Chapter 9

Bianzhong – a percussion instrument in ancient China

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9. A Multiregional Economic Comparison9.1 China’s statistical systems9.2 Macroeconomic

performance9.3 Real living standards9.4 Regional economic

disparity

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Keywords:

• System of National Accounts (SNA),

• material product system (MPS),

• purchasing power parity (PPP),

• living standard,

• Engel's Law,

• rural-urban divide,

• regional disparity

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9.1 China’s statistical systems

9.1.1 Material Product System (MPS)

9.1.2 System of National Account (SNA)

9.1.3 Credibility of Chinese statistics

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Figure 9.1 Which countries match the GDP per capita of Chinese provinces?

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Notes: to Figure 9.1

(1)The equivalents include: Albania=Hebei, Algeria=Jilin, Angola=Hubei, Armenia=Sichuan, Azerbaijan=Zhejiang, Belarus=Jiangsu, Belarus=Jiangsu, Congo (Brazzaville) =Tibet, Costa Rica=Liaoning, Cuba=Fujian, Egypt= Xinjiang, El Salvador=Henan, El Salvador=Hunan, Guatemala=Ningxia, Guyana=Jiangxi, Hungary=Tianjin, India=Guizhou, Iraq=Gansu, Jordan=Anhui, Kazakhstan =Guangdong, Mauritius=Chongqing, Mauritius=Shaanxi, Namibia=Shanxi, Qatar=Macau, Saudi Arabia=Shanghai, Singapore=Hong Kong, Slovakia=Beijing, South Africa =Shandong, Swaziland=Guangxi, Turkmenistan=Hainan, Turkmenistan=Qinghai, Ukraine=Heilongjiang, Vanuatu =Yunnan. (2)Figures are in purchasing power parity (PPP) dollars and as of 2010.

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9.2 Macroeconomic performance

9.2.1 Estimating China’s time-series data

9.2.2 China’s interprovincial differences

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Year NBS (2005) Equation (9.2) WPTc Other sourcesd

RMB (yuan)a US$a RMB (yuan)b PPP ($) PPP ($)

1979 417 268 455 724 1000

1986 956 277 974 1293 2440

1988 1355 364 1406 1489 2472

1990 1634 342 1668 1678 1031; 2140

1991 1879 353 1895 1798 1680

1992 2287 415 2288 1983 1600

1993 2939 510 2753 2131 2120

1994 3923 455 2453 2510

(a): All are measured at current prices (the exchanges rates of RMB yuan to US dollar are shown in Figure 12.1). (b): Estimated by author at current prices. (c): Penn World Table (PWT) v6.2 (Heston et al., 2006) at constant prices. (d): World Bank (1996, p. 21) and Zheng (1996, p. 1).

Table 9.1 Various estimates of China’s GDP per capita, selected years

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Province 1952a 1980 1990 2000 2010Anhui 22 27 24 24 25Beijing 3 2 2 2 2Chongqing NP NP NP 19 18Fujian 14 20 12 7 9Gansu 16 16 27 30 30Guangdong 18 18 5 5 6Guangxi 27 28 29 29 26Guizhou 29 29 30 31 31Hainan NP NP 15 15 22Hebei 9 7 17 11 12Heilongjiang 4 5 8 10 14Henan 23 21 28 18 15Hubei 20 17 13 13 13Hunan 21 22 20 17 20Inner Mongolia

7 14 18 16 7

Jiangsu 13 10 7 6 5Jiangxi 11 24 23 25 27Jilin 8 6 10 14 11Liaoning 5 4a 4 8 9Ningxia 10 19 19 22 19Qinghai 15 9 14 20 23

Table 9.2 Provincial ranks by per capita GDP, selected years

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Province 1952a 1980 1990 2000 2010Shaanxi 24 12 21 27 17Shandong 19 13 11 9 8Shanghai 1 1 1 1 1Shanxi 17 15 16 21 16Sichuan 28 26 26 23 24Tianjin 2 3 3 3 3Tibet 25b 23b 22 26 28Xinjiang 6 11 9 12 21Yunnan 26 25 25 28 29Zhejiang 12 8 6 4 4

Table 9.2 (cont’d)

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Notes: (1)Per capita GDP data are measured at current prices; (2)“NP” denotes “not a province for the year”. (a) Per capita GDP is estimated based on the data of national income (SSB, 1990) and Equation 9.2 of Section 9.2. (b) Per capita GDP is estimated by the author based on the Tibet/Yunnan ratio of national incomes (1.127) and Yunnan’s GDP data.Sources: SSB (1986, 1991) and NBS (2001; 2011) except for (a) and (b).

(1) 1952–1980 (29 provinces):

• 15 provinces (Beijing, Hebei, Shanxi, Liaoning, Jilin, Jiangsu, Zhejiang, Shandong, Henan, Hubei, Sichuan, Yunnan, Tibet, Shaanxi, and Qinghai) ranked higher than before;

• ten provinces (Tianjin, Inner Mongolia, Heilongjiang, Anhui, Fujian, Jiangxi, Hunan, Guangxi, Ningxia, and Xinjiang) ranked lower than before; and

• four provinces (Shanghai, Guangdong, Guizhou, and Gansu) remained unchanged.

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(2) 1980–1990 (29 provinces, with the exclusion of Hainan):

• ten provinces (Jiangsu, Zhejiang, Anhui, Fujian, Shandong, Hubei, Guangdong, Yunnan, Tibet, and Xinjiang) ranked higher than before;

• 11 provinces (Hebei, Shanxi, Inner Mongolia, Jilin, Heilongjiang, Guangxi, Sichuan, Guizhou, Shaanxi, Gansu, and Qinghai) ranked lower than before; and

• eight provinces (Beijing, Tianjin, Liaoning, Shanghai, Jiangxi, Henan, Yunnan, and Ningxia) remained unchanged.

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(3) 1990–2000 (30 provinces, with the exclusion of Chongqing):

• nine provinces (Fujian, Hebei, Henan, Hunan, Inner Mongolia, Jiangsu, Shandong, Sichuan, and Zhejiang) ranked higher than before;

• 13 provinces (Gansu, Guizhou, Heilongjiang, Jiangxi, Jilin, Liaoning, Ningxia, Qinghai, Shanxi, Shaanxi, Tibet, Yunnan, and Xinjiang) ranked lower than before; and

• eight provinces (Anhui, Beijing, Guangdong, Guangxi, Hianan, Hubei, Shanghai, and Tianjin) remained unchanged.

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(4) 2000–2010 (31 provinces):

• ten provinces (Chongqing, Jiangsu, Shandong, Guangxi, Henan, Jilin, Ningxia, Shanxi, Inner Mongolia, and Shaanxi) ranked higher than before;

• 14 provinces (Xinjiang, Hainan, Heilongjiang, Hunan, Qinghai, Fujian, Jiangxi, Tibet, Anhui, Guangdong, Hebei, Liaoning, Sichuan, and Yunnan;) ranked lower than before; and

• seven provinces (Beijing, Gansu, Guizhou, Hubei, Shanghai, Tianjin, and Zhejiang) remained unchanged.

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9.3 Real living standard

9.3.1 General situation

9.3.2 Rural-urban disparity9.3.3 Spatial differences of

purchasing power

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Source: IMF.Figure 9.2 China’s purchasing power parity (PPP) conversion rates, 1980-2010

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Source: NBS, various years.Figure 9.3 China’s rural-urban income gaps

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Source: NBS, various years.Figure 9.4 The Engle coefficients of China’s urban and rural households, 1978-2010

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Spatial differences of purchasing power:

• 1 kg of chicken costs ¥12.06 in Jiangxi but ¥32.00 in Shanghai;

• 1 kg of fish costs ¥10.04 in Jiangxi but ¥20.10 in Tibet; • 1 kg of pork costs ¥21.76 in Xinjiang but ¥32.00 in

Beijing; • 1 kg of eggs costs ¥6.8 in Shanghai but ¥10.96 in Hainan; • 1 kg of milk costs only ¥3.78 in Xinjiang but ¥17.4 in

Shanghai;• 1 kg of apples costs only ¥4.12 in Henan but ¥13.16 in

Chongqing; • 1 kg of oranges costs only ¥3.04 in Henan but ¥7.00 in

Qinghai and Tibet; • 1 kg of bananas costs only ¥2.98 in Jiangxi but ¥7.00 in

Chongqing.

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CountryLife expectancy

(years)Infant mortality rate

(‰)1980 2007 1980 2007

China 68 72.88 42 21.16

Australia 74 80.62 11 4.51

Hong Kong 74 81.68 11 2.93

Japan 76 82.20 8 2.80

South Korea 67 79.10 26 5.94

Malaysia 67 72.76 30 16.39

New Zealand 73 78.96 13 4.99

Singapore 71 81.80 12 2.30

Sri Lanka 68 74.80 34 19.01

World average 61 65.82 67 42.65Sources: Wang (2003, p. 55) and CIA (2008).

Table 9.3 Life expectancy and infant mortality rates, selected economies

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9.4 Regional economic disparity

9.4.1 Literature review

9.4.2 Regional inequality index

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GDP per capita 1952 1980 1990 2000 2010

Panel A: All provinces

Top five (yuan) 397 1766 3833 20129 61956

Bottom five (yuan) 81 176 979 3991 15548

Absolute gap (yuan) 315 1590 2854 16138 46407

Ratio of top five to bottom five 4.87 10.04 3.92 5.04 3.98

Panel B: Excluding Beijing, Shanghai and Tianjin

Top five (yuan) 226 502 2136 11981 49126

Bottom five (yuan) 81 176 979 3991 15548

Absolute gap (yuan) 144 326 1157 7990 33577

Ratio of top five to bottom five 2.77 2.85 2.18 3.00 3.16

Source: As for Table 9.2; calculated by author.

Table 9.4 Gaps between the top five and bottom five provinces (in per capita GDP, yuan)

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Figure 9.5 The coefficients of variation (CV) of per capita GDP among provinces

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China had a per capita GDP ratio of more than 12 for the richest (Shanghai) to the poorest (Guizhou) at the end of 1990s. This figure is only lower than Indonesia (20.8 in 1983), but much higher than many other countries, such as:• the former Yugoslavia (7.8 in 1988), • India (3.26 in 1980), • Netherlands (2.69 in 1988), • Italy (2.34 in 1988), • Canada (2.30 in 1988), • Spain (2.23 in 1988), • France (2.15 in 1988), • West Germany (1.93 in 1988), • Greece (1.63 in 1988), • UK (1.63 in 1988), • South Korea (1.53 in 1985), • Japan (1.47 in 1981), • USA (1.43 in 1983; 2.31 in 2009) and• Australia (1.13 in 1978).

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Case study 7

Similar initial conditions, varied results

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Chapter conclusion:

Since the late 1970s, the Chinese economy has demonstrated an increasing asymmetry between different regions and resulted in a series of regional economic problems. Due to the application of different statistical systems in the pre- and post-reform periods as well as the unavailability of statistical data in some provinces, a complete multiregional comparison of the Chinese economy is extremely difficult and, to some extent, meaningless. Using the best data and the regression approach, we try to estimate a set of time-series data on GDP for all provinces, on which the multiregional comparison of the Chinese economy is based. Finally, regional economic disparity indexes are computed for the past decades. Not surprisingly, China’s interregional economic differences have been posing considerable challenges to its societal harmony…

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Suggested reading Brandt, Loren and Dwayne Benjamin (1999). “Markets and Inequality

in Rural China: Parallels with the Past,” American Economic Review, Volume 89, Issue 2.

Cao, Huhua (2010). “Urban–Rural Income Disparity and Urbanization: What Is the Role of Spatial Distribution of Ethnic Groups? A Case Study of Xinjiang Uyghur Autonomous Region in Western China,” Regional Studies, Volume 44, Issue 8, October, pp. 965-982.

Chen, Anping, Nicolaas Groenewold (2010). “Reducing regional disparities in China: An evaluation of alternative policies,” Journal of Comparative Economics, Volume 38, Issue 2, pp. 189-198.

Dong, Xiao-Yuan (2005). “Wage inequality and between-firm wage dispersion in the 1990s: A comparison of rural and urban enterprises in China,” Journal of Comparative Economics, Volume 33, Issue 4 pp. 664-687.

Dong, Xiao-yuan, Louis Putterman, Bulent Unel (2006). “Privatization and firm performance: A comparison between rural and urban enterprises in China,” Journal of Comparative Economics, Volume 34, Issue 3, pp. 608-633.

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Suggested reading Gao, Qin (2010) “Redistributive Nature of the Chinese Social Benefit

System: Progressive or Regressive?” The China Quarterly, Volume 202, pp. 1 - 19.

Giles, John, Albert Park and Fang Cai (2006). “How has Economic Restructuring Affected China's Urban Workers?” The China Quarterly, Volume 185, pp. 61 - 95.

Hao, Rui (2008). “Opening up, Market Reform, and Convergence Clubs in China,” Asian Economic Journal, Volume 22, Issue 2, pp. 133–160.

Jian, T., J.D. Sachs, and A.M. Warner (1996). “Trends in Regional Inequality in China,” China Economic Review, Volume 7, Issue 1, pp. 1–22.

Jiang, Minghua, Lixin Colin Xu (2005). “Medals in transition: explaining medal performance and inequality of Chinese provinces,” Journal of Comparative Economics, Volume 33, Issue 1, pp. 158-172.

Jiang, Yanqing (2011). “Understanding openness and productivity growth in China: An empirical study of the Chinese provinces,” China Economic Review, Volume 22, Issue 3, September 2011, pp. 290-298.

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Suggested reading

Mehrotra, Aaron, Jenni Pääkkönen (2011). “Comparing China’s GDP statistics with coincident indicators,” Journal of Comparative Economics, Volume 39, Issue 3, pp. 406-411.

Ravallion, M., Chen, S. (2007). “China's (uneven) progress against poverty,” Journal of Development Economics, Volume 82, Issue 1, pp. 1-42.

Rawski, T. G. (2001). “What is happening to China’s GDP statistics?” China Economic Review, Volume 12, pp. 347-54.Tsui, Kai-yuen (1991). “China’s Regional Inequality, 1952–1985,” Journal of Comparative Economics, Volume 15, pp. 1–21.

Tsui, Kai-yuen (2005). “Local tax system, intergovernmental transfers and China's local fiscal disparities,” Journal of Comparative Economics, Volume 33, Issue 1, pp. 173-196.

Wan, G., M. Lu, and C. Zhao (2004). “Globalization and Regional Income Inequality Evidence from within China,” Discussion Paper No. 2004/10, UNU World Institute for Development Economics Research (UNU-WIDER), Helsinki, Finland, November.

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Williamson, J. (1965). “Regional Inequality and the Process of National Development: A Description of the Patterns,” Economic Development and Cultural Change, Volume 13, Issue 4, pp. 165–204.

Yang, Dennis, Tao (1999).”Urban-Biased Policies and Rising Income Inequality in China,” American Economic Review, Volume 89, Issue 2.

Yao, S. and Z. Zhang (2001). “On Regional Inequality and Divergence Clubs: A Case Study of Contemporary China,” Journal of Comparative Economics, Volume 29, pp. 466–84.

Yusuf, Shahid (1994). “China's Macroeconomic Performance and Management during Transition,” Journal of Economic Perspectives, Volume 8, Issue 2.

Zhang, Z., A. Liu and S. Yao (2001). “Convergence of China’s Regional Incomes, 1952–1997,” China Economic Review, Volume 12 Issues 2/3, pp. 243–58.

Zheng, J. (2001). “China’s official statistics: Growing with full vitality,” China Economic Review, Volume 12, pp. 333-7.

Suggested reading

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