Transcript China: the facts

China: stylized facts
PRESENTATION By Richard Herd
Head Asian non-members Unit
OECD Economics Department
March 2006
OECD Development Centre Conference
“China, India and Africa”
Growth has been very rapid
GDP growth at constant prices
16
14
12
10
8
6
4
2
0
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Three factors have boosted growth:
• Reform of the economic environment
• Capital formation
• Structural change
Major reforms are very recent
Year
1978
1979
1979
1980
1984
Policy change
"Open door" policy initiated, allowing foreign trade and investment to begin
Decision to turn collective farms over to households
Township and village enterprises (TVEs) given stronger encouragement
Special economic zones created
Self-proprietorships (getihu) encouraged, of less than 8 persons
1990
1993
1994
1994
1995
1996
Stock exchange started in Shenzhen
Decision to establish a "socialist market economic system"
Company law first introduced
Multiple exchange rates ended
Shift to contractual terms for state owned enterprise staff
Full convertibility for current account transactions
1997
1999
2001
2002
Plan to restructure many state-owned enterprises begins
Constitutional amendment passed that explicitly recognizes private ownership
China accedes to the World Trade Organisation (WTO)
Communist party endorses role of the private sector, inviting entrepreneurs to join
2003
2004
Decision to "perfect" the socialist market economic system
Constitution amended to guarantee private property rights
Prices are now market determined
Share of price regulated transactions for industrial products
120
100
80
60
40
20
0
1978
1985
1991
Market prices
1995
State guided
1999
State fixed
2003
The economy has opened to foreign trade
Average of exports and imports as % of GDP
35
30
25
20
15
10
5
0
1978 1981 1984 1987 1990 1993 1996 1999 2002
Chinese imports a growing source of
demand
% of region’s GDP
2.5
China
2.0
1.5
1.0
0.5
0.0
1999
2000
Latin America
2001
Africa
2002
2003
2004
World (ex China)
The number of state firms has fallen rapidly
Share of Industrial sector Firms
100
90
80
Private
70
60
50
40
30
20
10
0
Private
Collective
I nd i r ect st at e
Direct
state
Collective
I nd i r ect st at e
Direct state
1998
2003
The private sector output
skyrockets ….
Constant prices gross output
5000
4500
4000
3500
3000
state
2500
domestic
2000
foreign
1500
1000
500
0
1998
1999
2000
2001
2002
2003
…… and is more productive …
Excess productivity of firm types relative to direct state ownership
Other private
Non mainland
Private individual
Private company
Collective
Indirect state
Direct state
0
50
100
150
….. dominating exports …
(Share of exports by controlling interest)
0
10
20
30
40
50
60
70
80
90
Electronics/Telecom
Textiles
Electric equipment
Garments
Leather products
Metal products
Transport equipment
Chemicals
Machinery
Plastics
Private, foreign
Private, domestic
Note: These industries represent 75% of export value in 2003.
Source: NBS industrial microdata
Collective
State
100
… and is now bigger than public sector
Private sector value added as per cent of sector GDP
65
60
55
50
45
40
1998
1999
2000
Non-farm business sector
Economy-wide
2001
2002
Business sector
2003
Rapid growth of capital
• Fixed capital formation has
accounted for half of growth
• Human capital expanding rapidly
The capital stock has grown fast
Annual Per cent change in estimated capital stock
14
12
10
8
6
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005
Financed by high private sector saving
Per Cent of GDP
50
45
40
35
30
25
20
15
10
5
0
National
Business
Business and state
State
Household
1978
1983
1988
1993
1998
Source: National Bureau of Statistics, Statistical Yearbook and Modigliani and Cao (2004).
2003
Fiscal policy has been prudent
2
0.0
-1.0
-2.0
-3.0
Per cent of GDP
20
04
20
03
20
02
20
01
/2
00
19
98
19
92
/1
99
7
Budget balance % of GDP
With little recourse to
public debt
Budget balance as Per Cent of GDP
80
70
60
50
OECD
China
40
30
20
10
0
1992
1994
1996
1998
2000
2002
2004
Factors behind the growth in real income
Share of growth attributable to each factor
70
60
50
40
1983-2003
30
2003
20
10
0
Activity and
dependency rate
Capital per
worker
Total factor
productivity
Educational output has surged
•Primary education almost complete
•Junior high very good
•University intake tripled
And is likely to continue growing
Proportion of age group receiving given education level
2001 2010 2020 2050
Primary
Junior High
Senior High
Tertiary
100
85
54
13
100
95
73
23
Average years
OECD
8.0
12.8
9.6 10.0 13.5
Source: Ministry of Education
100
99
85
40
100
100
100
55
Third factor: structural change
•Move from agriculture
•Source of productivity growth
Significant growth from sectoral change
Productivity growth from structural change, five year average
Per Cent per year
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
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
-1.5
Important micro-economic structural
reforms needed
•
Financial markets
•
Basic economic laws need improvement
•
Labour markets need to be freer
Better basic laws for the private sector
needed
•
A new company law is needed
•
A new bankruptcy law
•
A better anti-monopoly law also required
•
Laws to implement Constitutional Amendments
•
Enforcement of commercial laws
needs improving
•
Difficult to obtain and enforce IPR judgements
•
Evidence of local prejudice in judgements
•
Creates barriers to innovation and expansion
•
Move to more central funding of judiciary
•
Separate courts for commercial law
Reducing regional inequalities
• Urbanisation is a positive factor for
development
•
• Migration has been restricted
•
• Boosts spatial income inequality
•
• Complex group of policies needs changing
Contact details
•
[email protected]
•
http://puck.sourceoecd.org
•
www.oecd.org
•