Review and Outlook of China’s Economic Development

LIU, ShijinDirector of General Office and concurrently Director-General of Research Dept. of Industrial Economy of the Development Research Center of the State Council, PR

C

I. China’s economic development has undergone historical changes

• The economy has been consistently and rapidly developed and the comprehensive national strength has been tangibly promoted.

From 1978-2003, China’s economy witnessed an annual growth of 9.3%,ranking first in the world. In terms of comparable price, China’s GDP in 2003 was 9.38 times that of 1978.

Compared with that of 1980, the aggregate of GDP of 2000 showed a fivefold increase and realized the goal of quadrupling the average per capita GDP in spite of the newly-added 300 million population.

Total value of GDP from 1978-2003 (per year)

0

20000

40000

60000

80000

100000

120000

140000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 30

2

4

6

8

10

12

14

16

GDP(100 million yuan) Growth rate( ％ )

The national wealth has gone up, the output of some major industrial and agricultural products has been increased by a big margin and the yield of some important products is among the first rank in the world.

The economic growth has changed from a supply-restraint one to a demand-restraint one.

In 2003, the average per capita GDP in China exceeded $ 1,000.

Changes of average per capita GDP of Chinese people from 1978-2003

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

Percapita GDP

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Growthrate

Average per capita GDP(yuan/per person ）

GDPgrowth rate (%)

People’s life has witnessed great improvement in history.

Since 1979, the consumption level of the Chinese people both in urban and rural areas has been greatly raised and its growth has become one of the fastest in the world.

From 1978 to 2003, the Engel efficient (i.e. ratio between foodstuff consumption expenditure and the total consumption expenditure) of the Chinese residents both in cities and rural areas has been reduced respectively from 57.5% and 67.7% to 37.1% and 45.6%.

Engel coefficient for Chinese people

30

35

40

45

50

55

60

65

70

19781980

19851989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

Engel coefficient for rural families(% ）

Engel coefficient for urban families （ % ）

Income of urban and rural people and growth rate(1973-2003) (per year)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 30

5

10

15

20

25

30

35

40

Income for city dwellers (yuan) Growth rate (%)

Income of rural people and growth rate(1978-2003)

0

500

1000

1500

2000

2500

3000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 30

5

10

15

20

25

30

35

Income of rural people (yuan) Growth rate (%)

Retail sales of social product from 1978-2003

05000

100001500020000250003000035000400004500050000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 30

5

10

15

20

25

30

35

Retail sales of social product(100 million yuan)

Growth rate (%)

Bank deposit balance at end of the year and growth rate for city and rural residents across the country

0

20000

40000

60000

80000

100000

12000019

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

03

0

5

10

15

20

25

30

35

40

45

Bank deposit balance (100 million Yuan)

Increased volume Growth rate (%)

The number of rural poor had been reduced from 250 million in 1978 to 30 million in 2000, showing a decrease from 30.7% to 3% accounting for the total rural population.

Generally speaking, the urban and rural people have experienced two historical strides, namely from being poor to having adequate food and clothing, and from having adequate food and clothing to being well-off.

• The economic structure is undergoing adjustment and fast upgradin

g and has entered the mid-phase of industrialization.

• The industrial structure is showing an explicit development trend fro

m a low level to a high level and from a seriously imbalance to a ba

sically reasonable balance.

A comparative complete industrial system has been established.

Hi-tech technological industry has become an important force drivin

g forward industry and the entire economy.

Total investment for fixed assets and growth rate (1985-2003)

0

10000

20000

30000

40000

50000

60000

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3-20

-10

0

10

20

30

40

50

60

70

Total investment (100 million yuan) Growth rate (%)

Structural changes for three industries

Ratio of primary industry

Ratio of secondary industry

Ratio of tertiary industry

0%10%20%30%40%50%60%70%80%90%

100%

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

Ratio

-5%0%5%10%15%20%25%30%35%40%45%50%

Growth rate

Growth rate ofprimary industry Growth rate of

secondary industryGrowth rate oftertiary industry

Structural changes for employment of three industries

Ratio for primaryindustry

Ratio for secondaryindustry

Ratio for tertiaryindustry

0%

20%

40%

60%

80%

100%

19781979

19801981

19821983

19841985

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

Ratio

-5%

0%

5%

10%

15%

20%

Growthrate

Growth rate ofprimary industry

Growth rate ofsecondary industry

Growth rate oftertiary industry

0

5

10

15

20

25

30

35

40

45

19781980

19851989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

Urbanization rate in China

Urbanization rate (%)

• The pattern of opening up to the outside world in all fields has basically been formed and the previous closed and semi-closed economy has been initially turned into an open economy.

• From 1978-2003, the total volume of import and export had been increased from $ 20.64 billion to $ 851.2 billion, ranking from the 32nd place to the 4th place in the world.

Total volume of import and export and growth rate (1978-2003)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3-10

0

10

20

30

40

50

Total volume of import andExport ($ 100 million)

Growth rate (%)

0%

20%

40%

60%

80%

100%

19801985

19891990

19911992

19931994

19951996

19971998

19992000

20012002

Structure changes for China’s export products

Ratio for primary products Ratio for finished industrial products