in the “Old China”

1948: Hyper-inflation in China

The Achievements

Preliminarily Industrialized the Economy Established a Independent and

Comprehensive Industrial system GDP Growth Rate Averaged at 6.68% per

year during 1953-1978 Life Expectancy increased from around 35

to about 67 years.

Outline





The GDP Growth Rate of China and the World

0

2

4

6

8

10

12

14

16

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

GDP中国增长率 GDP世界增长率

The Rapid Increase of GDPTotal GDP, i n mi l l i ons of 1990 US$(converted at Geary Khami s PPPs)

0

1000

2000

3000

4000

5000

6000

7000

total Popul ati on (000)）

0

200, 000

400, 000

600, 000

800, 000

1, 000, 000

1, 200, 000

1, 400, 0001

1500

1700

1822

1826

1830

1834

1838

1842

1846

1850

1854

1858

1862

1866

1870

1874

1878

1882

1886

1890

1894

1898

1902

1906

1910

1914

1918

1922

1926

1930

1934

1938

1942

1946

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

GDP per capi ta i n chi na (1990 i nternat i onal $)

0

500

1, 000

1, 500

2, 000

2, 500

3, 000

3, 500

4, 000

1

1820

1825

1830

1835

1840

1845

1850

1855

1860

1865

1870

1875

1880

1885

1890

1895

1900

1905

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

Outline





Is the China’s Economic Growth Sustainable?

Pollution in the World:1999

The Over-dependency on Foreign TradeForeign Trade as % of GDP: 1978-2006

-10

0

10

20

30

40

50

60

70

80Total I mports & Exports Total Exports Total I mports Bal ance

The Over-dependency on Investment

Capi tal Formati on Rate i n Chi na: 1978-2005

0

5

10

15

20

25

30

35

40

45

50

Capi tal Formati on Rate (%)

China’s Changing Economic Structure, 1981-2003 (%)

1981-1985

1986-1990

1980-1990

1996-2000

2001-2003

Share of GDP (expenditure approach):a

Private Consumption 52.2 51.0 46.5 47.2 45.1

Public Consumption 14.0 12.5 12.8 12.2 12.8

Fixed Capital Formation 28.1 29.2 33.7 35.0 39.5

Exportsb 7.9 12.7 19.0 20.1 25.7

Net Exports -0.3 -0.4 1.0 3.0 2.3

Contribution to GDP growth:a


Public Consumption 12.4 11.2 11.0 16.3 9.5

Fixed Capital Formation 31.2 21.9 38.7 40.0 57.9

Exportsb 12.7 22.8 23.6 26.5 48.7

Net Exports -8.3 9.2 1.2 4.0 1.4

The Changing Structure of the U.S economy, 1981-2004 (%)

1961-1969

1970-1979

1980-1990

1991-2000

2001-2004

Share of GDP:


Private Investment 15.6 16.8 16.7 15.7 15.6

Government Spending 22.2 21.0 20.6 18.6 18.5

Net Exports 0.6 -0.2 -1.8 -1.6 -4.3

Contribution to GDP growth:


Private Investment 16.9 21.3 11.4 21.8 10.0

Government Spending 24.0 17.7 21.0 13.5 24.1

Net Exports -0.6 -1.5 -1.7 -7.5 -11.8

China's Capital Productivity andRate of Return on Capital

0

0.1

0.2

0.3

0.4

0.5

0.6

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

0

0.04

0.08

0.12

0.16

0.2

0.24

Capital Productivity Marginal Capital ProductivityIndustrial Profit Rate (right scale)

Decreasing Consumption Rate

Fi nal Consupti on Rate i n Chi na: 1978-2005

50

52

54

56

58

60

62

64

66

68Fi nal Consumpti on Rate (%)

Income Inequality in China:1979~2004

.24

.28

.32

.36

.40

.44

.48

80 82 84 86 88 90 92 94 96 98 00 02 04

GINI

Sweden 25, India 32.5, United States 40.8, China 44.7, Brazil 59.1

0.20

0.25

0.30

0.35

0.40

0.45

0.50

'81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01

Gini Coefficient for China’s Income Distribution

The Increasing Inequality

According to a recent study, In urban area, the top 10% family’s income is

31 times of the bottom 10% family’s income, rather than 9 times, as some statistics show.

If we consider both the urban and rural area, the ratio is 55, rather than 21 times.

Inequality and Social Development In China

The Change of Life Expectancy in the World1960 1980 2001 1980-1960 2001-1980

Argentina 65.2 69.6 74.1 4.4 4.5

Australia 70.7 74.4 79.1 3.7 4.6

Brazil 54.8 62.6 68.3 7.8 5.7

Canada 71.1 74.7 79.1 3.6 4.4

China 36.3 66.8 70.5 30.5 3.6

France 70.2 74.2 79.2 3.9 5

India 44.3 54.2 63 9.8 8.8

Indonesia 41.5 54.8 66.3 13.3 11.5

Japan 67.7 76.1 81.1 8.4 5

Korea, Rep. 54.2 66.8 73.6 12.7 6.8

Malaysia 54.3 66.9 72.7 12.6 5.8

Mexico 57.3 66.8 73.4 9.4 6.6

United States 69.8 73.7 77.5 3.9 3.9

East Asia & Pacific 38.8 64.3 69.2 25.5 4.9

High income 68.9 73.8 78.1 4.8 4.3

Middle income 44.9 65.6 69.7 20.7 4.1

Low income 43.9 53.2 58.9 9.3 5.7

World 50.2 62.6 66.6 12.3 4

International Comparison of the Expenditure Structure on Health，２０００

　Health expenditure,

total (% of GDP)Public Share of Total Health

Expenditure (%)Private Share of Total Health

Expenditure (%)

1990 2000 1990 2000 2000-1990 1990 2000 2000-1990

Australia 7.88 8.3 67.39 72.41 5.02 32.99 27.6 -5.39

Austria 7.1 8 73.52 69.75 -3.77 26.76 30.3 3.54

Brazil 6.56 8.3 45.88 40.84 -5.04 54.88 59.2 4.32

Canada 9.04 9.1 74.67 71.98 -2.69 25.44 28 2.56

China 3.48 5.3 61.78 36.6 -25.18 37.36 63.4 26.04

France 8.61 9.5 78.16 76 -2.16 22.07 24 1.93

India 4.2 4.9 21.43 17.76 -3.67 78.57 82.2 3.63

Indonesia 1.63 2.7 34.97 23.7 -11.27 67.48 76.3 8.82

Japan 5.91 7.8 77.66 76.67 -1 22 23.3 1.3

Nigeria 2.69 2.2 36.8 20.91 -15.89 63.2 79.2 16

Turkey 3.64 5 60.99 71.2 10.21 38.46 28.9 -9.56

Sweden 8.46 8.4 89.83 77.26 -12.57 10.64 22.7 12.06

United Kingdom 6.01 7.3 84.36 80.96 -3.4 14.98 19 4.02

United States 11.88 13 39.65 44.31 4.66 60.61 55.7 -4.91

Zambia 3.3 5.6 78.18 62.14 -16.04 21.21 37.9 16.69

East Asia & Pacific

3.31 4.67 48.94 38.12 -10.83 50.57 61.95 11.37

High income 8.68 10.19 59.91 59.08 -0.83 40.22 40.9 0.68

Middle income 5.1 5.92 49.8 51.01 1.21 51.57 48.9 -2.67

Low income 3.56 4.29 37.08 26.34 -10.74 69.95 73.66 3.72

World 8.12 9.31 57.51 57.79 0.28 41.38 42.22 0.84

public spending in education / GDP, compare China and selected countries

　 1970 1980 1999 1970-1980 1980-1999

Australia 3.71 5.21 4.49 1.5 -0.72

Austria 4.47 5.35 6.29 0.88 0.94

Canada 8.49 6.7 5.51 -1.79 -1.19

China 1.25 2.51 2.79 1.26 0.28

France 4.7 4.93 5.89 0.23 0.96

India 2.45 2.83 4.06 0.38 1.23

Indonesia 2.62 1.65 .. -0.97 ..

Japan 3.89 5.72 3.54 1.83 -2.18

Turkey 2.08 2.25 4 0.17 1.75

Sweden 7.35 8.68 7.77 1.33 -0.91

United States 7.39 6.6 5.07 -0.79 -1.53

United Kingdom 5.32 5.57 4.47 0.25 -1.1

East Asia & Pacific 3.15 2.51 2.13 -0.64 -0.38

High income 4.58 5.45 5.27 0.87 -0.18

Upper middle income 3.96 4.23 4.47 0.27 0.24

Middle income 3.57 3.79 4.52 0.22 0.73

Lower middle income 3.22 3.31 4.61 0.09 1.3

Low income .. 3.1 2.83 .. -0.27

World 3.71 3.81 4.38 0.1 0.57

International Comparison of Secondary School enrollment

(%) 1970 1980 1999 1970-1980 1980-1999

Australia 82.1 71.2 156.4 -11.0 85.3

Brazil 25.9 33.5 103.2 7.6 69.8

China 24.3 45.9 62.8 21.6 16.9

France 73.4 84.6 108.7 11.1 24.1

India 24.2 29.9 48.7 5.7 18.8

Indonesia 16.1 29.0 54.9 12.9 25.9

Japan 86.6 93.2 102.1 6.6 8.8

Korea, Rep. 41.6 78.1 97.4 36.5 19.3

Malaysia 34.2 47.7 70.3 13.5 22.6

United States 83.7 91.2 94.6 7.5 3.4

East Asia & Pacific 23.8 43.3 60.8 19.5 17.5

High income 75.1 86.3 105.3 11.2 19.1

Upper middle income 34.6 49.5 88.3 14.9 38.8

Middle income 27.4 51.1 69.9 23.7 18.7

Lower middle income 25.8 51.5 65.0 25.7 13.6

Low income 17.6 28.7 44.5 11.1 15.8

World 34.1 48.9 66.7 14.7 17.8

International Comparison of the Expenditure Struct

ure on Education：１９９９

L o w e r s e c o n d a r y S e c o n d a i r e 1 e r c y c l e n s q z P r i m a r y e d u c a t i o n E n s e i g n e m e n t p r i m a i r e S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z

A v e r a g e d u r a t i o n o f e a r l y c h i l d h o o d e d u c a t i o n i n y e a r s D u r é e m o y e n n e d e l a p r é s c o l a r i t é e n a n n é e s U n i v e r s i t yU n i v e r s i t yM + W H + F M e n H o m m e s W o m e n F e m m e s L o w e r s e c o n d a r y S e c o n d a i r e 1 e r c y c l e n s q z P r i m a r y e d u c a t i o n E n s e i g n e m e n t p r i m a i r e S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z

A v e r a g e d u r a t i o n o f e a r l y c h i l d h o o d e d u c a t i o n i n y e a r s D u r é e m o y e n n e d e l a p r é s c o l a r i t é e n a n n é e s

S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z S e c o n d a r y e d u c a t i o n E n s e i g n e m e n t s e c o n d a i r e n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z n s q z Pre-primary (age 3+)Primary, secondary and post-secondary

non-tertiaryTertiary All levels of education

Public sources

Private sources1

Public sources

Private sources1

Public sources

Private sources1

Public sources

Private sources1

Argentina m m 88.6 11.4 67.4 32.6 77.2 22.8

Chile 70.2 29.8 69.2 30.8 22.8 77.2 55.1 44.9

China 54.6 45.4 55.8 44.2 56.8 43.2 55.8 44.2

India2, 3 95.3 4.7 95.3 4.7 99.7 0.3 96.2 3.8

Indonesia4,

5 5.3 94.7 76.6 23.4 43.8 56.2 64.5 35.5

Jamaica 49.4 50.6 61.8 38.2 70.4 29.6 62.2 37.6

Malaysia m m m m 92.7 7.3 m m

Peru2 80.3 19.7 76.8 23.2 54.5 45.5 71.6 28.4

Philippines3 m m 66.8 33.2 m m m m

Thailand4 92.6 7.4 97.8 2.2 83.3 16.7 94.6 5.4

Uruguay 87.4 12.6 93.6 6.4 m m m m

WEI mean** 66.9 33.1 78.3 21.7 62.8 37.2 71.7 28.3

OECD mean

81.7 18.3 92.1 7.9 79.2 20.8 88.0 12.0

The Excessive Savings in China: 1981-2004

Gross savi ngs (% of GDP)

0

5

10

15

20

25

30

35

40

45

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

The over deposit

Gap between deposit and loan increased from 1995 (billion)

1995 1999 2003 2004 2005 2006

10 150 400 570 920 1067

What are the Major Reasons of Inequality in China ？

Monopoly? Corruption? Privatization? Foreign Capital?

The Laid-off/privatization Movement

Urban employment

State-owned Units

Collective-owned Units

Mining and Quarrying

Manufacturing

highest level 27331(2005)11261(1995)

3628(1991)

932(1995)

9803(1995)

lowest level19040(1995)

6488(2005) 810(2005)558(2005)

8043(2000)

change 8291 -4773 -2818 -374 -1760

The Laid-off/privatization Movement

0

5000

10000

15000

20000

25000

30000

Urban empl oyment

State-owned Uni ts

Col l ect i ve- owned Uni ts

Manufacturi ng

Informalizing Labor Market

0

5000

10000

15000

20000

25000

30000

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

EMP- CI TY- SOEEMP- STF&WRKEMP- CI TY

Forei gn Enterpri ses' Share i n Chi na' s I nternati onal Trade (%)

0

10

20

30

40

50

60

70

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Year

EX + IM EXIM

The Share of I ndustry Output by Ownershi p

0

10

20

30

40

50

60

70

80

90

100

1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999

Year

SOECLTI DVOtherSOE+CLT

Share in Industry Output by Ownership (%)

54.61 35.63 7.4856.17 32.99 5.5551.52 35.07 6.3247.01 34.02 9.8337.34 37.72 13.6933.97 36.59 15.1436.32 39.39 9.1531.62 38.11 11.728.24 38.41 9.01

0

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Forei gn Owned SOE Col l ect i ve Domest i c Pr i vate

Foreign Capital’s Share in Different Industries in China:2005

“ ” (%)三资企业在工业总产值中的比重

0 1 2 48 8 10 11 11 13 15 18

23 25 25 25 26 27 28 2932 33 34 34 35 36 37 38 39 40 43 43 46

53 5561 63 66

84

0

10

20

30

40

50

60

70

80

90

烟草制品业

煤炭开采和洗选业

黑色金属矿采选业

有色金属矿采选业

非金属矿采选业

石油和天然气开采业

水的生产和供应业

石油加工、炼焦及核燃料加工业

电力、热力的生产和供应业

黑色金属冶炼及压延加工业

有色金属冶炼及压延加工业

非金属矿物制品业

木材加工及木、竹、藤、棕、草制品业

医药制造业

专用设备制造业

纺织业

化学原料及化学制品制造业

通用设备制造业

化学纤维制造业

农副食品加工业

印刷业和记录媒介的复制

废弃资源和废旧材料回收加工业

燃气生产和供应业

饮料制造业

造纸及纸制品业

食品制造业

金属制品业

电气机械及器材制造业

橡胶制品业

工艺品及其他制造业

塑料制品业

交通运输设备制造业

纺织服装、鞋、帽制造业

()

皮革、毛皮、羽毛绒及其制品业

家具制造业

文教体育用品制造业

其他采矿业

仪器仪表及文化、办公用

通信设备、计算机及其他电子设备制造业

Share of Different Ownership in Different Industries in China:2005

(%)不同所有制企业在工业总产值中的比重

0

10

20

30

40

50

60

70

80

90

100

全国总计

烟草制品业

煤炭开采和洗选业

黑色金属矿采选业

有色金属矿采选业

非金属矿采选业

石油和天然气开采业

水的生产和供应业

石油加工、炼焦及核燃料加工业

电力、热力的生产和供应业

黑色金属冶炼及压延加工业

有色金属冶炼及压延加工业

非金属矿物制品业

木材加工及木、竹、藤、棕、草制品业

医药制造业

专用设备制造业

纺织业

化学原料及化学制品制造业

通用设备制造业

化学纤维制造业

农副食品加工业

印刷业和记录媒介的复制

废弃资源和废旧材料回收加工业

燃气生产和供应业

饮料制造业

造纸及纸制品业

食品制造业

金属制品业

电气机械及器材制造业

橡胶制品业

工艺品及其他制造业

塑料制品业

交通运输设备制造业

纺织服装、鞋、帽制造业

()

皮革、毛皮、羽毛绒及其制品业

家具制造业

文教体育用品制造业

其他采矿业

仪器仪表及文化、办公用机械制造业

通信设备、计算机及其他电子设备制造业

国有及国有控股私营 “ ”三资

Take away Profits, Leave GDPand…

Pollution

Pollution in the World:1999

Searching a Job ？ Or a War ？

Conclusion

The growth pattern of China has to be changed, or it will not sustain face the dangers of re-colonizing

Foreign Capital Controls the Economy;Locked at the low-Ladder of the World Economy

How? Strengthen the State and Empower the Working

Class

End

Thank You!

China’s Basic Economic Statistics, 1981-2001 (percent) 6th Five Year

Plan (1981-85)

7th Five Year Plan (1986-

90)

8th Five Year Plan

(1991-95)

9th Five Year Plan

(1996-00)

1981-1995

1996-2001

Real GDP growth (Official) 10.78 7.92 12.00 8.26 10.23 8.10

Real GDP growth (Maddison)1 8.87 5.73 8.68 6.312 7.76

Inflation rate3 3.64 7.26 12.45 0.60 7.78 0.50

Energy consumption growth 4.99 5.20 5.86 -0.43 5.35 0.16

Gross domestic savings (% of GDP) 34.04 35.98 40.76 41.26 36.93 41.11

Investment (% of GDP) 34.08 36.86 39.64 37.64 36.86 37.69

State Investment (% of Gross investment)

67.09 64.91 61.18 52.51 64.39 51.64

State Investment (% of GDP) 22.87 23.92 24.25 19.76 23.74 19.47

Consumption (% of GDP) 66.24 63.52 59.38 59.34 63.05 59.42

Government Expenditure (% of GDP) 23.29 18.11 13.43 14.34 18.28 15.24

Net Exports (% of GDP) -0.30 -0.31 1.51 3.46 0.30 3.29

Foreign direct investment (% of GDP) 0.33 0.90 4.31 4.39 1.85 4.29

FDI (% of gross investment) 0.95 2.49 10.62 11.58 4.69 11.33

Household final consumption growth4 11.28 5.88 10.01 7.78 9.06 6.81

General government consumption growth4 11.66 6.90 11.40 8.74 9.99 9.19

Gross consumption growth4 11.34 6.02 10.26 7.96 9.21 7.30

Gross Investment Growth4 19.70 5.70 23.15 9.98 16.18 10.48

State Investment Growth4 15.36 5.56 17.79 8.25 12.90 7.99

China’s Basic Economic Statistics, 1981-2001 (percent)

6th Five Year Plan

(1981-85)

7th Five Year Plan

(1986-90)

8th Five Year Plan

(1991-95)

9th Five Year Plan

(1996-00)

1981- 1996-

1995 2001

Government budget Balance(% of GDP)

-0.22 -0.79 -1.03 -1.53 -0.68 -1.71

New government debt(% of GDP) 1.5 1.89 2.39 3.93 1.93 4.08

SOE output share in industry output 71.3 57.89 45.19 29.03 58.13

SOE employment growth 2.34 2.85 1.72 -6.15 2.3 -6.08

City collective enterprise employment growth

6.64 1.33 -2.33 -13.14 1.88 -13.26

Staff and workers employed by manufacturing sector, growth5 3.2 2.81 0.51 -9.42 2.17 -9.03

total Staff and workers, growth5 3.43 2.62 1.19 -5.29 2.41 -5.1

Total employment growth 3.32 5.51 1 1.15 3.28 1.18

Share of employment in formal sector 97.89 93.12 81.02 60.67 90.68 58.07

Change of formal sector employment share in total employment

-0.55 -2.8 -0.84 -5.93 -1.4 -5.54

Gini coefficient 26.15 34.81 38.5 40.3

The Chinese Economy in the Past Three Decades: Achievements and Problems Andong Zhu Tsinghua University Beijing IDEAs Conference 2007.6.

Documents

world slide

investment slide

period slide

decades conclusion slide

chinese economy

foreign trade slide

rapid increase of gdp

s economy