The Chinese Economy in the
Past Three Decades:
Achievements and Problems
Andong Zhu
Tsinghua University
Beijing IDEAs Conference
2007.6
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
 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 GDP Growth Rate of China
and the World
16
14
12
10
8
6
4
2
0
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
中国GDP增长率
世界GDP增长率
The Rapid Increase of GDP
Total GDP, in millions of 1990 US$
(converted at Geary Khamis PPPs)
7000
6000
5000
4000
3000
2000
1000
19
50
19
54
19
58
19
62
19
66
19
70
19
74
19
78
19
82
19
86
19
90
19
94
19
98
20
02
0
1
1998
1994
1990
1986
1982
1978
1974
1970
1966
1962
1958
1954
1950
1946
1942
1938
1934
1930
1926
1922
1918
1914
1910
1906
1902
1898
1894
1890
1886
1882
1878
1874
1870
1866
1862
1858
1854
1850
1846
1842
1838
1834
1830
1826
1822
1700
1500
total Population (000)）
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
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
1
GDP per capita in china (1990 international $)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
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
Is the China’s Economic Growth
Sustainable?
Pollution in the World:1999
The Over-dependency on Foreign Trade
The Over-dependency on Investment
Capital Formation Rate in China:1978-2005
50
45
Capital Formation Rate (%)
40
35
30
25
20
15
10
5
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
0
China’s Changing Economic Structure,
1981-2003 (%)
19811985
19861990
19801990
19962000
20012003
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
Private Consumption
53.6
47.5
44.4
51.8
30.4
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
Contribution to GDP growth:a
The Changing Structure of the U.S
economy, 1981-2004 (%)
19611969
19701979
19801990
19912000
20012004
Private Consumption
61.7
62.4
64.5
67.3
70.2
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
Private Consumption
59.7
62.5
69.4
72.2
77.7
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
Share of GDP:
Contribution to GDP growth:
China's Capital Productivity and
Rate of Return on Capital
0.6
0.24
0.5
0.2
0.4
0.16
0.3
0.12
0.2
0.08
0.1
0.04
0
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Capital Productivity
Industrial Profit Rate (right scale)
Marginal Capital Productivity
Decreasing Consumption Rate
Final Consuption Rate in China:1978-2005
68
Final Consumption Rate (%)
66
64
62
60
58
56
54
52
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
50
Income Inequality in China:1979~2004
.48
.44
.40
.36
.32
.28
.24
80
82
84
86
88
90
92
94
GINI
96
98
00
02
04
Gini Coefficient for China’s Income Distribution
0.50
0.45
0.40
0.35
0.30
0.25
0.20
'81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
Sweden 25, India 32.5, United States 40.8, China 44.7, Brazil
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 World
1960
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
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
Structure on Education：１９９９
Pre-primary (age 3+)
nS
se
qc
o
z
n
Primary, secondary
and post-secondary
non-tertiary
nS
P
nS
L
nS
se
qc
o
z
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
Private
sources1da
Argentina
m
m
Chile
70.2
29.8
China
54.6
45.4
India2, 3
95.3
4.7
5
5.3
94.7
Jamaica
49.4
50.6
Malaysia
m
m
Peru2
80.3
19.7
3
m
m
Thailand4
92.6
7.4
97.8
2.2
Uruguay
87.4
12.6
93.6
6.4
m
WEI
mean**
66.9
33.1
78.3
21.7
62.8
81.7
18.3
92.1
7.9
79.2
Indonesia4,
Philippines
OECD
e
88.6
69.2
55.8
95.3
76.6
61.8
m
76.8
66.8
Private
sources1
ser
oqci
w
om
z
nae
dr
ray
res
yde
eu
dcc
uao
ctn
ai
tod
ina
oE
r
n
yEs
neS
sie
eg
cin
geo
nm
n
e
dm
n
eta
npi
tr
sir
e
em
ca1
oi
nre
der
ac
i
yr
Tertiary
Public
sources
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
Public
sources
se
qc
o
z
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
11.4
30.8
44.2
4.7
23.4
38.2
m
23.2
33.2
c
e
l
e
A
v
e
P
nS
A
U
M
W
L
rser
nvqci
aoe+
ieom
nW
m
w
zg
nare
v
eH
dr
eaady
rno+
rgreuF
m
sF
yde
s
rm
eu
eiddac
cm
uom
tutas
ctn
eyri
ai
datoos
atinn
rioEo
n
oEfsy
Sn
nee
eosia
eg
f
irnc
oegel
nm
ayn
e
drm
cn
aleth
npiy
itr
rcsli
heedm
ca1
ih
oi
elnor
rddoe
a
ch
id
orey
cod
e
ldu
ece
da
ut
ci
ao
tn
ii
on
ny
ie
na
yr
es
aD
All levels of education
nS
se
qc
o
z
n
Public
sources
Private
sources1da
67.4
32.6
22.8
56.8
99.7
43.8
70.4
92.7
54.5
m
e
83.3
Public
sources
Private
sources1
77.2
22.8
55.1
44.9
55.8
44.2
96.2
3.8
64.5
35.5
62.2
37.6
m
m
71.6
28.4
m
m
16.7
94.6
5.4
m
m
m
37.2
71.7
28.3
20.8
88.0
12.0
77.2
43.2
0.3
56.2
29.6
7.3
45.5
m
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
The Excessive Savings in China: 1981-2004
Gross savings (% of GDP)
45
40
35
30
25
20
15
10
5
0
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
highest level
lowest level
change
State-owned
Units
27331(2005) 11261(1995)
19040(1995)
8291
6488(2005)
-4773
Collective
-owned
Units
Mining and
Quarrying
Manufacturi
ng
3628(1991) 932(1995)
9803(1995)
558(2005)
8043(2000)
810(2005)
-2818
-374
-1760
The Laid-off/privatization Movement
30000
Urban employment
State-owned Units
25000
Collective- owned Units
Manufacturing
20000
15000
10000
5000
05
20
04
20
03
20
02
20
00
01
20
20
99
19
98
19
97
19
96
19
94
93
95
19
19
19
92
19
91
19
90
19
89
19
87
86
85
88
19
19
19
19
84
19
83
19
82
19
81
19
79
80
19
19
19
78
0
Informalizing Labor Market
30000
25000
EMP-CITY-SOE
EMP-STF&WRK
EMP-CITY
20000
15000
10000
5000
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Foreign Enterprises' Share in China's International Trade (%)
70
60
EX + IM
EX
IM
50
40
30
20
10
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
The Share of Industry Output by Ownership
100
SOE
CLT
IDV
Other
SOE+CLT
90
80
70
60
50
40
30
20
10
0
1949
1954
1959
1964
1969
1974
Year
1979
1984
1989
1994
1999
Share in Industry Output by
Ownership (%)
60
Foreign Owned
SOE
Collective
Domestic Private
50
4054.61
35.63
7.48
56.17
32.99
5.55
30
51.52
35.07
6.32
34.02
9.83
2047.01
37.34
37.72
13.69
36.59
15.14
1033.97
36.32
39.39
9.15
031.62
38.11
11.7
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
28.24
38.41
9.01
Foreign Capital’s Share in Different Industries in China:2005
“三资”企业在工业总产值中的比重(%)
30
20
0
4
0 1 2
46
50
40 43 43
39
38
36 37
32 33 34 34 35
40
27 28 29
23 25 25 25 26
15 18
13
8 8 10 11 11
10
84
90
80
53 55
60
66
61 63
70
通信设备、计算机及其他电子设备制造业
仪器仪表及文化、办公用
其他采矿业
文教体育用品制造业
家具制造业
皮革、毛皮、羽毛(绒)及其制品业
纺织服装、鞋、帽制造业
交通运输设备制造业
塑料制品业
工艺品及其他制造业
橡胶制品业
电气机械及器材制造业
金属制品业
食品制造业
造纸及纸制品业
饮料制造业
燃气生产和供应业
废弃资源和废旧材料回收加工业
印刷业和记录媒介的复制
农副食品加工业
化学纤维制造业
通用设备制造业
化学原料及化学制品制造业
纺织业
专用设备制造业
医药制造业
木材加工及木、竹、藤、棕、草制品业
非金属矿物制品业
有色金属冶炼及压延加工业
黑色金属冶炼及压延加工业
电力、热力的生产和供应业
石油加工、炼焦及核燃料加工业
水的生产和供应业
石油和天然气开采业
非金属矿采选业
有色金属矿采选业
黑色金属矿采选业
煤炭开采和洗选业
烟草制品业
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(%)
“三资”
私营
国有及国有控股
100
90
80
70
60
50
40
30
20
10
0
通信设备、计算机及其他电子设备制造业
仪器仪表及文化、办公用机械制造业
其他采矿业
文教体育用品制造业
家具制造业
皮革、毛皮、羽毛(绒)及其制品业
纺织服装、鞋、帽制造业
交通运输设备制造业
塑料制品业
工艺品及其他制造业
橡胶制品业
电气机械及器材制造业
金属制品业
食品制造业
造纸及纸制品业
饮料制造业
燃气生产和供应业
废弃资源和废旧材料回收加工业
印刷业和记录媒介的复制
农副食品加工业
化学纤维制造业
通用设备制造业
化学原料及化学制品制造业
纺织业
专用设备制造业
医药制造业
木材加工及木、竹、藤、棕、 草制品业
非金属矿物制品业
有色金属冶炼及压延加工业
黑色金属冶炼及压延加工业
电力、热力的生产和供应业
石油加工、炼焦及核燃料加工业
水的生产和供应业
石油和天然气开采业
非金属矿采选业
有色金属矿采选业
黑色金属矿采选业
煤炭开采和洗选业
烟草制品业
全国总计
Take away Profits, Leave GDP
and…
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
Class
the State and Empower the Working
End
Thank You!
China’s Basic Economic Statistics, 1981-2001 (percent)
6th Five Year
Plan
(1981-85)
7th Five Year
Plan (198690)
8th Five Year
Plan
(1991-95)
9th Five Year
Plan
(1996-00)
19811995
19962001
8.10
Real GDP growth (Official)
10.78
7.92
12.00
8.26
10.23
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
(198185)
Government budget Balance(% of
GDP)
7th Five Year
Plan
(198690)
8th Five
Year
Plan
(199195)
1981-
1996-
9th Five Year
Plan
(1996-00)
1995
2001
-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