China's economic growth

1. Overview of China's Economic
Growth
Naixiang Feng
School of International Studies
University of Business and Economics
Phone: [phone]; Fax: [phone]
August 17 , 2011
Email: [email protected]; [email protected]

2. A PREVIEW
◆ China Profile
◆ China’s Economic Overview
◆ China’s Five-year plan

◆
Brief History of Chinese Economy
◆1911-1949: Old China
◆1949: PRC established, new China set up

◆
1950-1953: Korean War
◆1958-1962: The Great Leap Forward Movement
(Three years’ National Disaster)
◆1966-1976: the Cultural Revolution
◆1978 : Deng’s Reform
◆ The Chinese governmental and bureaucracy system
◆ The Communist Party of China
◆ Generations of New China’s Leadership
◆ China’s Political Structure
◆ Problems
◆ Conclusion

3. China ProfileChina Profile
World largest developing Country
◆population: over 1.3 billion (Mexico times 12)
◆23 provinces (including Taiwan)
◆4 Municipalities:
Beijing, Tianjin, Shanghai, Chongqing
◆5 Autonomous Regions:
Xinjiang, Inner Mongolia, Tibet, Ningxia and Guangxi
◆2 Special Administration Area:
Hong Kong, Macao

4. China ProfileChina Profile
•7 regions
Northeast ,
Northwest,
North China,
East China,
South China,
Middle China,
Southwest
•Income Level: 4,283 GDP per capita in current dollar (2010),
Mexico ( $9,242)
about 56% residents living in rural area
•Human development index: 0.663
(0.902-US) (0.750-Mexico)
•Rank: 89th of 169 (2010), USA: 4th, Mexico: 56th
( Source: http://hdr.undp.org/en/statistics/)

6. China ProfileChina Profile
Open-door Policy-----1978
Accession into WTO-----in Dec.2001
The special administrative regions
Hong Kong (1997)
Macao (1999)

7. China Economic Overview
•Population: 1.3 billion
•GDP: $5.9 trillion (2010) ,2
nd
largest economy
(Mexico $1 trillion , 14
th
economy)
–agriculture: 10.9%
–industry: 48.6%
–services: 40.5%
•Labor force:
–agriculture: 39.5%
–industry: 27.2%
–services: 33.2%

9. China Economic Overview
China’s GDP increased from $1.1 trillion to $1.6 trillion
from 2000 to 2004, $3.43 trillion in 2007,$4.33 trillion
in 2008, $4.9 trillion in 2009, $5.9 trillion in 2010
China's foreign-exchange reserves jumped more than
$200 billion in 2004 to reach $609.9 billion, $1.5
trillion at the end of 2007, $1.94 trillion 2008, $2.8
trillion in 2010, $3.2 trillion on July, 2011
China has about $4.5 trillion (2010) in personal savings
and a saving rate of close to 50%.
Source: National Bureau of Statistics of China

10. China Economic Overview
The World Bank's Figures
China's new status is not surprising. China has been the
world's leading producer of steel, copper, aluminum,
cement, and coal for several years. As a consumer, China
surpassed Japan as the globe's second largest importer of
petroleum in 2005. In 2006, China surpassed Japan as the
world's No. 2 auto market, with total sales of 7.2 million
vehicles and production of 7.3 million. In 2009, China
surpassed the United States as the World’s No.1 auto
market, with total sale and production both over 13
million. In 2010, China’s car production and sales reached
18 million respectively.

11. China Economic Overview
•In 2006, the number of overseas tourists grew by
3.9% to 125 million, and foreign exchange earning
increased by 15.9% to US$33.9 billion.
•In the first nine months of 2007, the number of
overseas tourist increased by 5.9% to 97.7 million
and foreign exchange earning increased by 12.2% to
27.9 billion.
•According to the World Tourism Organization, China
remained the 4th most popular tourist-destination
(behind France, Spain and the US) in the world in
2005.

12. China’s Five-year plans
The 1st Five-Year Plan (1953-1957)
The 2nd Five-Year Plan (1958-1962)
The 3rd Five-Year Plan (1966-1970)
 The 4th Five-Year Plan (1971-1975)
The 5th Five-Year Plan (1976-1980)
The 6th Five-Year Plan (1981-1985)
The 7th Five-Year Plan (1986-1990)
The 8th Five-Year Plan (1991-1995)
The 9th Five-Year Plan (1996-2000)
The 10th Five-Year Plan (2001-2005)
The 11th Five-Year Plan (2006-2010)
The 12th Five-Year Plan (2011-2015)
Source: http://sientechina.china.com.cn/english/features/guideline/156529.htm

13. China’s Five-year plans
China, economically extremely backward before 1949,
has become one of the world's major economic powers
with the greatest potential, and the overall living
standard has reached that of a fairly well-off society. In
the 22 years following reform and opening-up in 1979 in
particular, China's economy developed at an
unprecedented rate, and that momentum has been held
steady into the 21st century.
Despite the warning of overheated economy, China’s GDP
growth was 11.2% in the last five-year plan (2006-2010)

14. Brief History of Chinese Economy
•When China launched Industrial
Movement, Japan started its Meiji
Restoration
•In 1911, Qing Dynasty Collapsed,
Foundation of Republic of China-ROC.
•In 1919,after WWI, New Culture
Movement ,May 4th Movement, Science
and Democracy were introduced to China.
•Afterward, Communism was introduced to
China

15. Brief History of Chinese Economy
•Second round industrialization in 1920s-1930s
by domestic private capital.
This process was suppressed by government-
back capital and foreign capital and suspended
by following 2 wars.
–1937-1945, WWII, Anti-Japanese Invasion War
–1946-1949, Liberalization war between national troops and
communist troops (Civil War)
•Foundation of PRC,1 October,1949

16. 1949: PRC is established
On October 1, 1949, in a grand ceremony witnessed by
crowds of Beijing people in Tiananmen Square, Mao Tse-
tung (Mao Zedong) , Chairman of the Central People's
Government, solemnly proclaimed the founding of the
People's Republic of China (PRC).

17. Mao Tse-tung
(Mao Zedong)
(1893-1976)

19. National flagNational flag
National emblemNational emblem

20. 1950—1953: The War to Resist U.S.
Aggression and Aid Korea
In 1950, China intervened in the Korean
War to save the North Koreans from
being wiped off the map, and by 1953,
the Korean War was over (actually, South
Korea and North Korea are still
technically at war with each other, even
though the fighting stopped in 1953).

23. Brief History of Chinese Economy
•Transit from market economy to central planning
economy from 1950-1956
–6 years transition-socialistize
•Maoist Economy (Planning Economy),1956-1978
Industrialization in 1950s
jeopardized Sino-USSR relationship from 1958
Great Leap-forward Movement in 1959
3 year natural disaster 1959-1962
Culture revolution,1966-1976
Mao Zedong died in Sep.1976 and end of Mao
era

24. 1958—1962: The Great Leap Forward
Movement
In 1958, Mao, who was growing increasingly distant
from Moscow, launched the Great Leap Forward. The
idea was to mobilize the peasant masses to increase crop
production by collectivizing the farms and use the excess
labor to produce steel. What ended up happening was the
greatest man-made famine in human history. From 1958
to 1960, poor planning and bad management managed to
starve 30 million people to death. Officially, the
government blamed it on "bad weather."

26. Brief History of Chinese Economy
•The Cultural Revolution (1966-76) further altered the
objectivity of historians. In the years after the death of Mao
Zedong in 1976, however, interest grew within the party,
and outside it as well, in restoring the integrity of
historical inquiry.
•This trend was consistent with the party's commitment to
"seeking truth from facts."
•As a result, historians and social scientists raised probing
questions concerning the state of historiography in China.
•Their investigations included not only historical study of
traditional China but penetrating inquiries into modern
Chinese history and the history of the Chinese Communist
Party.

27. 1966—1976: The Cultural Revolution
In 1966, Mao launched the Great Proletarian Cultural
Revolution. The origins of the Cultural Revolution are
vague, but probably stem, in part, from a growing
separation between Mao's clique and the rest of the CCP.
Mao called upon students to rebel against authority, and
they did, forming units of Red Guards. China promptly
collapsed into anarchy. Schools shut down, offices closed,
transportation was disrupted -- it was so bad that even
today, the full history is still far from known.

32. In terms of the chaos, blood, and destruction, it was
comparable to the French Revolution, though it lacked
the same political impact. At one point, Red Guards
were fighting pitched battles with Government troops
outside of the Foreign Ministry building. Later on in
the Cultural Revolution, Red Guard units ended up
fighting each other for supremacy. In the summer of
1967, there were massive riots in both Hong Kong and
Macau.

33. Brief History of Chinese Economy
•On one hand, Mao created a strong central
government, ended China's foreign domination,
and began a process of determined Soviet-style
industrialization.
•On the other hand, his revolutionary vision led to
the death of millions (the two worst periods
were the Great Leap Forward of 1958-1961 and
the Great Proletarian Cultural Revolution of
1966-1969), the destruction of traditional
Chinese culture, and a new political culture of
fear and extreme conformity

34. Deng Xiaoping and “Opening up to the Outside
World”

38. •Deng’s reform
•In 1978, Deng Xiaoping created the Open Door Policy, and
China began to open to the outside world. Tourism was
allowed, students began to go overseas, special economic
zones were established, and joint ventures with foreign
firms were encouraged to bring in foreign technology,
investment, managerial know-how, and market access.
•He emphasized that state firms and government agencies
should be led by those who had some expertise, not just by
those who showed the proper revolutionary fervor.
•He encouraged the elimination of the rural communes, and
land was turned over to the rural household (for
production and income, but not for real ownership).
Agricultural productivity jumped dramatically, and free
markets were created to sell food. A large surplus of rural
workers began to pour into other economic activities.

39. Progressive
Opening

40. Bohai Sea
Economical
Circle
Yangtze River
Delta
Pearl River
Delta
Three Delta
Regions

41. Northeast
China
Revitalization
West China Development
12 provinces participation

42. The Chinese governmental and
bureaucracy system
The key points are as follows:
The Chinese government has considerable powers.
The Chinese government also has great authority.
Good relationship with the government is a must to
create a favourable business environment

43. The Chinese governmental and
bureaucracy system
THE COMMUNIST PARTY OF CHINA
•Political power in China has always resided
firmly with the central government, and with
the Chinese Communist Party.
•This feature of the Chinese political system has
remained fundamentally unaffected by the
economic reforms. It is obviously still a one-
party system, and it can be extremely
repressive when the political authority of the
Chinese Communist Party is challenged.

44. The Chinese governmental and
bureaucracy system
THE COMMUNIST PARTY OF CHINA
Over 80 millions members
One-party system
8 democratic parties who form a alliance
with CPC

45. The Chinese governmental and
bureaucracy system
THE COMMUNIST PARTY OF CHINA
founded in 1 July 1921. First National
Conference with13 representatives.
 established its army in 1 August 1927
party branch at company level in Army in
fall,1928
Long March from 1935-1936 from Jiangxi
to Shanxi, about 12500km
Mao Zedong was appointed as leader in
1935

46. THE COMMUNIST PARTY OF CHINA
1937-1945, Anti-Japan Invasion War
1945-1949,Civil War
PRC founded in 1 Oct,1949
 Command Economy since 1956
1966-1976,Culture Revolution
In 1976,Mao Zedong Died, Mr.Hua Guofeng
succeeded
In 1978,Deng Xiaoping initiated Reform and
Open-door policy

47. THE COMMUNIST PARTY OF CHINA
 1989-2002, Jiang Zemin as General
Secretary
8 November 2002, 16
th
national conference
of CPC, Hu Jintao as General Secretary
 Xi jinping is now Vice President of China,
and will succeed Hu in 2012

48. Generations of leadership
Mao Zedong(1893-1976)
Deng Xiaoping(1904-1997)

49. Generations of leadership
Jiang Zemin (1926- ) Hu Jintao (1942- )

50. Generations of leadership
Hu Jintao (1942) Xi Jinping (1953- ) Li Keqiang
(1955- )

51. The Chinese governmental and bureaucracy system
Bureaucracy has been a feature of China for millennia.
The 1949 revolution brought some changes, mainly in
the nature of education and the way in which
bureaucrats were selected; the ideology changed, but the
bureaucracy remained.
Bureaucracy can intervene in the business operation of
FDI in different ways. And authority is used differently.
Foreign investors need to work out in advance the
interests of each participating (and possibly competing)
branch of government.

52. China’s Political Structure
The Communist
Party of China
The Constitutional System
The National
People’s Congress
Chinese People’s Political
Consultative Conference
(CPPCC)
The State Council

53. China’s Political Structure
The Communist
Party of China
The People’s
Congress
Chinese People’s Political
Consultative Conference
(CPPCC)
Local Government
Secretary Chairman
Governor
Chairman

54. China’s Political Structure
Precisely: Precisely:
--- provinces, autonomous regions
and municipalities directly under
the Central Government
---cities with districts and
autonomous prefectures
---counties, autonomous counties and
cities
---townships, ethnic townships and
towns.

55. Ethical Problems
Corruptions
 Intellectual property rights violation
 Pollution of the environment
 Contaminated food and stuffs
 Contaminated Baby Milk Powder (Melamine)
 Injecting water into meat to increase its weigh
Toys

56. Other Problems
•Growing Income Inequality (the Gini coefficient has
reached 0.5 in China, overtaking the recognized warning
level of 0.4)
•The three disparities in China
1. Coastal region and hinterland
2. the rich and the poor
3. the urban and the countryside.
•Housing Price
•Social Security. Rapid ageing of the populations will
mean pay as you go pension schemes will become
unsustainable
•Education

57. Conclusion
•The economic reform since 1978 is a great success.
•The prospects for continued rapid growth of the Chinese
economy are excellent.
•The political situation is stable with successful power
transition.
•China’s standing in the world is getting big.
•The problems are under the control of the Chinese
government.
•Yet China has a long way to go to become real economic
powerful country in terms of per capita income.

58. Thank you for your attention.
Questions?