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The Development Trend of Chinese Economy
2003-09-01
Wang Mengkui
The mid- and long-term development objective for China is to build a well-off society in an all-round way in the first 20 years of the 21st century (2001-2020). "Well-off society" is a conventional Chinese conception, which refers to a social formation that people have more than adequate food and clothing and live a well-to-do life, though not wealthy yet. According to standards raised by Chinese statistic departments, around 75% people in urban and rural areas had reached moderate prosperity in the year 2000, with an average per capita GDP of 850 US dollars. China thus entered the range of middle and low-income countries in terms of the World Banks’ criterions. The food problem, which has been harassing Chinese people for hundreds of thousand of years, has been ultimately resolved. This is a significant milestone in the process of Chinese history, and provides the economic development with a new starting point.
I. Chinese Economy Will Maintain a High Growth Speed
The anticipated objective for Chinese economic development in the period of 2001-2020 is that GDP will be quadrupled and grow by 7.2% annually. Calculated by comparable price, GDP will approach 36,000 billion RMB by the year 2020, which exceeds 4,000 billion US dollars according to the current exchange rate. By that time, though Chinese economic aggregate will see a greater increase, the per capita income will remain low, and China will remain a developing country. Not until the mid-21st century could modernization be fundamentally achieved. Building a well-off society in an all-round way is an inevitable phase on the road to modernization for China with underdeveloped economy and culture.
The objective for Chinese economic development in the 20 years is to be realized via four five-year plans, i.e., from the Tenth Five-Year Plan to the Thirteenth one. The planned economy system has been transformed to a socialist market economy system. The characters, contents and approaches of state plans also differ from those in the past, and is now a directive social economic development layout. Similar programming also exists in some developed countries practicing market economy. Now the Tenth Five-Year Plan (2001-2005) is rolling its hoop in application. The economic growth rate in 2001 was 7.1%, and 8% in 2002.The economic development was severely impacted in 2003 by SARS, but overall this impact is short-termed and partial. It did not damage the fundamental level or reverse the high-speed development trend of Chinese economy. The yearly economic growth rate still carries the possibility of exceeding 7% percent. So does the growth rate in 2004. Each anticipated objective of the Tenth Five-Year Plan could be reached and exceeded in 2005, as the Eleventh Five-Year Plan (2006-2010) is being brewed actively.
Experts have various forecasts for potential economic growth rate in the period of 2001-2020, with the lowest of 7–7.9% and the highest around 9%, both of which exceed the requirement of doubling GDP in ten years. Even the uncertain factors are accounted or the economic growth will slow down afterwards, the objective of quadrupling GDP in 20 years could well possibly be achieved. In the 20th century, those countries that maintained a high growth speed through 40 years include Korea (8.4%), Singapore (7.9%), and Thailand (7.6%). Chinese economy had been growing at a high speed in the last 20 years of the 20th century. If the objective in the period of 2001-2020 is achieved, China will also maintain a high growth speed through 40 years as well, but that undoubtedly requires greater efforts.
The programming for Chinese economic development is for a peaceful development. Chinese economic development will enrich the power maintaining world peace and stability. "China Threat" is just groundless.
II. Factors Supporting Chinese Economic Growth
Factors supporting Chinese economic growth consist in several aspects:
The first is a prosperous investment demand. China is vigorously promoting industrialization, and the scale of Chinese economy is rapidly expanding. Urban and rural infrastructure construction is outspreading on a large scale, the exploitation of central and western regions and revitalization of old industrial bases are being expedited, and investment is rapidly increasing. In 2002, China consumed an amount of rolled steel accounted for 1/4 of the world total, glass for 1/3, and cement for 40%. The contribution rate by the market factor is keeping increasing, and the average annual growth rate of civilian investment (including privately economy, individual economy, stockholding economy, collective economy, combined management economy, and excluding foreign, Hong Kong, Macao, Taiwan capital ) is 20%, which is a significant pivot for continuous economic development. China sees a fairly high savings ratio, and the social savings currently exceed 10,000 billion RMB, approximately equal to gross GDP of one year. There is a big volume for investment potential. Now the percentage of the state-owned economy investment has dropped under 50%, and that of the non-state-owned economy (including foreign capital) accounts for more than 50% of the total amount. In the new round of high-speed economic growth, the non-state-owned economy including civilian and foreign investment will dominate social investment.
The second is a consumer market which keeps expanding. There are 1.3 billion population in China. The consumer structure of urban and rural inhabitants is being updated and the consuming fields are being widening, which result in a broader domestic market. After the problem of adequate food and clothing is solved, inhabitants’ housing, transportation, communication and new generations of consumer goods will increase rapidly. In the past 5 years, urban housing acreage increased 22%, household computers increased 6 fold, household air-conditions increased 3.6 fold, private cars increased 3.4 fold; color TV sets in peasants’ households increased 1.22 fold, refrigerators increased 74%, and washing machines increased 45%. Chinese economic development is imbalanced, and disparities between different regions or between urban and rural areas are huge. The update of consumer structure takes on a trait of "accumulation of spoondrifts" (one spoondrift pushes another, and the wave crest will be higher and higher through the accumulation of power after one round and the other), and the product market will keep on expanding for a long time.
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