China’s Great Economic Transformation
Wu Luming/China Foto Press
China’s Great
Economic Transformation
Thirty years of change have modernized China’s economy
Loren Brandt and Thomas G. Rawski
C
hina’s massive, protracted, and unexpected economic upsurge began in the late 1970s and continues nearly 30 years later. China’s extended boom began at remarkably low levels of income and consumption. Its growth spurt is remarkable for its geographic spread as well as its speed and longevity. While coastal regions have led the upward march of output, exports, and income, China’s central and western regions have recorded enormous gains as well.
Rapid advance in output per capita has elevated hundreds of millions from absolute poverty. Using an early official poverty indicator, the share of impoverished villagers drops from 40.7 percent in 1980 to 10.6 percent in 1990
30 November–December 2008 chinabusinessreview.com
and 4.8 percent in 2001. A second indicator shows higher proportions living in absolute poverty, but indicates a comparable trend (75.7 percent impoverished in 1980 and 12.5 percent in 2001).
China’s economy has abandoned its former isolation in favor of deep engagement with world markets. The trade ratio, which measures the combined value of exports and imports as a share of gross domestic product (GDP), jumped from under 10 percent prior to reform to 22.9 percent in 1985, 38.7 percent in 1995, and 63.9 percent in 2005—a level far higher than comparable figures for any other large and populous nation. China has also become a major player in the global market for foreign
ANNIVERSARIES: 30 YEARS OF REFORM
direct investment, receiving annual inflows in the neighimperfect markets, institutional shortcomings, and other borhood of $70 billion during 2004–06 and generating defects that retarded growth and increased its cost but moderate, but rapidly increasing, outflows of direct overnever threatened to stall the ongoing boom. seas investment ($16.1 billion
China’s Great
Economic Transformation
Thirty years of change have modernized China’s economy
Loren Brandt and Thomas G. Rawski
C
hina’s massive, protracted, and unexpected economic upsurge began in the late 1970s and continues nearly 30 years later. China’s extended boom began at remarkably low levels of income and consumption. Its growth spurt is remarkable for its geographic spread as well as its speed and longevity. While coastal regions have led the upward march of output, exports, and income, China’s central and western regions have recorded enormous gains as well.
Rapid advance in output per capita has elevated hundreds of millions from absolute poverty. Using an early official poverty indicator, the share of impoverished villagers drops from 40.7 percent in 1980 to 10.6 percent in 1990
30 November–December 2008 chinabusinessreview.com
and 4.8 percent in 2001. A second indicator shows higher proportions living in absolute poverty, but indicates a comparable trend (75.7 percent impoverished in 1980 and 12.5 percent in 2001).
China’s economy has abandoned its former isolation in favor of deep engagement with world markets. The trade ratio, which measures the combined value of exports and imports as a share of gross domestic product (GDP), jumped from under 10 percent prior to reform to 22.9 percent in 1985, 38.7 percent in 1995, and 63.9 percent in 2005—a level far higher than comparable figures for any other large and populous nation. China has also become a major player in the global market for foreign
ANNIVERSARIES: 30 YEARS OF REFORM
direct investment, receiving annual inflows in the neighimperfect markets, institutional shortcomings, and other borhood of $70 billion during 2004–06 and generating defects that retarded growth and increased its cost but moderate, but rapidly increasing, outflows of direct overnever threatened to stall the ongoing boom. seas investment ($16.1 billion