Speech-on-Demystifying-the-Chinese-Economy - Demystifying...

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1 Demystifying the Chinese Economy* Justin Yifu Lin Chief Economist and Senior Vice President, the World Bank When China began its transition from a planned to a market-oriented economy in 1979, it was a poor, inward-looking country with a per capita income of US$182, less than one-third of the average in Sub-Saharan African countries, and a trade dependence (trade-to-GDP) ratio of 11.2 percent. 1 China’s economic performance since then has been miraculous. Annual GDP growth averaged 9.9 percent over the 30-year period, and annual growth in international trade, 16.3 percent. China is now a middle-income country, with a per capita GDP of US$4,260 in 2010, and more than 600 million people have escaped poverty. Its trade dependence ratio has reached 65 percent, the highest among the world’s large economies. In 2009 China overtook Japan as the world’s second largest economy and replaced Germany as the world’s largest exporter of merchandise. China’s car market is now the world’s largest, and Shanghai has been the world’s busiest seaport by cargo tonnage since 2005. The spectacular growth over the past three decades far exceeded the expectations of anyone at the outset of the transition, including Deng Xiaoping, the architect of China’s reform and opening-up strategy. 2 Interest among academics in China’s transition and development experience has increased exponentially in the past three decades. 3 In this speech I will draw on my new book, Demystifying the Chinese Economy, to provide answers to six related questions: Why was it possible for China to achieve such extraordinary performance *The text of this speech is drawn on the Demystifying the Chinese Economy, published by the Cambridge University Press in November 2011. 1 Unless indicated otherwise, the statistics on the Chinese economy reported in the paper are from the China Statistical Abstract 2010, China Compendium of Statistics 1949–2008 , and various editions of the China Statistical Yearbook , published by China Statistics Press. 2 Deng’s goal at that time was to quadruple the size of China’s economy in 20 years, which would have meant an average annual growth of 7.2 percent. Most people in the 1980s, and even as late as the early 1990s, thought that achieving that goal was a mission impossible. 3 The EconLit database includes 27 peer-reviewed scholarly journal articles with China or Chinese in the title published in 1979, a number that jumps to 70 for 1989 and 1,016 for 2009.
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2 during its transition? Why was China unable to attain similar success before its transition started? Why did most other transition economies, both socialist and non-socialist, fail to achieve a similar performance? What costs does China pay for its extraordinary success? Will China sustain a similar dynamic growth in the coming decades? Can other developing countries achieve similar economic performance? I.
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This note was uploaded on 01/25/2012 for the course COMM 321 taught by Professor Erinmcclellan during the Spring '11 term at Boise State.

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Speech-on-Demystifying-the-Chinese-Economy - Demystifying...

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